Thursday, November 03, 2011

Shortage of cancer drugs

There is a shortage of oncology drugs - particularly those that have been around a long time like vincristine, carboplatin, taxotere, doxorubicin and leucovorin. Oncology drugs are usually purchased by the oncologist and sold to the patient or Medicare or an insurer. Since oncology is a knowledge-based specialty rather than a procedure-based specialty, the oncologist makes his income by the mark-up between wholesale and retail prices. Medicare looked at this mark-up and thought it excessive, imposing a limit on it. This has acted as a deterrent to the prescription of generic drugs which would make the practice of treating Medicare patients uneconomic. For example the price of branded carboplatin is $120 a vial whereas generic carboplatin is $3:50. Since Medicare allows only a 6% mark-up it would cost the oncologist money to prescribe the generic.

This is the law of unintended consequences acting. Manufacturers have stopped making generic drugs and even worse, some patients have received a wrong, sound-alike, drug as a consequence. A grey-market has grown up with Indian and Brazilian generics appearing on the market.

This is not much of a problem yet in the UK, but one can see it spreading over here. I have heard of adjunct drugs that are necessary for the administration of some types of chemotherapy being unavailable in hospital pharmacies.

This story is featured in toady's NEJM.


Anonymous said...

The scary thing is that my oncologic colleagues were warning of this for many years since the reimbursement changes began (and long before I had CLL).

Given the way things are going in the US, things will only get least until either Obamacare is repealed and markets are allowed to work properly or until things hit bottom and a single payer system such as exists in the UK emerges. In between we will face some interesting unintended consequences of the policies imposed on us by those who think they know better than the people in the trenches.


Grateful said...

Obamacare is only about a year and a half old, so anyone who was warning about this for many years could not possibly have been thinking about Obamacare. Rather, this problem arises from a combination of how Medicare Part B works and how medicine has become big business, with large corporations competing for shrinking dollars.

Briefly, a Medicare patient who receives treatment as a hospital inpatient is covered under Medicare Part A, which has no premium cost for the patient. But a patient who is treated in a doctor's office is covered under Medicare Part B, with monthly premium costs of about $100 per month. And prescription drugs taken at home are covered by Medicare Part D. The different reimbursement methods are complex but are influenced by political pressure, and the hospital and pharmaceutical lobbies are stronger than the lobby for doctors in private practice. Indeed, most US doctors are not in private practice but are employees of large corporations.

Anonymous said...

That's the point Grateful...federal policy (which is then propogated by private health insurance plans) began changing the reimbursement game for oncologists years before Obamacare was on the horizon and the unintended consequences of those efforts to reign in expenses are just now showing up.

The reimbursement received for actually "getting" the multiple infusions that many folks with various cancers receive is not sufficient to pay for the overhead of many facilities. Most of the residual cost and profit (doctors, unless salaried do have to make a profit) comes from the 'markup' on the drugs administered.

Under the current system in the US the current laws inexorably drive down the price of generic drugs to the point that manufacturers have no desire to produce them and middlemen (drug wholesalers) try to maximize their profits by exacerbating the scarcity until they can sell them at higher prices...decreasing the margins for facilites and increasing the inconvenience for everyone.

With Obamacare we can expect more meddling and more fiascos.

We should either allow markets to work as they are supposed to or scrap the entire system and create a single payer system funded completely by taxpayers and not driven by profit.

Obamacare is the worst possible "middle scenario" and will be worsened yet by choosing to have a panel of so-called experts "call the shots", picking winners and losers in health care. Believe me, you won't enjoy being one of the losers.

I have worked in the healthcare system for over 40 years and don't necessarily think that a single payer system is bad...I just think that what has been created in the US by a bunch of meddling politicians over the years is setting us up for one crisis after another.

I believe that markets can only work properly when they are permitted to work without outside interference, most of which (though not all) has been foisted on the healthcare industry by neo-socialist politicians who think that they know what's best for the rest of us.

Grateful said...

How is the US medical market supposed to work? Doctors in private practice are competing against hospitals, drug companies, and other large corporations. In terms of being in the trenches, hospitals, doctors, etc. are in very different trenches, and the doctors are in the low trenches on the bottom of the hill....and you know what flows down hill. The free market in US medicine is working the way that free markets have always worked: the big strong companies crush their competition. Politicians are not driving federal policy; rather, politicians are listening to the voices in the market, and the loudest voices are the biggest companies. Many large medical corporations would be happy to drive private doctors out of business so more doctors become their employees.