An article in the Washington Post is just one more chapter in the book of the screwed up American medical system. It's about two eye drugs, Avastin and Lucentis, virtually the same, both equally effective. One costs $50. The other costs $2,000. Guess which is prescribed a half million times a year?

 

Genentech, a division of the Roche Group, makes both products but reaps far more profit when it sells the more expensive drug. Although Lucentis is about 40 times as expensive as Avastin to buy, the cost of producing the two drugs is similar, according to scientists familiar with the drugs and the industry.

Doctors, meanwhile, may benefit when they choose the more expensive drug. Under Medicare repayment rules for drugs given by physicians, they are reimbursed for the average price of the drug plus 6 percent. That means a drug with a higher price may be easier to sell to doctors than a cheaper one. In addition, Genentech offers rebates to doctors who use large volumes of the more expensive drug.

The article estimates that the drug is costing Medicare an extra $1 billion a year.

The story is just the latest in the year's litany of what is wrong with out healthcare system. In February, Time magazine had a story on the illogic of the hospital chargemaster and the wide difference hospitals charge for the same procedure and in November the Journal of the American Medical Association found that despite the fact that Americans pay much more for their medical care than peer nations, they are sicker.

The Harvard Business Review in October published an opinion piece that the system can be fixed:

 

We must move away from a supply-driven health care system organized around what physicians do and toward a patient-centered system organized around what patients need. We must shift the focus from the volume and profitability of services provided—physician visits, hospitalizations, procedures, and tests—to the patient outcomes achieved. And we must replace today’s fragmented system, in which every local provider offers a full range of services, with a system in which services for particular medical conditions are concentrated in health-delivery organizations and in the right locations to deliver high-value care.