Landmark Medicare Law Had Little Impact on Reducing Chemotherapy Cost

Posted in News Release

WASHINGTON (Sept. 29, 2014) — Legislation passed in 2003 to slow the spiraling costs of drugs paid for by the federal government to treat Medicare patients has had no meaningful impact on cancer chemotherapy drug costs, say a team of researchers in the Journal of Clinical Oncology published online Sept. 29.

“We looked at use of outpatient chemotherapy to treat colorectal and lung cancers, and did not find a substantial change in how oncologists prescribe those drugs following the implementation of the recent Medicare law in 2005,” says the study’s senior author, Arnold L. Potosky, PhD, a professor in the department of oncology at Georgetown Lombardi Comprehensive Cancer Center.

“Economists expected a sharp decline in use of the most expensive drugs targeted by the law, because reimbursement to oncologists for these drugs was reduced, but that did not happen,” says Mark C. Hornbrook, PhD, of Kaiser Permanente Northwest, the study’s lead author.

In fact, the authors note that not only did the policy fail, cancer care cost has skyrocketed. During the decade after the law passed, the aggregate cost of cancer care increased by as much as 60 percent, even though cancer rates had fallen.

Among other provisions, the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) reduced the reimbursement to cancer clinics on some oncology drugs.  One notable example: reimbursement of a typical daily dose of paclitaxel, a widely used chemotherapy, was reduced from $1,245 in 2004 to $135 in 2005, when that provision of the law went into effect.

Profit on federal Medicare reimbursement on high-priced drugs is a significant source of revenue in many fee-for-service cancer clinics — drugs that medical oncologists are often able to purchase substantially below wholesale prices yet bill the government for higher fees.

Examining 5,831 chemotherapy regimens for 3,613 patients, the researchers found that use of MMA-affected chemotherapy drugs slightly declined after the law in fee-for-service clinics.  Use of the same drugs was, in contrast, slightly higher in integrated health networks.  These are HMOs and other systems where physicians are on salary — prescription choices make no difference in their incomes.

The researchers cannot say why the MMA had no significant effect on prescribing habits in this slice of the cancer care community, but they theorize that oncologists based their decisions, in part, on evidence-based medicine, which could include use of newly approved, expensive agents.

In addition to Hornbrook and Potosky, authors include Jennifer Malin, Veterans Affairs Medical Center and UCLA; the late Jane C. Weeks, Dana-Farber Cancer Institute; Nancy L. Keating, Brigham and Women’s Hospital; and Solomon B. Makgoeng of Georgetown University Medical Center.

The study was supported by grants from the National Cancer Institute (U01 CA093344, U01 CA093332, U01 CA093324, U01 CA093348, U01CA093329, U01 CA093339, U01 CA093326) and from the U.S. Department of Veterans Affairs (CRS 02-164).

About Georgetown Lombardi Comprehensive Cancer Center
Georgetown Lombardi Comprehensive Cancer Center, part of Georgetown University Medical Center and MedStar Georgetown University Hospital, seeks to improve the diagnosis, treatment, and prevention of cancer through innovative basic and clinical research, patient care, community education and outreach, and the training of cancer specialists of the future.  Georgetown Lombardi is one of only 41 comprehensive cancer centers in the nation, as designated by the National Cancer Institute (grant #P30 CA051008), and the only one in the Washington, DC area.  For more information, go to

About Georgetown University Medical Center
Georgetown University Medical Center (GUMC) is an internationally recognized academic medical center with a three-part mission of research, teaching and patient care (through MedStar Health).  GUMC’s mission is carried out with a strong emphasis on public service and a dedication to the Catholic, Jesuit principle of cura personalis — or “care of the whole person.”  The Medical Center includes the School of Medicine and the School of Nursing & Health Studies, both nationally ranked; Georgetown Lombardi Comprehensive Cancer Center, designated as a comprehensive cancer center by the National Cancer Institute; and the Biomedical Graduate Research Organization, which accounts for the majority of externally funded research at GUMC including a Clinical and Translational Science Award from the National Institutes of Health.