A respected group of cancer specialists developed a chemotherapy program for a breast cancer patient. But then her insurance company denied the claim, so the cancer center stuck her with a bill three times as large as what they would have required from the insurance company.
In June of 2012 Ann Marie O’Callaghan got some of the most terrifying news a woman can get: she had breast cancer. Worse, Ann Marie was only 39 at the time and the oldest of her two children was about to go into kindergarten.
Cancers that strike young women can often be very aggressive, but fortunately there were proven treatments for her particular breast cancer. After six months of intensive chemotherapy her stage III tumor had shrunk to become a stage I tumor which could be removed by a simple lumpectomy. After she received local radiation treatment to her breast there was good reason to believe she might be cured.
Then, last summer, her cancer came back. It was only a small, locally recurring tumor, but any cancer that recurs is likely to be tougher to treat because it’s already learned to survive the original therapy. Ann Marie wanted to be able to raise her children, so she returned to the same specialists who had knocked her cancer back the first time.
A nurse anesthetist herself, she knew to consult internationally respected oncologists at the Baylor College of Medicine. They recommended a chemotherapy regimen that included an new agent called Perjeta because it had already been shown to be very effective against her type of cancer.
Then her insurance company (Blue Cross) got involved. Blue Cross didn’t think that drug was appropriate for her, so they refused to pay for it. The medical director at Blue Cross, whose specialty is treating allergies in children, decided the oncologists at Baylor were wrong. The oncologist at Baylor appealed, but the Blue Cross allergy doctor held fast.
This story shouldn’t be news to anyone by now. Here in America refusing to pay for necessary medical treatment is what our private health insurance companies do best. So Ann Marie was left with the choice that even insured Americans sometimes face: your money or your life! Pay for the treatment with your own money or succumb to your disease.
Of course I’m not qualified to evaluate her oncology team either. I can only say that a woman was facing a deadly disease and got some of the best available medical advice on how to fight it. And her insurance company decided that they knew better.
So, how much was Ann Marie expected to pay?
As a new chemotherapy agent, Perjeta is very expensive. A single 420 mg dose can be purchased directly for about $5,000. Medicare pays about $4,290 per dose, and Blue Cross can get it for $4,133 (they accidentally paid for the first 840 mg double dose and then asked for their money back). But Cancer treatment centers pay wholesale prices for chemotherapy drugs, as a recent episode of 60 Minutes revealed, so they usually make a very good profit from any of these payments.
So which of these prices did Ann Marie pay? Because her insurance declined it, she was expected to pay the full billing charge of $12,226 for each 420 mg dose of Perjeta. That’s almost three times what Blue Cross would have paid. As a result, her total bill for just the Perjeta was $61,131.
Why was she expected to pay so much?
Here in the US we have a very bizarre system of medical billing. Most health care providers send hugely inflated bills to insurance companies, and then settle for the small fraction (typically about 20-30%) that the insurance company decides to pay them. In other words, not only do we pay about twice as much for our healthcare in the US as they pay in other Countries, our insurance companies are billed an average of four to five times that amount.
So hospitals and other healthcare providers routinely give insurance companies 70-80% discounts off the billed charges for medical services. The uninsured might get discounts too, though usually smaller.
But if you have insurance, and your insurance company denies a claim for any reason, hospitals insist that they are obligated to bill you the full amount for that service.
Put another way: patients aren’t just expected to pay for their medical services when their insurance company refuses, they’re expected to pay many times the cost of those services. What’s more, no one ever has to tell a patient in advance how much they’ll be billed for a medical service. Ann Marie was told in advance, because the oncology clinic at Baylor told her she would have to pay the full $12,226 for each dose of Perjeta before she could receive it– there were no payment plans allowed.
The hospitals and medical clinics insist they are forced to do this by law. Of course the reward here for being such law-abiding citizens is another $8000 profit on top of the profit they would already make, so I haven’t seen a lot of evidence of hospitals fighting this obligation. Since Ann Marie’s insurance company refused payment, Baylor Medical College was able to collect three times the amount Blue Cross would have paid them. This is a bit of a win-win for hospitals and clinics.
