Drug Cost Not an Indication of Effectiveness

In the battle to control costs and out-of-pocket expenses for consumers, it would seem logical that doctors would choose the lower-cost drug. However, a report found that when given the choice, doctors chose the more expensive eye medicine over a lower cost option, even when both prescriptions provided the same effective treatment.

When comparing Avastin, which costs about $50 per injection, with Lucentis, which costs about $2000 per injection, doctors chose the more expensive treatment more than half a million times each year. That choice cost the Medicare program an additional $1 billion annually.

“Lucentis is Avastin—it’s the same damn molecule with a few cosmetic changes,” said J. Gregory Rosenthal, a Toledo ophthalmologist who, outraged by the price, co-founded a group called Physicians for Clinical Responsibility to protest its use. “Yet Americans are paying a billion dollars every year for no good reason—unless you count making Genentech rich.”

Genentech, which produces both drug formularies offers rebates to doctors who use large volumes of the more expensive drug. In addition, physicians receive repayment reimbursement for the average price of the drug plus 6% under Medicare payment models. In a statement, Genentech said that Lucentis is better tailored for eye use, which leads to its higher cost.

“The price of Lucentis supports the research and development of new potential medicines, including the 92 percent of drugs that never make it to patients,” the company said. “We re-invest a larger portion of our revenue into clinical research than most pharmaceutical companies. Genentech believes it is in the best interest of patients to continue to focus our efforts in ophthalmology on discovering and developing new potential medicines for other serious diseases of the eye.”

Lucentis sales to Medicare beneficiaries totaled $1.2 billion in 2012, but Medicare officials have no choice but to reimburse those costs.

“We do not have the authority to dictate treatment based on cost,” Tami Holzman, a spokeswoman for the Centers for Medicare & Medicaid Services, said in a statement. “Under current law, Medicare must cover treatment that is deemed reasonable and medically necessary by a physician or other provider.”

Matthew Bennett, a senior vice president at PhRMA, added that this protection is important. “The cheapest option on average is not always the best option for many patients.”

Reform to policies that would make cheaper drugs more desirable might incentivize providers to choose them over their pricier competitors.

Around the Web

An Effective Eye Drug is Available for $50. But Many Doctors Choose a $2,000 Alternative.

[The Washington Post]