Expensive physician-administered biologic drugs for cancer and other diseases are helping to drive the cost of Medicare higher and higher, newspaper analyses of newly released Medicare billing data show.
We note this with interest because biopharmaceutical companies that make these drugs, private cancer doctors who collect significant sums billing Medicare for them, and major PBMs that take a cut serving as middlemen are also the main players in the drive to cripple or kill the 340B program.
Earlier this week, the Centers for Medicare and Medicaid Services released data for over 880,000 health care providers who collectively received $77 billion in Medicare Part B fee-for-service payments in 2012. Much of the initial reporting has focused on the small number of doctors who account for a large share of Medicare costs. For example, The Washington Post reported that “most of the 4,000 doctors who received at least $1 million from Medicare in 2012 billed mainly for giving patients injections, infusions and other drug treatments.” The Bloomberg news service found that “cancer doctors specializing in blood work and radiation received the most compensation.”
“Of $64 billion Medicare paid to doctors in 2012, $8.6 billion was used to cover drugs, an amount that has been rising for years,” the Post said. “In 2010, [CMS] lost the ability to mandate, when two equivalent drugs are available, that physicians be paid only for the cheapest. At the same time, pharmaceutical companies have offered physicians incentives, such as discounts, to use large volumes.”
“Many of the physicians who have submitted multimillion-dollar bills to Medicare,” it continued, “blame high drug prices and say the pharmaceutical industry is taking most of the money.”
“If you want to know who makes the money, it’s the drug company and the middleman,” a Texas rheumatologist said.
Pharmaceutical Research and Manufacturers of America scoffed at the idea that drug prices play a big role in the nation’s health-care costs, telling the Post such suggestions are “off base and not supported by the data on health care spending.”
One of the drugs that came up most frequently in reporting about the Medicare billing data is Lucentis, a biologic injectable drug made by Genentech that is used to treat macular degeneration. Genentech also makes Avastin, a closely related oncology drug that when used off-label has been shown in studies to be as effective at treating the eye disease for a fraction of the cost. (For more information, see the Post’s Dec. 7, 2013 story entitled “An effective eye drug is available for $50. But many doctors choose a $2,000 alternative.”) In late 2010, The New York Times reported that a confidential document it obtained described how Genentech had “begun offering secret rebates to eye doctors as an apparent inducement to get them to use more of the company’s expensive drug Lucentis” rather than Avastin.
You might recall that Genentech, which has been leading the charge for drug manufacturer audits of 340B safety net health care providers, publicly acknowledged last August that it overcharged 340B caregivers for Lucentis, Avastin, and a big chunk of its entire product line from the middle of 2008 through the middle of 2011.
(UPDATE: Read a timely editorial on this subject in The Hill.)
The pharmaceutical industry is again busy writing checks to friendly researchers to generate convenient data to attack the 340B program. This time the most profitable drug companies in the world are accusing hospitals of failing to provide adequate levels of charity care.
A new report charges that only 20 percent of 340B hospitals are supplying 80 percent of the charity care. The majority is supposedly free riding and building gold plated executive wash rooms.
It’s all utter hogwash.
The report is based on unreliable data that even the government decided was too weak to use to ascertain hospital uncompensated care costs. The analysis also completely omits the extent to which 340B hospitals are underpaid by Medicaid.
According to figures from the American Hospital Association, 340B hospitals provided nearly two-thirds of the $27 billion in uncompensated hospital care in the country in 2012. There are no good guys and bad guys here. To be eligible for the program hospitals must show they serve disproportionately high percentages of Medicaid, low-income seniors – or be located in remote areas.
Every 340B hospital takes heavy losses due to its safety-net mission. Big Pharma can’t change that fact.
If Big Pharma persuades Congress to limit or end the 340B program, “hardworking Americans in the heartland of the country will lose as hospitals cut back on prescription discounts, treatment and services,” the head of the National Rural Health Association argues today in a commentary in the Capitol Hill newspaper Roll Call.
“Many of our hospitals and clinics would have to close altogether,” warns NRHA President Raymond G. Christensen, M.D. “That would be a travesty we can’t let happen.”
“Rural hospitals are the front line of care for millions of Americans who can’t travel to big cities for medical treatment,” Dr. Christensen writes. “Most are small, less than 25 beds, and many struggle to keep their doors open in the face of rising costs. A little-known prescription drug program called 340B helps these providers stay in business — and extend vital services to needy patients.”
Dr. Christensen cites these examples of “the positive impact of the program is tangible in small towns and rural communities” across America:
- In Centerville, Tenn., St. Thomas Hickman Hospital reaches out to patients without cars, picks them up from home and brings them in for lunch and medical treatment. The hospital also provides free medications on a regular basis to outpatients who can’t afford them.
- Cass County Memorial Hospital in Atlantic, Iowa, provides qualified outpatients a full year of medications for free. And it gives its emergency room doctors vouchers to supply medicines at no cost to patients, based on need.
