The Market for Suboptimal Cancer Care
posted by Frank Pasquale
If you know anyone with cancer, today’s story in the NYT (“Market Forces Cited in Lymphoma Drug’s Disuse“) is a must-read. It shows why patients need to understand not only some medical science when evaluating a doctor’s advice, but also the field of insurance law and health financing that shapes treatment patterns.
The story focuses on development of “new class of drugs [Bexxar and Zevalin] called radioimmunotherapies” for non-Hodgkins’ lymphoma–the “fifth most common cancer in the United States, with 60,000 new cases and almost 20,000 deaths a year.” Both Medicare and private insurers provide financial incentives for doctors not to use the drugs–which may not be surprising given the survivors’ costs issues I blogged earlier. In part because of these incentives, “many doctors prescribe Bexxar and Zevalin only as a last resort, when they are unlikely to succeed because the cancer has advanced.”
What’s really astonishing is how, even if one gets rid of the survivors’ costs issue, incentives in the current insurance market can lead to courses of treatment that are costlier than higher-quality alternatives. Bexxar costs $25K, and need only be given once in most cases, while the cost of the currently prevalent Rituxan is $20K. Rituxan may end up being given many more times, and so its cost may quickly supplant that of Bexxar.
One would think that a private insurer would opt for the Bexxar, given that the cost of Rituxan might quickly outstrip that of Bexxar. However, Americans frequently switch insurance plans, and that churn can make it economically rational for an insurer to focus on short-term instead of long term costs. As the article concludes, “market-driven forces . . . [can result] in high costs but not necessarily the best care.” Any medical advice probably has to be interpreted in light of our system of money-driven medicine.
July 14, 2007 at 12:40 pm
Posted in: Economic Analysis of Law, Health Law
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Responses (5)
BennyAbelard - July 14, 2007 at 2:38 pm
At yet somewhere, at this moment, Gordon Smith is repeating his trope about the American system with its fantastic “access and innovation”.
Don’t mean to pick on Professor Smith, I’m sure lots of others are also saying such things. But isn’t the whole point of this story that ordinary affluent Americans who thought they had adequate health insurance don’t have access to new medical innovations? What our healthcare system provides in spades is “profits and political muscle”.
http://www.theconglomerate.org/2007/04/the_democratic_.html
http://www.theconglomerate.org/2007/07/fred-wilson-get.html
Maryland Conservatarian - July 14, 2007 at 3:36 pm
what are the odds that it turns out all the smart people who know best how to run our health care system went to law school instead of pursuing a career in the health care industry…that’s the real tragedy – that we don’t earlier identify these good and noble people (i.e. Ms. Clinton)and, instead of letting them waste their time at Yale Law, push them into years of grueling study in Med School followed by long hours of research into potential cures, the success of which is not guaranteed..sigh…what a waste
Scott Moss - July 14, 2007 at 11:04 pm
I sense an attempt at snarkiness coming from Maryland C., but of an unintelligible sort. Let me ask: do you actually disagree with Frank’s point that insurers:
(1) have an incentive to skimp, (2) especially given how a number of people bounce from plan to plan, and
(3) that this sort of cost-cutting may economically rational but socially sub-optimal, and
(4) that this may be an inefficiency that’s hard for market forces to discipline because of the very limited choice most Americans have as to their health plans.
Seriously, what if any part do you disagree with — or, as I suspect, does your knee jerk right when you read any criticism of the current health care system, even if the critique is that more people are dying of cancer due to the incentive structure of the health insurance industry?
David Schwartz - July 16, 2007 at 8:36 am
In every insurance field, the insurer has an incentive to pay out as little money as possible, even at the expense of the insured.
I think this example is theoretically interesting, but not sufficiently relevant to the real world. It is certainly true that something that costs less in the short term but more in the long term might be preferred by an insurance company that is not assured its customer will stay with it.
However, realistically, people will serious illnesses don’t switch insurers very often.
The root cause of this specific problem is structural. The tie between doctors and insurance companies is too tight. Doctors should be interacting with patients and recommending procedures based on their professional judgment with no regard for the insurance company’s procedures.
They can, of course, continue to explain the insurance company’s procedures and what the effect of those procedures on the patient’s medical care might be. But first and foremost, they owe their patients an unbiased assessment of what they think is best. That is certainly part of what they’re paying for.
Betsy de Parry - July 16, 2007 at 2:40 pm
I am one of the patients Alex Berenson interviewed for the Times article. As the author of a book about my experience with lymphoma, I regularly hear from patients around the country. Few are offered Bexxar or Zevalin as options. The most common “reasons” are outlined in an essay I recently wrote for our local newspaper, The Ann Arbor News. The link follows:
http://www.mlive.com/annarbor/stories/index.ssf?/base/news-0/1181458985115390.xml&coll=2
What is also disturbing is the cost of treatment. When the cost of chemotherapy-related side effects is added the cost of the drugs themselves, the result is that Bexxar and Zevalin are bargains! My actual costs, which I cite in the essay, were $36,929.50 for RIT, including the drugs, scans and all necessary medical visits. In a twelve month period, the additional costs for chemotherapy and chemotherapy-related side effects was $162,409.72.
If Bexxar and Zevalin were used more frequently, everyone would win. Insurers could save thousands by simply providing incentives for oncologists to use the drugs. Since the treatment takes only one week, patients could avoid months of treatment and side effects and get back to their lives much faster. And employers would have employees back to work quicker.
I am enormously grateful to Alex Berenson and The New York Times for shining the light on this unfortunate situation. As I stated in the article, I truly believe that patients with all types of illnesses deserve to know all their options. It is only too bad that we patients must often find them for ourselves.
Betsy de Parry
Author, “The Roller Coaster Chronicles”
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