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ProPublica: Medicare doctors waste billions by prescribing name-brand drugs

The doctor's office of Dr. Hew Wah Quon in the Chinatown neighborhood on Friday, November 1, 2013 in Los Angeles, Calif.
The doctor's office of Dr. Hew Wah Quon in the Chinatown neighborhood on Friday, November 1, 2013 in Los Angeles, Calif.
Patrick T. Fallon/ProPublica

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Millions of taxpayer dollars are being spent to pay for expensive and often unnecessary brand-name drugs.

A new investigative report from ProPublica shows a handful of doctors are writing prescriptions that cost Medicare $300 million in 2011 alone. The loophole in the government healthcare program makes it easy and legal for physicians to prescribe these drugs when cheaper, comparable generic drugs are available.

Reporter Charlie Ornstein of  ProPublica, in collaboration with Tracy Weber and Jennifer LaFleur, wrote an article and analyzed data surrounding these these prescribing habits

Interview Highlights:

On the loophole in the government health care program:
"Part D is the program that Congress created back in 2003 and started in 2006, which provides drug coverage to 36 million seniors and the disabled across the country. We wanted to look at how doctors were prescribing in this program. What we found was, the doctor you choose has a huge effect in terms of the medications you receive in terms of whether you receive drugs that are potentially harmful for you or whether you receive more expensive medications instead of generics that may work just as well."

On who is prescribing these expensive drugs:
"There are doctors all across the country, but really there's a pocket of doctors. There's about 900 doctors who are prescribing in ways that are just disproportionate from their peers. Way more brand-name drugs. These doctors on the whole cost Medicare $1 billion, in 2011, and we calculated that about $300 million of it could have been saved if these doctors practiced like their peers."  

On the reasons why they don't go with generics:
"One is that among these doctors, they have a lot of patients who receive what's called the low-income subsidy. For them, the cost of a brand name medication is under $7, no matter which brand name it is, compared to a generic, which is about $3. For somebody who is middle class and doesn't receive this extra subsidy, you're going to pay a lot if you're going to pay for a brand name drug that your insurer doesn't favor. You could pay more than $100, but if you're poor, you're going to only pay less than $7. So that's one factor, this low income subsidy takes away the incentive for patients to request a generic drug.

"The second thing is that among the doctors that were heavy prescribers of brand name drugs, they were far more likely to have relationships with the pharmaceutical industry. About half of them got $1000 or more from drug companies since 2009 compared to only about 15 percent of people who didn't prescribe like them."

On whether patients bear any responsibility to request a generic:
"When it's your pocketbook on the line you do that, but I think we need to realize that it's all of our pocketbooks that are subsidizing the Medicare drug program. The way the program was set up it takes away the incentive for those who have lower income to make decisions that may perhaps be based on cost. I don't think anyone is saying that no one should ever take a brand name drug, that's not the case at all. What we're saying is that if there are doctors who are just so far out on the margins that could save Medicare so much money, why aren't they being looked at?"

On the methodology of the study:
"We looked at the data and looked to see what the average prescribing was in every specialty in every state. So we were not comparing, say a psychiatrist with a dermatologist...Then we looked for doctors that were two standard deviations away from the average, which is statistical term to look for people who are really an outlier, so it's not just people who may have several more patients who are taking a brand name drug compared to others, it's people who really have a lot more. Interestingly we found a whole bunch of those in Los Angeles, and we found pockets in ethnic communities where there are a whole bunch of doctors that are outliers. 

"Particularly in Los Angeles is Chinatown and Koreatown that there are a number of doctors who extensively used brand name drugs, particularly in drug classes that there were generics available. When we visited those offices we found that they were not really affiliated with a larger medical center...Secondly, I think they have, what we found, relationships with large pharmaceutical industry. When we visited their offices we saw drug reps waiting to see them, dropping off samples, so there was a much more ongoing relationship with the drug industry."

On the relationship between doctors and drug companies:
"It's been speculated for a long time that doctors have a financial incentive to prescribe drugs for companies with whom they have a financial relationship. A lot of drug companies have now paid billions of dollars to settle claims from the government about improper marketing. And as a condition of those settlements they've agreed to post online the payments that they've given to doctors for speaking and consulting. Some doctors receive huge amounts of money and some receive little amounts of money, but studies have suggested that things as small as a meal or a small gift can influence a doctor's prescribing even if a doctor would say there is no way they could be bought for a meal."

On what Congress is doing to curb this issue:
"The president put in his 2014 budget a proposal to change the way that this is done and chance the copays for the low income to give them more of an incentive to prescribe generics. This could save not just hundreds of millions of dollars, but billions of dollars each year. Congress hasn't acted on it and the reason is there isn't a natural constituency calling for them to do that."