Here we go again. The U.S. Food and Drug Administration’s decision earlier this month to withdraw approval for the cancer drug Avastin for treating women with advanced breast cancer was met with anguished pleas from patients, and accusations of government rationing from conservatives. Sen. David Vitter, R-La., called it a “government take-over of health care.” In the weeks leading up to the agency’s decision a column by right-wing blogger Neil McCabe was titled, “Death Panel Rejects Breast Cancer Patients’ Avastin Pleas.”
Such denunciations have become the predictable reaction to any recommendation against a medical treatment or test that people have come to believe is effective, even when evidence suggests otherwise. Americans don’t like being told they can’t have whatever they want whenever they want it, whether it’s a cancer drug, mammograms for women in their forties, or PSA testing for middle aged men. In the case of Avastin, five studies, all paid for by the drug’s manufacturer, found that the drug does not lengthen the lives of breast cancer patients. It can also cause a toxic mix of nasty side-effects, including severe high blood pressure, bleeding and hemorrhaging, heart attack or heart failure, and death. The company and some cancer specialists argue that the drug might be effective for a small sub-population of breast cancer patients, but they have yet to show who is likely to benefit and by how much.
The FDA did the right thing, and I don’t think it’s an exaggeration to say that rejecting Avastin could be one of the most important decisions ever made by a federal agency for the nation’s long-term fiscal outlook.
The reason is not just Avastin’s astronomically high cost. At $80,000-$100,000 per patient per year, or about $1 billion a year, it’s a pricey drug, to be sure. But the total cost, about $1 billion a year in the U.S., is only a tiny fraction, just over a third of 1%, of our $2.8 trillion health care bill. The importance of the FDA’s decision lies more in the signal it sends about our willingness to address health care spending head on.
Ten years ago, health care accounted for 20% of federal spending. Today, the federal government spends more on health care than it does on defense, because health care costs are rising faster than the rest of the economy. If the current trend continues, according to the non-partisan Congressional Budget Office, by the year 2082, health care will eat up more than half of our entire economy.
In other words, our long-term debt problem is really a health care spending problem. We can’t have a functional economy that’s half health care, and the question is not whether we will get our health care spending house in order, but rather how and when.
There are really only two ways to bend the health care cost curve, one of which is to slash the prices paid for medical services. That’s the path we are now set to take due to the Supercommittee’s failure to come to an agreement for fixing the federal budget. Congress has been left with the task of cutting reimbursements to hospitals, doctors, nursing homes and other health care providers by 2% per year for the next decade.
This might seem like the most direct way to cut costs, but it’s a mirage. Medicare already pays less for any given medical service than does private insurance, and more doctors will refuse to care for Medicare beneficiaries if rates drop further, at least as long as they can get higher reimbursement rates from private insurance. Many hospitals will also wriggle out of Medicare’s lower prices, most likely by engaging in cost shifting — charging higher prices to private insurers and employers to make up for the losses they incur taking care of Medicare patients.
Cutting Medicare reimbursements simply shifts costs to the private sector, without actually slowing health care spending. That means that many of us Americans under age 65 who are still working, paying our taxes and getting health insurance on the private market will continue to see our health care costs rise faster than wages in order to prevent health care providers from feeling the pain of lower Medicare prices.
The right way to cut health care spending has to begin with tough decisions like the FDA’s. Avastin is just one example of the dozens, perhaps even hundreds of drugs, tests, surgeries and medical devices that offer marginal, if any benefit to patients, which we pay for nevertheless. To take just a single example, it’s estimated that about one-third of the imaging tests, the hundreds of millions of X rays, CT scans and MRIs that are performed each year, do little if anything to improve doctors’ ability to diagnose their patients’ conditions or change the course of treatment they recommend.
The FDA’s decision about Avastin could not have been easy. The women who have taken it and who believe fervently that it is helping them have heart-rending stories to tell. But our addiction to expensive and marginally effective medical treatments is the road to economic ruin, and it’s crucial that we start to make rational decisions about what’s worth paying for — and the price we can pay. Until we are willing to just say no to treatments like Avastin, we won’t have a prayer of getting either our health care spending or our long-term debt under control.