In this ongoing series, we analyze the recently released Medicare physician payment database to identify wasteful spending by Medicare and seniors, including on treatments proven ineffective or in cases where equally effective alternatives to a high-priced treatment exist.
The Centers for Medicare & Medicaid Services, or CMS, recently released Medicare physician payment data for the first time in decades. This release generated a great deal of media coverage, both of the doctors billing the most to Medicare and also of the most expensive health care services.
One of the highest-volume costs in the database is for Lucentis, a drug used to treat agerelated macular degeneration, or AMD, a form of blindness that affects the elderly. Last year, a Washington Post investigation highlighted the unsettling fact that, while an equally effective alternative drug, Avastin, costs about $50 per injection, many ophthalmologists continue to prescribe and administer Lucentis—which is priced 40 times higher, at about $2,000 per injection. This price difference is particularly staggering given that Lucentis and Avastin are both recommended to be injected monthly, meaning these prices represent repeated costs to patients and Medicare over time….
…Its manufacturer, Genentech, refuses to repackage it for sale in smaller doses, so pharmacists must currently repackage the drug manually in a sterile environment. Genentech has strong financial incentives to discourage the use of Avastin for treating AMD—it is the same company that manufactures Lucentis, which generates substantially higher profits because the production costs of the two drugs are roughly comparable.
Ophthalmologists also have financial incentives to prefer Lucentis. Since Medicare reimburses doctors for drugs at the average sales price plus 6 percent, ophthalmologists receive $120 above the sales price for Lucentis, compared to only $3 for Avastin….