AEI's Gottlieb: Obamacare Program Increases Costs for Cancer Treatment

Wednesday, 31 Jul 2013 01:31 PM

By Dan Weil

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The Affordable Care Act extends a gimmick that increases the cost for cancer treatment and damages its quality, says Scott Gottlieb, a physician and resident fellow at the American Enterprise Institute.

"For cancer treatment, Obamacare is taking a rotten feature of the old system and making it worse," he writes in The Wall Street Journal.

That feature is the 340B program, "which siphons money from drug makers and insurers to subsidize certain hospitals," Gottlieb says. The program has been expanded under Obamacare.

Under the program, Gottlieb contends, eligible hospitals can buy drugs at forced discounts of 25 percent to 50 percent and "then bill government and private insurers for the full cost of the drugs, pocketing the spread."

"The arrangement gives 340B-qualified hospitals a big incentive to search for patients and prescribe lots of drugs. The costlier the drugs, the bigger the spread. So expensive cancer drugs are especially appealing," he adds.

The original idea was that only about 90 hospitals that care for a "disproportionate share" of poor patients would qualify, Gottlieb says. But by 2011, 1,675 hospitals, about one-third of the nation's total, were 340B-qualified.

"Now Obamacare is encouraging even wider 340B abuses. The new healthcare law expands 340B to cover cancer centers, new categories of hospitals and rural health centers."

According to Gottlieb, eligible hospitals are buying private oncology practices so they can purchase expensive cancer drugs at discount rates. As a result, less chemotherapy treatment is being given in doctors' offices and more in hospitals.

"When the practice of oncology shifts to outpatient hospital clinics, the care is often less comfortable and convenient for cancer patients — and more costly."

"The Obama team has used informal 'sub-regulatory guidance' to expand the 340B program still further," Gottlieb continues, adding that "the definition of a 'covered patient' for 340B purposes is so murky under . . . [certain] guidance that hospitals are able to buy and bill discounted drugs for patients when the hospital merely serves as a conduit and doesn't give direct patient care."

All of it has generated an increase in abuse, Gottlieb concludes.

"One of the rationales behind the Affordable Care Act was that the law would end the gimmicks that distort incentives and drive up costs. In the case of the 340B program and its effect on cancer treatment, the law has only further distorted an already expensive gimmick."

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