Battle lines drawn over Medicare Cancer Drug pricing proposal

Cancer specialists clashed Wednesday over a Medicare proposal to test new ways to pays for drugs given in doctor's offices and hospital outpatient clinics.
The proposal by the Center for Medicare and Medicaid Services applies to Part B drugs, a class that covers certain cancer drugs, antibiotics and eye-care medications. Some cancer drugs are among the costliest on the market, ranging from $9,000 to $100,000 a month, according to America's Health Insurance Plans. Last year, Medicare paid doctors and outpatient clinics $20 billion for Part B drugs.
Medicare patients also pay whopping out-of-pocket costs for these drugs, through coinsurance that totals 20 percent of the drug's price. Unlike employer-based health plans, "Medicare doesn't have a limit on out-of-pocket spending," says Tricia Neuman, director of the Kaiser Family Foundation's program on Medicare policy, noting that cancer therapy can drive patients into bankruptcy.
The controversy arises out of a long history of heated debate about how best to pay for medications that must be administered by doctors. The system was set up at a time when these medicines were cheap, "like Band-Aids and bags of saline," says Dr. Peter B. Bach, director of the Center for Health Policy at Memorial Sloan Kettering Cancer Center, and formerly a senior adviser on Medicare to the Bush administration.
Over time, he says, prices soared, driven by incentives that prompted doctors to prescribe higher-priced drugs and pharmaceutical companies to charge more for them. The goal now is to change those incentives and reward physicians for providing higher quality care at lower cost.
"The current perverse incentive system doesn't benefit patients or the system."