- At Regional Health System in the Black Hills of South Dakota, 340B savings fund patient treatment in a local detoxification clinic and a short-term crisis center.
“The benefits of 340B flow far beyond the needy patients treated at America’s rural hospitals,” he says. “Because savings are often passed on in low-cost or free prescriptions, people take their medications and return less often to the hospital emergency room. That translates into lower costs for Medicare and Medicaid — saving a bundle of taxpayer dollars.”
A new study shows that the 340B program is vital to helping health providers in Oregon better treat the vulnerable and underserved.
Specifically, the report found that 340B savings allow federally qualified health centers in the state to provide:
- financial assistance to patients unable to afford their prescriptions
- clinical pharmacy services, such as disease management programs or medication therapy management
- additional clinics
- community outreach programs
“FQHCs rely on the 340B funding to offset the costs of providing these and other important (yet unreimbursed) services. And as safety-net community providers, FQHCs use the funding to benefit all patients of the community, indirectly passing savings to the state as a whole,” said the report which was commissioned by the Oregon Primary Care Association.
Oregon is weighing whether to require these health centers to hand over essentially all of their savings on 340B drugs provided to Medicaid beneficiaries.
“Policies that shift cost savings to the state may not actually be effective and could adversely impact patient care,” the study concluded.
Oregon is just one example of how critical 340B is to assisting health providers across the country meet their missions to help needy patients.
We’ve noticed that Eli Lilly and Co. has been taking pot shots at the 340B program calling for more oversight and transparency.
This from a company that agreed to plead guilty and pay $1.4 billion for promoting its antipsychotic drug Zyprexa for uses not approved by the Food and Drug Administration including marketing it to elderly patients with dementia. Health care providers serving the poor received $750,000 as part of a related False Claims Act settlement and Lilly is still operating under a Corporate Integrity Agreement with the feds as part of the deal. Two years ago, the company paid $29 million to settle Security and Exchange Commission charges that its subsidiaries bribed government officials in Russia, Brazil, China, and Poland to win millions of dollars of business. A parallel Justice Department investigation is ongoing.
Meanwhile, Lilly executives have been recruiting other drug companies to join the industry-funded AIR 340B campaign. When SNHPA and other 340B provider groups recently called upon HHS Secretary Sebelius to move forward with long-awaited steps to increase transparency such as posting 340B prices and requiring manufacturers to explain how an overcharge occurred, AIR 340B described the recommendations as “a distraction.”
And if that isn’t enough, Eli Lilly devoted much of World Cancer Day (Feb. 4) to make offensive and unfounded comments on 340B and patient care.
Shame on Lilly.
Shame on AIR 340B.
To view a full list of AIR 340B members, click here.
Iowa 340B hospital Hancock County Health System was profiled by their local news station. The focus was patient access to medication through 340B. Click the video below to view the segment.
Perhaps the most misreported number in the 340B debate is the number of pharmacies that have contracts with 340B healthcare providers. That number currently stands at 13,833.
The confusion comes from the way the Office of Pharmacy Affairs tracks contract pharmacies in its database. Instead of listing these brick-and-mortar stores only once, the agency counts the number of contracts between a 340B provider and a pharmacy. The confusion? The database often includes multiple contracts between a single pharmacy and different divisions of a hospital or between one pharmacy and multiple healthcare centers – so these same pharmacies are listed multiple times. The system also keeps pharmacies on the list that have terminated their contract with a 340B provider.
To unaware observers – and our critics who know better – the system leads to massive over counting of 340B contract pharmacies. Remove the pharmacies listed more than once, scrub the ones that have been terminated and you get 13,833. We will update this number as new data becomes available from OPA.
Why is this important? Because the growth in the number of 340B contract pharmacies is far lower than Big Pharma wants you to believe. According to the Health Resources and Services Administration, 82 percent of 340B providers dispense outpatient medicines through an in-house pharmacy. Of the remainder, 75 percent use fewer than five contract pharmacy arrangements.
U.S. hospitals provided a record-high $45.9 billion in unreimbursed care to indigent and underinsured patients in 2012, an 11.7 percent increase over 2011, according to a new American Hospital Association (AHA) report. The uncompensated care total includes charity care and bad debt but excludes Medicaid and Medicare underpayment. 340B hospitals provide 62 percent of all hospital uncompensated care in America, AHA noted last month in an infographic about the 340B program.
Hospitals have provided $347.7 billion in unreimbursed care since 2003, AHA says. Bad debt and charity care accounted for 6.1 percent of total hospital expenses in 2012, the highest such percentage in a decade.
Congress created the 340B program to help safety-net health care providers cope with the cost of uncompensated care. Hospital unreimbursed care has risen from $14.7 billion in 1992, the year that 340B was established, to $45.9 billion in 2012. Total U.S. spending on prescription drugs skyrocketed during the same period, from $47 billion to $326 billion.