rich-doctor-pennybagsOn Wednesday the authorities released the detailed information on how much Medicare pays out to physicians around the nation. And there’s been a lot of commentary on how amazing it is that some handful of doctors are earning tens of millions of dollars out of the system. It was also quickly noted that the top earning doctor, gaining over $20 million in one year from Medicaid, was currently being prosecuted for trying to rip the system off. So that’s OK then, the Feds are already onto this.

However, it’s all becoming a bit more complex as more information comes out about what has been going on. The first and most obvious point to make is that this doctor, Solomon Melgen, didn’t actually “earn” $21 million from Medicare at all. That’s what he was paid. And Medicare payments include the costs of the treatment as well as the payment for the labour of the doctor administrating it.

The secret becomes a little more obvious when you think that Melgen is an opthalmologist and that he’s practicing in South Florida. Where, rumour has it at least, there are quite a lot of old people. Add in a little more: one of the most expensive treatments (other than weird cancer ones applicable in small numbers) to come to market in recent years is the use of Lucentis for wet macular degeneration. $2,000 a pop, a course of treatment is in the $50k to $60k range. And yes, wet macular degeneration is a common enough disease that leads to blindness in the elderly.

So, one way of reading the story is simply that the right sort of doctor in the right sort of part of the country to have a patient base needing this new and expensive treatment gets paid a lot by Medicare. So what?

Except we come to another point of this story, which is that Lucentis and Avastin (a treatment for colon cancer) are in fact the same drug. Except that Avastin hasn’t been tested on wet macular degeneration and Lucentis has. Oh, and that Avastin can be had for $50 a pop. Yes, they’re both made by the same company, Genentech, and a doctor can use Avastin if they wish to: off-label uses are entirely legal. But the doctor gets to decide which drugs his patient gets and that’s probably how we want that government funded health care system to work. The doctors’ compensation is 6% or so of the drug bill with a minimum fee so one can see why one drug might be preferred over another. But obviously in this case it was entirely for purely medical reasons.

So we’ve got a bit of dodginess around the patent and marketing status of the two drugs. But here’s where the story gets really bizarre. For what is it that Melgen is being prosecuted for? If he’s just giving and expensive drug to patients who need it, as he’s allowed to prescribe, what’s the problem?

This:

According to the audit, the FDA-approved labeling for Lucentis stated that physicians should use one vial of the drug for each patient, at a cost of about $2,000. Each vial contained four doses, but the labeling stated that physicians should use only one dose for each patient and discard the excess amount, the audit said.

In 2007 and 2008, Melgen typically used each vial to treat four patients and billed Medicare for $8,000, according to the audit. He continued that practice through June of last year.

Well, that’s very naughty of him… wait, what?

The regulatory bureaucracy itself is insisting that 75% of the doses of one of the country’s most expensive drugs must be thrown away?

I’m not a fan of the US health care system the way it was and I’m not a fan of the way it is now either. But there are times when I think the Carthaginian solution is needed: raze it to the ground, sell the population into bondage and plough the land with salt then start again. Then I calm down a bit and think only that radical reform will do: which has to start with the admission that the FDA is at least a part of the current problem.

[illustration by Brad Jonas for Pando]