Cancer doctors' drug sales draw profits, scrutiny

Insurers, lawmakers seek to curtail overpayment


Among cancer doctors, it is called the chemotherapy concession. At a time when overall spending on prescription drugs is soaring, cancer specialists are pocketing hundreds of millions of dollars each year by selling drugs to patients - a practice that almost no other doctors follow.

The cancer specialists can make huge sums - often the bulk of the revenue from their practice - from the difference between what they pay for the drugs and what they charge insurers and government programs. But some private health insurers are studying ways to reduce these profits, and the issue is getting close attention in Congress.

Typically, doctors give patients prescriptions for drugs that are then filled at pharmacies. But cancer doctors, known as oncologists, buy the chemotherapy drugs themselves, often at prices discounted by drug manufacturers trying to sell more of their products, and then administer them intravenously to patients in their offices.

The practice also creates a potential conflict of interest for these doctors, who must help patients decide whether to undergo or continue chemotherapy if it is not proving to be effective and which drugs to use.

Cancer specialists have successfully resisted most government efforts to take the drug concession away, arguing that they need the payments to offset high costs in the rest of their practices. But support for change is growing.

"This has gotten out of hand," said Dr. William C. Popik, chief medical officer for Aetna, which is exploring approaches to the concession, including taking it away in some regions.

Health insurers say they can buy these drugs much less expensively and have the drugs shipped directly to doctors' offices.

Medicare, which does not cover most prescription drugs, does pay doctors about $6.5 billion a year for drugs they administer, largely cancer drugs. Under the system of determining what the appropriate prices for these drugs are, the government is paying, by some estimates, more than $1 billion over what the drugs actually cost. Many private insurers say they are also overpaying for these drugs.

The General Accounting Office, which studied federal payments for cancer drugs in late 2001, discovered that doctors, on average, were able to get discounts as high as 86 percent on some drugs.

Democratic Rep. Pete Stark of California introduced legislation this month that would slightly increase what Medicare pays oncologists for their services but pay doctors closer to what the drugs cost.

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