Managed Care - November 2008 - (Page 33)

Who ultimately foots the bill? Perceiving that oncologists were taking advantage of Medicare’s liberal payment policy for infusion drugs, Congress four years ago mandated use of the average sale price (ASP) plus 6 percent. The new formula, oncologists say, underpays them for the drugs and leaves many patients underserved. Physicians are demanding higher rates from health plans as a result. 2007 annual increase in wholesale acquisition cost 12.3% 11.6% 14.0% 6.8% Erlotinib 100 mg Genentech Source: AARP Imatinib mesylate 100 mg Novartis Capecitabine 500 mg Roche Sorafenib 200 mg Bayer Tough topic for discussion There is no standard approach in how oncologists broach the subject of the cost of cancer drugs with patients. A report published in the Journal of Clinical Oncology in early 2007 found that 26 percent of oncologists rarely spoke about it. Average first-year cost for cancer patients By health plan +54% $37,504 $57,657 2003 2006 By patient $2,434 $5,094 Source: HealthCore +109% Cancer drug forecast • Global sales of oncology drugs will hit $48 billion this year • In 2012 the market will grow to between $75 billion and $80 billion • Sales will swell 12 percent to 15 percent per year • That growth rate will be double the average 6.4 percent for pharmaceuticals • The growth is being fueled by targeted oncology therapeutics Source: IMS Health working on a patient, Marsland dispatches the patient to a local hospital. “Years ago when the margin was significant, if patients with limited incomes didn’t have that 20 percent copayment, we’d basically write it off,” says Marsland. “Now you can’t do that anymore. If you can’t get that 20 percent, you are under water on almost every single drug you have.” Here’s an example from Kovach’s books. One hundred milligrams of Avastin costs him $548.40. CMS allows $573.70 after the markup. Medicare pays for 80 percent of the allowable; the patient covers the other 20 percent. A treatment dose is 500–700 milligrams. When patients have secondary insurance, that payment is usually not a problem. When they don’t, getting the money is problematic — if not impossible. Kovach has to pay for the drug up front, leaving him in the red as he tries to recoup the money. “It’s a real bureaucratic pain,” says Kovach. One option is going to a manufacturer for charity support. Companies like Genentech — which makes Avastin — have been responsive. However, that also takes additional time to arrange — time that Kovach is not reimbursed for. Until the Medicare Modernization Act of 2004, physicians operated under a radically different set of guidelines. Quite a few oncologists readily concede that the margins were very high. “They basically made us retail pharmacists,” says Marsland. One reason that the margin was high, he adds, was to compensate for an artificially low amount paid for administering therapies. When lawmakers adopted the new drug rules, Medicare also put some stopgap measures in place to bolster the amount physicians were getting for administering the drugs. That ended last year, says Okon, “and there was a huge drop-off in servicesrelated reimbursements.” At the same time, private payers were moving to an ASP-plus reimbursement formula of their own. The imbalance of payments pushed some oncologists further into the red. To counter that, says Okon, practices started opening their books to their private payers in an attempt to get relief. “Medicare is now being subsidized in many cases by the private pay side,” says Okon. That’s not a universal shift.“Medicare pays roughly a little less than half of all the payments in cancer care, so they’re the NOVEMBER 2008 / MANAGED CARE 33

Table of Contents Feed for the Digital Edition of Managed Care - November 2008

Managed Care - November 2008 Editor’s Memo Contents News and Commentary Legislation & Regulation Letters Medication Management Compensation Monitor Do It Yourself for Less Biomarkers Promise, but Do They Deliver? Oncologists Complain About Drug Payment Consider Blood Pressure Self-Monitoring Q&A: Keep Industry in the Game Formulary Files Plan Watch Tomorrow’s Medicine Outlook Respiratory Syncytial Virus Managed Care Considerations Contents Continuing Education Objectives RSV Disease in the Pediatric Population In the Trenches RSV Infection in the Adult Population Health Plan Medical Director Health Plan Pharmacy Director RSV Issues and Solutions Assessment/Evaluation/Certificate Request Post-Test

Managed Care - November 2008

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