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Bankrupt Healthcare
The High Costs of Redundant Brand Name Drugs

Lucentis, a brand name drug that treats macular degeneration, is a good example of the way the U.S. health care system is biased against generic drugs. The NYT reports that Lucentis is made by Genetech, the same company that makes a generic drug called Avastin. Several studies have shown Avastin is as effective as Lucentis at treating macular degeneration, but Lucentis nevertheless became a popular drug; billings for it now cost the federal government about one billion dollars annually. The NYT piece suggests that a factor in the drug’s rise is over-prescription of the drug by doctors who are paid consultants for Genetech:

Now, a new federal database shows that many of the doctors who were the top billers for Lucentis were also among the highest-paid consultants for Genentech, earning thousands of dollars to help promote the drug

Half of the 20 doctors who received the most money from Genentech to promote Lucentis in 2013 were among the highest users of the drug in 2012, billing for higher amounts of Lucentis than 75 percent of their peers. The figures were compiled from two federal databases that covered different periods, and it is not known whether or how much Genentech paid the doctors in 2012.

The 20 doctors earned $8,500 to $37,000 over five months in 2013, payments that included consulting and speaking fees as well as travel expenses and meals. Genentech says it has an annual cap of $50,000 a doctor for speaking fees.

Doctors claim that Lucentis is safer than Avastin, but the story quotes a review of nine different clinical trials that indicate the generic drug does not increase deaths or serious side-effects. If doctors are prescribing more expensive brand name drugs than is necessary, that’s one more reason for patients to have more an incentive to be involved in their own care. Studies show that patients do opt for cheaper procedures over more expensive ones when both are about equally as expensive—even for their children. Presumably the same would hold for generic and brand name drugs. The best way to make sure doctors aren’t padding profits by drugs like Lucentis is to empower consumers.

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  • Boritz

    In some states pharmacists can legally substitute a generic for a brand name without seeking permission.  In other states they must use the brand in the Rx.  However, some pharmacists will swear, like the doctors do, that the brand name drug is superior.  One pharmacist I know claimed that he had patients die after switching from a brand name to a generic form of a heart medication.  So there is ample fear to back down anyone who wants to save with a generic.

  • Andrew Allison

    For a doctor to prescribe a brand name drug for an insured patient when there’s a generic equivalent is insurance fraud, and should be treated as such. Part of the problem is that for the insured patient, the co-pay is probably the same for either, so the cost doesn’t matter to them. Insurance companies could help by introducing separate co-pays for generic and brand name drugs for which there is a generic equivalent, but at the end of the day, it’s about educating consumer consumers to insist on generics when available.
    FWIW, Wal-Mart (pioneer of the $4 30- and $10 90-day supplies of most generic generic drugs policy since taken up by several other chains) requires new mail order patients to select their preference for generic or brand name and fills any future orders accordingly.

  • RK

    This article ( states that the long-term effects of Avastin use on macular degeneration is not yet known. To minimize liability, most doctors would not want to go outside “the standard of care” route to save money for patients especially those with insurance. Lucentis is the standard of care at the moment. For any disease, going outside of “standard of care” is risky due to liability.

  • Jacksonian_Libertarian

    Problems like this would vanish if health insurance didn’t insulate consumers from the costs of their healthcare. High Deductible health insurance with Health savings accounts should be the only legal form of health insurance, and it should be illegal for healthcare providers to charge for any service for which the prices aren’t prominently published and displayed (auto mechanics are required by law to present a cost breakdown for any repair before work begins, it should be the same for doctors). In addition employer paid health insurance should be made illegal, employers could still require employees to carry health insurance as a condition of employment, but the costs would have to come out of the employee’s pay check.

    Insurance should be something that is purchased in case of a catastrophe, not for every day expenses.

    • FriendlyGoat

      It’s curious that you refer to yourself as a rather strict libertarian while proclaiming “it should be illegal for healthcare providers to charge for any service for which the prices aren’t prominently PUBLISHED and displayed”—–since this implies so much government coercion surrounding price publication. Are you aware that the actual argument of some conservatives and libertarians is that pricing arrangements are proprietary pieces of intellectual capital which need not be published for THAT very reason? Because charging different people different prices is a trade secret we’re not entitled to meddle in?

    • Andrew Allison

      Non-HDHP insurance is the only form of insurance which I can think of which pays (after a nominal deductible) for routine care — the equivalent would be to have your auto or homeowners insurance pay for routine maintenance. However, I don’t think that HDHP should be mandatory — let a thousand flowers bloom and be priced accordingly. The problem with employer paid plans is two-fold: the employee is both insulated from the cost of the insurance and lacks the ability to chose coverage or supplier.

      • FriendlyGoat

        Actually, as I noted below, the problem with employer-paid plans is that they have lulled so many people into voting conservative when they otherwise would have had enough sense to understand why they need to be liberals.

        • Andrew Allison


          • FriendlyGoat

            Just take those employer plans away and see what happens.

  • FriendlyGoat

    We can be glad our government sees to it that generics are functionally equivalent to the brands——so we don’t have to wonder whether they are. A new-age problem we have, though, is that many of the once-cheap generics are no longer very cheap.

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