Drugs and dollars

Hospitals’ back-breaking charges for cancer drugs add to the cruelty of the illness.

September 24, 2012 

If a person is diagnosed with cancer, there is one concern and only one on the minds of that patient and family members. That is to get high-quality treatment, period. That means high-quality doctors, high-quality hospitals and certainly the most effective drugs available to treat the disease.

But as a report from The News & Observer and The Charlotte Observer showed on Sunday, that single-mindedness in terms of putting care and compassion and cure before all else can prove financially devastating.

Perhaps it should not be a surprise after the newspapers’ series “Prognosis: Profits” in April, but hospitals’ charges for cancer drugs vary widely among institutions and in comparison with community cancer clinics (where charges tend to be much lower).

The hospitals charge such high prices to insured patients, spokespeople say, to help cover their charity care – the cost of treating those who are uninsured and who couldn’t otherwise afford to pay.

Here are some examples: UNC Health Care out of Chapel Hill was paid $267 for a dose of taxol, used to treat breast and ovarian cancer. The Medicare allowance for the drug is $36. UNC got $228 for nine units of cisplatin, which treats tumors. That is 14 times the average sales price of $1.80 per unit.

Duke University Health System charged $32,370 for rituximab, which treats lymphoma and leukemia. Duke settled for $19,420. Medicare would have allowed $6,420. Duke received $10,670 for a dose of Neulasta, which fights infections for those undergoing chemotherapy. Medicare would have allowed $2,800.

Billing for cover

Insurance companies negotiate some prices down, as they do for all hospital services. But the charges reflect the custom, in the American capitalistic health care system, of hospital cost-shifting – charging more for drugs or a particular service, far more than the actual cost with a profit, in order to cover that patient who has nothing and thus gets free care.

For the patient who has something, look out. The husband of a woman who was treated for ovarian cancer at UNC, Steve Rosenberg, has kept track of all bills (his wife is covered by Blue Cross and Blue Shield). The bills have amounted to $430,000 in total charges, with Blue Cross paying over $186,000 and the Rosenbergs paying over $27,000.

And what if he and his wife hadn’t been able to pay? As “Prognosis: Profits” showed, despite charity care it’s not uncommon for people to be sued by hospitals trying to collect, or for some people to go broke trying to cover expenses. So it goes with a system in which insurance companies, drug manufacturers and hospitals all want to stay healthy on their balance sheets.

Robust profits

And they do. Last year, UNC Hospitals had a profit of $133 million, reporting $75 million in charity care. Duke had a profit of $542 million. And the drug industry is healthy indeed.

President Obama’s Affordable Care Act is likely to cut down on cost-shifting because more people will have health insurance.

Under the current system, the same cancer treatments for which Duke and UNC and other large operations can charge top dollar cost much less in community clinics not affiliated with hospitals. But the consolidation of hospitals and doctors’ practices is giving patients fewer choices.

The primary concern of a person with cancer is, and should be, survival. Some critics of reform say the free market system is best because people can “shop around.”

But this is about life and death, not grocery coupons. Hospitals that charge a premium for drugs may in their minds just be dealing with a necessary evil of the American health care system. That doesn’t make it any less disgraceful.

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