The agency that runs the Medicare program decided in late March that it will pay for patients to receive an advanced new treatment for prostate cancer called Provenge.
The decision was cheered by patient groups. The pressure was intense as they demanded that the Centers for Medicare and Medicaid Services (CMS) pay for the pioneering vaccine that already had been approved by the Food and Drug Administration. Early signals indicated the agency might deny payment because the drug is expensive.
But Provenge is expensive because it is expensive to make. The drug is created individually using each patient’s own cells and costs $93,000 for the required three treatments.
Patients with advance-stage breast cancer, however, are not cheering.
In December, the Food and Drug Administration revoked its earlier approval for Avastin, a cutting-edge biologic drug used to treat breast cancer that also is expensive. The agency decided the medicine's potential side effects were too great compared to its benefits. Many are still wondering if cost was part of the consideration.
Genentech, Avastin's manufacturer, has appealed the ruling. But if the FDA decision stands, thousands of women who wanted and needed the medication won’t be able to get it.
Both decisions symbolize one of the most pressing problems with our health sector -- government controls too many medical decisions.
People over 65 have virtually no choice but to use Medicare for their primary health coverage. So if Medicare declines to pay for a drug, seniors are, for all intents and purposes, denied access to it. Many private plans follow Medicare’s lead.
The treatments Medicare covers are determined by government officials. There are private plans within Medicare, but they’re highly regulated and limited in the coverage they can provide.
Provenge and Avastin are just two examples of many in which government officials will be deciding what treatments will or will not be available to us. Many of these decisions will be under the radar for patients and doctors, never knowing that government officials may well determine whether or not a doctor can prescribe an important, but possibly costly, drug for them.
Decisions from Washington could limit access to a wide range of novel drugs and biologics. And it’s going to get worse under agencies created by the new health law. The new Independent Payment Advisory Board, for example, will have sweeping authority over payments in Medicare, and these unelected board members are specifically charged with focusing on payments for prescription drugs. In other countries with government-run heath systems, bodies like IPAB lead to explicit rationing.
Washington control ultimately will dictate which drugs are developed – or not. This will certainly deter innovation and development of tomorrow’s new medicines. Firms generally avoid investing in treatments if there is a risk the big government programs won’t pay for them.
In the case of the Avastin ruling, Genentech is likely to take a huge financial hit. Medicare and Medicaid will probably stop paying for the drug for breast cancer, and the firm will lose a huge share of the market.
And this is happening even after the drug received FDA approval. Avastin was approved in 2008 when the FDA first considered it. So this new ruling adds yet another degree of uncertainty to the federal drug approval process, deterring future pharmaceutical development not just for Genentech, but for every pharmaceutical research company watching this play out.
We need to reform the FDA drug approval process to gather information more quickly and efficiently. And we definitely don’t want government to have the final say on whether these medicines will be available to us.
Physicians, hospitals, and health insurance companies all conduct their own effectiveness research into drugs, devices, and treatments. These entities are closer to the patient and better-positioned to make the call about which treatments are worth paying for.
The government now controls half of all health spending in this country. Putting so much of our health sector under government control distorts prices and restricts choice. Instead, we should empower patients to have more control over health insurance choices. Prices need to be more transparent. And it should be up to individual patients, doctors, and their insurer to determine if a new drug should be covered. These vital decisions shouldn't be left to a distant government bureaucrat sitting in an office in Washington DC.
Our centralized healthcare system is dangerous to health and must be watched carefully. When bureaucrats, distant from the actual delivery of care, decide what treatments are "worth it," patients suffer.
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