PROFIT OPPORTUNITY FOR DOCTORS
Infused cancer medications are first purchased by doctors, who then bill insurers for reimbursement. That is different from pills and other oral drugs for which doctors typically write a prescription filled at a pharmacy.
The offer of a 50-percent discount to Zaltrap's list price is a potential windfall for doctors. Patients, health insurers, the government or anyone else who pays healthcare bills would not see a benefit.
"At the very least it is an incentive for doctors to use the drug," said Dr Leonard Saltz, chief of Memorial Sloan-Kettering's gastrointestinal oncology service. "And I find that concerning."
He noted that rebates and discounts for cancer drugs are not uncommon, but said this is the first time he is aware of a verbal across-the-board offer for a half-price discount.
The average U.S. oncologist, according to the Journal of Oncology Practice, generated revenue of nearly $5 million last year, of which drug costs accounted for nearly $3 million.
To combat the temptation of wider profit margins, health plans in recent years began reimbursing doctors for cancer drugs based on average sales prices, rather than wholesale prices. But for a new drug such as Zaltrap, reimbursement is based on the full list price until a sales track record is established.
WellPoint said it is raising reimbursements to independent oncologist on a range of generic chemotherapy drugs by as much as 140 percent.
"These drugs are the backbone of many therapies recommended by the National Comprehensive Cancer Network and typically much less expensive than their brand counterparts," said Jennifer Malin, WellPoint's medical director oncology.
She said the goal is to shift the system away from what has been a largely drug-revenue based practice model, to one where oncologists are paid for providing good patient-centered care.
"The payers are looking at the quality data and demanding incremental value over existing products," said Dan Mendelson, chief executive officer of consulting firm Avalere Health.