How Cutting Payments for a Drug Could Cost Medicare More

[Sgent]

http://blogs.wsj.com/health/2009/10/02/how-cutting-payments-for-a-drug-could-cost-medicare-more/

Medicare just started reimbursing doctors less for very small amounts of the cancer drug Avastin. Oddly enough, that could mean Medicare will start spending lots more money on the eye drug Lucentis. Here’s why.

Lucentis and Avastin are very similar molecules. A few years back, before Lucentis was on the market, eye doctors realized that they could inject Avastin in patients’ eyes to treat macular degeneration, a condition that can lead to significant loss of vision and occurs mostly in the elderly.

Avastin costs tens of thousands of dollars to treat cancer patients, but the tiny dose doctors inject into patients’ eyes costs a very small fraction of that –the specialty pharmacy chain The Apothecary Shops repackages Avastin for use in the eye and sells it to doctors for $27 per dose, John Musil, the company’s CEO, told the Health Blog.

This week, Medicare cut its reimbursement for the dose of Avastin commonly used in the eye to about $7. Previously, when there was no specific billing code for tiny doses of Avastin, doctors could get reimbursed about $50 for using the drug in the eye, Philip Rosenfeld, an eye doctor at the University of Miami, told the Health Blog.
....

Lucentis costs just under $2000, but is reimbursed $2039.