Americans are still aghast at the Medicare reimbursement data released yesterday. Meanwhile, doctors have been coming to their own defense, and wonks have been offering further analyses. Two helpful articles highlight the role that drug prices play in making “Medicare millionaires.” WaPo explains why ophthalmology is the highest-billing specialty reimbursed by Medicare: Ophthalmologists often prescribe a drug named Lucentis for blindness even though a cheaper alternative called Avastin exists. The difference in price is considerable:
A dose of Avastin costs only $50. A dose of Lucentis costs $2,000. Both Avastin and Lucentis are made by the same company, and they’re remarkably effective in treating a form of macular degeneration that was long the leading cause of blindness among the elderly, The Post reported. They are very similar on a molecular level and probably cost about the same amount to manufacture.Nonetheless, doctors prescribe Lucentis almost as often as Avastin. They also make more money doing so. Medicare is legally obliged to pay for any drug a doctor prescribes, and doctors also receive commissions of 6 percent to cover their own expenses. The commission a doctor collects on each dose of Avastin would be only about $3, as opposed to $120 on each dose of Lucentis.
A second WaPo story puts this case in perspective. Out of the total $64 billion received in reimbursements in 2012, $8.6 billion went to drug expenditures. Moreover, the 6 percent commission doctors get for prescribing drugs gives them an incentive to pick the most expensive ones. In 2011, when Medicare stopped paying that commission for a drug sometimes used for dialysis, prescriptions decreased by 34 percent.But the solution isn’t to allow Medicare to control the price of drugs, or to mandate that doctors prescribe only the less expensive of two comparable medications. Top-down controls almost always make a system more complicated and less responsive, reducing quality of care for patients. We don’t need more federal mandates; we need more consumer control. When consumers have more information about prices and greater responsibility for paying them, they will bring market pressure to bear on doctors to use more efficient means of treatment.