So patients in the US are effectively fined thousands of dollars any time they follow the advice of their doctor against the wishes of their insurance company. And the money goes straight to the hospitals and other medical providers.
Ann Marie was able to pay the full $61,131 for her Perjeta after she sold some of her property, but her story provides yet another example of the many ways in which our health care payment system through private insurance companies is completely broken. Her story also shows how hospitals and health insurance companies in the US have managed to make paying for cancer treatment almost as painful and terrifying as cancer itself.
David Belk, MD practices in Northern California. He blogs at truecostofhealthcare.org. His posts also appear on the Huffington Post where this post was first published.
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My daughter’s story was on Channel 2 in Houston tonight. You can see the interview at the link below. Bill Spenser did an excellent job covering the story. Be sure to see Baylor’s response on why they charge more than 3 times what they accept from insurance or medicare for this life saving drug. Also see why they blocked access to the drug Perjeta at prevailing retail price from Walgreens.
Please consider passing on this link to your friends.
http://www.click2houston.com/news/investigates/patients-being-forced-to-choose-between-life-money
Ann Marie’s interview with the NBC affiliate in Houston will be broadcast tonight, Tuesday, February 9th at 10 pm CST. To stream the broadcast of Ann Marie’s interview, try the Channel 2 Live Link. The link below is Channel 2 Live (KPRC) Broadcast in Houston. The time for local news broadcast of the interview is 10:00 to 10:30 PM (central standard time). http://www.click2houston.com/live/watch-live-kprc-2-news
Congressman Lloyd Doggett of Austin was also interviewed by the NBC affiliate. He is one of the few U.S. Congressmen from Texas interested in solving the problem of excessive pricing for prescription drugs.
Aside from Maryland’s hospital rate regulation law and California’s Hospital Fair Pricing Act, no state, federal or local law limits what hospitals can charge their patients. Hospitals are free to set their own prices, and each hospital does so in a complex document called the “chargemaster.”
In 1971 Maryland established a commission to review prices in the “chargemaster”. http://www.hscrc.state.md.us/ Healthcare in the US is not a market driven business. They can charge whatever they want and you have no real protection, unless you are an insurance company.
Very true that Dr. Belk’s article describes the disgusting behavior of a not-for-profit hospital, Baylor College of Medicine in Houston.
However, if you or family and friends ever find yourself in the fight with cancer and need help, please contact the drug manufacturer’s your doctor’s rely on for the treatment. This will bypass the risk of disgraceful behavior of the hospital and may open the door to lessen the financial burden.
It didn’t help in Ann Marie’s case, but it may be where you can find help if the situation arises. Just don’t give up the fight.
The medical piece of this discussion is way beyond my level of understanding. However, the corruption involved in charging an individual 300% more, for a potentially life saving drug, than the insurance company would be required to pay, is not. It is a great example of a failed system that makes families, of all creed, color, socio economic backgrounds, choose between bankruptcy and a life saving cancer treatment. Also consider that for many people, bankruptcy wouldn’t even be an option. They wouldn’t be able to get that amount of money, period.
Reading the NCCN guidelines on treatment of her2 locally recurrent breast ca will show you that this IS the recommended treatment despite the narrow FDA wording due to the fast tracking of this drug mentioned by Cajun. Posting a lot of info on metastatic her2 cancer is completely missing the point. Although if one has metastatic breast ca they also deserve their medication as anyone else does & at a reasonable cost. The cost in this article is $4100 for the insurance & shouldn’t be increased 300% for the patient.
Also, as already stated this article is focusing on price gouging by hospitals of cash paying patients. A patient, who can actually get the market cost Perjeta, should be allowed to receive a drug at a reasonable cost despite anything to do with insurance. Hospitals & insurance companies are making huge profits and patients are no longer the focus. They already make a profit on the negotiated insurance rates. This is why healthcare costs in U.S. are more than anywhere else & why our insurance premiums are insanely high.
I agree completely with you. We have the same price gouging law in Texas, but can only be enforced when the Governor declares an emergency and the product is in short supply.
There is only one state in the US that protects a patient from price gouging by a hospital or medical service facility and that is Maryland. In 1971 Maryland created a board that oversees the hospital billing for services and supplies.
Yes I agree, the story is about price gouging on defenseless patients.
