How Cutting Payments for a Drug Could Cost Medicare More
Medicare just started reimbursing doctors less for very small amounts of the cancer drug Avastin.
Oddly enough, that could mean Medicare will start spending lots more money on the eye drug Lucentis.
Here’s why.
Lucentis and Avastin are very similar molecules.
A few years back, before Lucentis was on the market, eye doctors realized that they could inject Avastin in patients’ eyes to treat macular degeneration, a condition that can lead to significant loss of vision and occurs mostly in the elderly.
Avastin costs tens of thousands of dollars to treat cancer patients, but the tiny dose doctors inject into patients’ eyes costs a very small fraction of that –the specialty pharmacy chain The Apothecary Shops
repackages Avastin for use in the eye and sells it to doctors for $27 per dose, John Musil, the company’s CEO, told the Health Blog.
This week, Medicare cut its reimbursement for the dose of Avastin commonly used in the eye to about $7.
Previously, when there was no specific billing code for tiny doses of Avastin, doctors could get reimbursed about $50 for using the drug in the eye, Philip Rosenfeld, an eye doctor at the University of Miami, told the Health Blog.
For a dose of Lucentis, Medicare reimburses doctors $2,039. Doctors pay just under $2,000 for a dose of Lucentis, Rosenfeld said.
That means that eye doctors will now lose a bit of money when they use Avastin to treat patients’ eyes, and make a bit of money when they use Lucentis.
Avastin hasn’t been approved for use in the eye, but it’s legal for doctors to use it in that way. Many eye doctors use both Avastin and Lucentis, depending on patient preference, Rosenfeld said.
Rosenfeld, like many docs, believes both drugs work equally well to treat macular degeneration; the NIH is currently sponsoring a head-to-head trial. But the new payment structure could push eye docs away from Avastin and toward the far more expensive Lucentis.
“Doctors will do what’s in the best interest of the patients,” Rosenfeld said. “Given that both drugs are equal, it’s not surprising that they’ll do what’s in their financial interest.”
That could mean a hit for Medicare, as well as for Medicare patients who are on the hook for co-pays.
Both Lucentis and Avastin were developed by Genentech, now owned by Roche. U.S. sales of Lucentis were over $550 million in the first half of this year, Roche reported. Because the drug is primarily used by the elderly, much of that is paid for by Medicare.
Until now, there was no specific Medicare billing code for small doses of Avastin. A Medicare spokeswoman said the new reimbursement level is based on a formula that is determined by law, and doesn’t take into account the costs of repackaging the drug.
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