After that recent episode with Scott Haas (EP365), where we talked about the real deal with PBM contracting, I kicked into high gear trying to untangle this whole apocalyptic honky-tonk we call benefits for prescription drugs. Notice I did not say prescription drug benefits because that would imply that pharmaceuticals are only charged for under the umbrella of pharmacy benefits. Ha ha, that would be just too easy. No, some pharma drugs are charged as part of patients’ medical benefits. An amazing primer for what that looks like in the real world follows.
Just pointing out that any self-respecting healthcare market distortion deserves another, and if anything qualifies as a market distortion, it’s buy and bill—what I talk about with Dr. Mitchell in this healthcare podcast. In the following weeks, we’ll chat about how the market has responded to this buy and bill market distortion that we talk about in this episode. So, next week, we’re gonna get into all the different kinds of bagging: the so-called brown bagging, the white bagging, the clear bagging … and what is this newfangled gold bagging? Spoiler alert there. Tune in next week.
And here’s another spoiler alert: While in this show today we chat about how provider organizations tend to make somewhere between 4.5% and 20% additional over drug costs, there was a recent study claiming that 4.5% to 20% is chump change. Some provider organizations are, in fact, making four times to six times the cost of the drug—a very expensive drug, mind you (lots of zeros here)—in profit. In the show in two weeks, I’m speaking with April Yongchu and Erik Davis from USI about exactly and specifically how provider organizations can manage to perform this “let’s make hundreds of thousands of dollars today” magic trick. So, with that, here’s your encore.
In the April [2020] issue of Value-Based Cancer Care (that’s a journal), there’s an article talking about a keynote presentation and a study highlighting a big problem for patients with cancer: toxicity. It’s a fact that some chemo agents are pretty toxic, but in this healthcare podcast I am talking about financial toxicity. The financial burden of cancer care has a seriously negative influence on patients’ quality of life.
This keynote speaker quoted in the Value-Based Cancer Care article implored his fellow oncologists: “Think twice before ordering costly interventions that may have little impact on the clinical course,” he said.
This might be difficult for a number of reasons, and one of them is that oncology centers make money, a whole lot of money, sometimes the most money, from infusing cancer medications. It’s this little payment paradigm called “buy and bill.” The cancer center buys the meds and then gets paid an additional fee to infuse the drug. This fee is a percentage of the drug cost.
You’ve probably heard a lot lately about the skyrocketing costs of some of these cancer agents. Realize that if you’re an oncology center, the higher the drug costs, the higher your revenue. Now consider the patient suffering under the weight of increased cost sharing and employers and taxpayers who are funding this strange payment model.
In this healthcare podcast, I dig into this so-called “buy and bill” payment model with Aaron Mitchell, MD, MPH. Dr. Mitchell is an oncologist and health services researcher over at Memorial Sloan Kettering.
You can learn more at drugpricinglab.org. You can also connect with Dr. Mitchell on Twitter at @TheWonkologist.
Aaron Mitchell, MD, MPH, is a practicing medical oncologist and health services researcher. He is an assistant attending at Memorial Sloan Kettering Cancer Center in the department of epidemiology and biostatistics. His research focuses on understanding how the financial incentives in the healthcare system affect physician practice patterns and care delivery to cancer patients. He cares for patients with prostate and bladder cancer.
04:34 Following the drug and following the dollar.
04:56 The “buy and bill” system.
05:43 The perverse and problematic incentives of the system.
08:38 “It creates the incentive for us to gravitate toward the more expensive drug.”
08:42 The hesitancy to address the financial toxicity of drugs for patients.
09:53 Why the only person losing in this situation is the patient.
10:51 The financial impact from the patient perspective.
13:57 Are patients realizing this impact?
14:42 Solving the problem of oncology drug choice.
16:45 Reimbursement reform.
18:24 Capitated systems and incrementalist impacts to reimbursement reform, and what these look like.
23:30 Are we at a tipping point?
23:51 “The current system … works too well for too many people.”
25:01 Who isn’t well served by the current system.
25:32 Who has to lead the charge for change.
28:28 Large oncology providers vs small oncology providers in the buy and bill system.