Here in NC (and maybe other states) there is a law that treats price gouging during natural disasters as a felony. You have to wonder why these patients are not protected during their own personal disasters.
Ann Marie is my daughter. I am very grateful to Dr. Belk for compiling this well written and fully documented piece on legal price gouging for a life saving drug. You would not expect this could happen when a patient is at their most vulnerable point in life and in need of support, to be firmly refused the insurance negotiated as initially promised. But then require 3 times the price that is accepted from her insurance and get away with it.
I was there and saw what they did. Each time requiring cash payment before releasing the Perjeta on the day of her infusion. They would not negotiate the price and they would not accept the offer by Walgreen’s Specialty Pharmacy to handle all coordination of the Perjeta supply for infusion at the lower retail price. I have yet to find a kind word for these people.
Immediately after finishing her last infusion, I wrote to the CEO of Genentech by certified mail to inform him of the egregious pricing of their product and request his thoughts. I also established a contact with Congressman Elijah Cummins office in DC. Congressman Cummins is the ranking member of the committee investigating the high price of Prescription drugs. In a later contact I also suggested a prominent oncologist at Houston’s MD Anderson Cancer Center testify at the committee meetings on the high price of cancer drugs. I am optimistic that Congressman Cummings will call strong attention to the issue.
Ann Marie was interviewed by Bill Spencer of the NBC News affiliate in Houston last week. We are expecting the interview to be featured next week on Channel 2 Houston. You may recall it was Bill Spencer who covered the Pamela Smart case for murder of her husband in 1990. I’m hoping Bill Spencer will bring more attention to this issue in Houston.
With all due respect I fail to see the relevance of your comment to Dr. Belk’s article. You have changed the topic to a discussion on the cost of treating metastatic breast cancer with Perjeta.
The decision not to cover the cost of Perjeta by Blue Cross Blue Shield (BCBS) of Texas for Ann Marie’s case has nothing to do with metastatic breast cancer. Many patient’s at Baylor’s College of Medicine in Houston are now receiving Perjeta with the cost fully covered by their health insurance. The use of Perjeta appears to be moving to the standard of treatment in combination with Herceptin and Docetaxel. This is true for both early stage HER2+ breast cancer and metastatic.
Ann Marie’s case is one of locally recurrent HER2+ breast cancer. The cancerous area was found very early and a radical mastectomy was completed to surgically remove the cancer. BCBS of Texas apparently used the very narrow wording of the FDA approval to claim treatment of locally recurrent HER2+ breast cancer with Perjeta as experimental.
Perjeta was approved on a fast track with the FDA due to it’s relative higher effectiveness. In combination with Herceptin it apparently closes the door to secondary mechanism at the HER2 receptor responsible for cancer cell growth.
We are working on a complaint to the Texas Board of Insurance based on BCBS decision and in view of NCCN Guidelines and the Baylor Breast cancer Tumor Board recommendation.
Dr. Belk,
As you are undoubtedly aware, the CLEOPATRA trial, which reviewed the performance of Perjeta (Pertuzumab) showed that, when administered in conjunction with Docetaxel and Trastuzumab in first line chemotherapy, produced an average 15.7 month increase in survival benefit.
That said, the authors of the report delivering this good news also note that Genentech’s price for adding pertuzumab to gain one Quality Adjusted Life Year is a breathtaking $713,219. As a result, they conclude that ““The addition of pertuzumab to a standard regimen … for treatment of metastatic HER2-overexpressing breast cancer is unlikely to provide reasonable value for money spent in the United States compared with other interventions generally deemed cost effective. This analysis highlights the economic challenges of extending life for patients with non-curable disease.”
In other words, the health plan’s decision to not cover pertuzumab may have differed with the Baylor oncologists, but it was consistent with the evidence in the medical/scientific literature.
Another issue here is that, contrary to your descriptions, treatments in these cases generally are not cures. There is a huge difference, and we need to keep that difference in mind.
As for charging the patient 3 fold for the drug because her health plan didn’t cover it, this type of profiteering by health systems and other providers is commonplace but clearly unethical and it should be illegal.
Brian Klepper
904.343.2921, brian.klepper@healthvaluedirect.com