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Medicare encourages doctors to use costliest cancer drugs 

Written by Diane Archer

The Trump Administration has identified one problem with Medicare payment rates for drugs. StatNews reports that CMS Chief Seema Verma critiqued Medicare regulations that encourage doctors to use the costliest cancer drugs as well as incentivize pharmaceutical companies to charge a high price for cancer drugs.

You can be sure that pharmaceutical companies give doctors a strong financial incentive to use their most costly cancer therapies. In exchange, Pharma may pay for their vacations, dinners and speaking fees. But, Medicare gives doctors a second incentive to prescribe the highest-cost cancer drugs. It pays them more to use them.

Medicare pays doctors for the cost of chemotherapy drugs plus six percent for administering these drugs. The higher the cost of the drug, the more the doctors earn.  It should go without saying that ease of administration has nothing to do with the amount Medicare pays doctors.

Why would Medicare pay a doctor $6,000 to administer a $100,000 drug therapy, much less $30,000 to administer a $500,000 drug therapy. Why would Medicare pay different amounts for the same drug therapy depending upon whether it is administered in a hospital or an outpatient clinic? It is all about the influence of the pharmaceutical companies and big Pharma.

In a recent speech, CMS chief Seema Verma posed these questions and critiqued Pharmacy Benefit Managers (PBMs) for having a conflict of interest. They allegedly negotiate lower drug prices for insurers. But, they also pocket money from the drug manufacturers to promote their costly drugs. According to Verma, they may keep some of the drug discounts they achieve for themselves.

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