Thursday, August 21, 2008

Do Rebates Belong In Healthcare?

Rebates can be a great deal – that is if you’re a retail customer buying a car, a computer or a high-end kitchen gadget. But, if you’re a medical oncologist treating people with serious illnesses, should you have to rely upon rebates to get the best possible price on drugs for your patients? While we love a good deal, we don’t think the practice of rebates belongs in the health care system. In fact, we think they are unfair and are borderline unethical because they can drive physicians to purchase and administer drugs patients may not need. They also, in the end, increase the cost of drugs to the patients.

We think oncologists/hematologists need to put their foot down and fight this issue now.

Here’s an example. If you choose to treat your cancer patients for chemotherapy-induced fatigue with Aranesp, the list price is so high, its counter-rebates and discounts are distorting the real ASP. So, the physician is faced with purchasing the drug 20 % to 35% below his/her reimbursement in anticipation of receiving several rebates and discounts from the distributor and manufacturer - in hopes his/her cost will eventually fall below the Medicare allowable of ASP +6%. The primary problem is the manufacturer list price is making it unaffordable to buy this as a single-source drug. And, Amgen has creatively bundled Aranesp and Neulasta, and physicians must sign a contract requiring them to purchase these drugs together - in order to get the best possible price and the “rebate”. The physicians must also negotiate an additional discount with the distributor.

To make matters worse, effective July 1st, Amgen instituted a price increase on both Aranesp and Neulasta by eliminating the discount with the distributor. When is this going to stop? These issues are making drugs unaffordable, putting patient care at risk and contributing to the exorbitant cost of health care.

What are oncologists, especially small practices and solo practitioners, supposed to do? There are a couple of possible alternatives.

1. write their patients a prescription, and send them off to the pharmacy to purchase their own chemotherapy.
2. send Medicare only and self-pay patients to the hospital.

We think the bundling/rebate practice is unfair and enables drug companies to form monopolies.

For more than 25 years, we’ve successfully represented medical oncologists/hematologists within the private practice, hospital and university settings. Due to the high cost of drugs and the unfair rebate process, several of our small and solo practice clients have been forced to close their doors. Others are currently considering doing the same.

Neltner Billing and Consulting is requesting ASCO to take action on this issue. Physicians should be able to purchase drugs as cheaply as possible in order to provide affordable care to our patients. Stop the rebates. Stop the bundling. Simply focus on getting the cost of the drugs down.

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