Home Archive Blogs Collections Podcasts Videos Info & Services
Skip Navigation LinksHome > Blogs > Musings of a Cancer Doctor > Just a Business
Musings of a Cancer Doctor
Wide-ranging views and perspective from George W. Sledge, Jr., MD
Saturday, December 01, 2012
Just a Business

Christopher Weaver of the Wall Street Journal has written the most fascinating medical oncology story I’ve read this year (WSJ 11/21/12: page B1).  Dr. William Kincaid of Union City, Tennessee, has entered a plea agreement (the first of many, the Journal avers) for purchasing and distributing foreign cancer drugs in violation of American law.  The drugs (Roche-Genentech’s Avastin and Rituxan) came to Johnson City via a Canadian Internet pharmacy, and were not “made in FDA-inspected facilities or labeled in accordance with U.S. law.”

 

The story is meaty, and spotlights many aspects of modern oncology practice. Let’s consider:

 

1.      The International Supply Chain: Kinkaid and his business manager are accused of receiving drugs illegally ordered over the Internet from a Canadian firm, Canada Drugs, in contravention of American law.  Canada Drugs, in turn, got its Rituxan from an Indian drug firm.  That firm had received the drugs from Roche, which made the antibody in Switzerland.

 

I rarely pause to consider how a drug gets into my infusion center, but the path of Rituxan in this case was a truly tortuous one. Dr. Kincaid’s nurses realized that something was amiss, and complained: the package inserts were written in Hindi, which apparently is not taught in the Union City school system.

 

2.        Globalization and its Discontents: The trek from Switzerland to India to Canada to Union City was made possible by the liberalization of global trade that occurred in recent decades. Liberalization has its limits. Why did Dr. Kincaid order a drug invented in California from a company in Winnipeg that obtained it from India? Because Americans pay far more for on-patent drugs than Indians (or Canadians) do. Dr. Kincaid could get the drug more cheaply by going outside the United States and exploiting that cost differential.

 

This differential has always had unintended consequences. I regularly had patients who found it cheaper to deal with pharmacies in Canada than ones in Indianapolis, some even taking a bus to Toronto to pick up their Arimidex. This was particularly the case before the passage of Medicare Part D oral prescription coverage. Oncotourism, if you will, with Ontario the beneficiary.

 

I always told my patients that if they could obtain their lifesaving drug at less expense, more power to them. I also told them that I had no way of knowing whether the drugs obtained there were legit, though my deep and abiding (and possibly unwarranted) faith in Canadian probity led me to think that they were probably just fine. Arimidex was Arimidex, after all. I certainly felt no sympathy for the companies who enriched themselves at the expense of my American patients, nor anything but contempt for the politicians who protected their scam.

 

3.        The Economics of American Oncology. Why did Dr. Kinkaid want to get a cheaper Rituxan or Avastin? Because American health care is bizarre. Oncology practices make their bacon (and pay their nurses) by prescribing intravenous drugs, with profit margins coming from the difference between what they pay a distributor and what they charge an insurer. The greater the differential, the bigger the profit. Though non-U.S. drugs accounted for only 3% of the drugs infused in Dr. Kincaid’s practice, he made $500,000 profit on the $2,000,000 he billed the insurers for them.

 

Oncology went from being a high-margin to a much lower-margin business in 2005, when Medicare changed its payment model, and margins for many drugs have continued to shrink.  Small oncology practices have been disappearing all over the country, being gobbled up by large (usually hospital-based) corporations.  This trend disturbs many, rightly or wrongly, but it is clearly based on changes in health care economics, changes in drug reimbursement prominent among them, that disincentivize small private practices.

 

We had, for a long time in oncology, the illusion of autonomy and bountiful plenty. Recent years have shown that we were never really in control of our destiny, but rather fortunate to be in the right place at the right time. That time is now over. We need, for a multitude of reasons, a new model of reimbursement, one that is more stable and less ethically dubious.

 

4.         The Oncologist as Outlaw Hero? If Dr. Kincaid wants to get his drugs more cheaply by ordering them from a Canadian company, why is this any different than any other business that orders its widgets overseas?  Isn’t that what globalization is all about? No one would object to Dr. Kincaid outsourcing dictations to Bangalore, after all. If Roche makes Rituxan in Switzerland and in California, and the only difference between the two is some paperwork (the Roche plant in Switzerland is not certified by the FDA to export Rituxan to the U.S.), does anyone really believe that Swiss Rituxan is any different than Californian Rituxan? Shouldn’t we celebrate Dr. Kinkaid’s circumvention of ridiculous American laws whose primary result is to enrich a foreign drug manufacturer? Isn’t he some sort of outlaw hero, deserving of  his own Country and Western ballad? Willie Nelson, perhaps?

 

5.         Drug Counterfeiting and Medicaid Fraud. Well, no. The Rituxan, Hindi package insert notwithstanding, was righteous, but the Avastin was not. When analyzed, the vials contained cornstarch and acetone, but no bevacizumab. Bev isn’t a wonder drug, but if you have metastatic colorectal or lung cancer it can prolong your life. The article states that the FDA “said it hasn’t learned of any patient harmed” by the fake Avastin, but this is only because coffins don’t carry stickers saying, “I was killed by a counterfeit drug.”

 

Drug counterfeiting is now a big business: $80 billion last year by one estimate I saw, and Avastin is apparently a favorite. In 2011 phony Avastin from Turkey found its way here via a British middleman. China is also a prominent source of counterfeits. The pharmaceutical industry has successfully fought against the passage of legislation mandating “track and trace” barcoding that would allow the FDA to follow drugs through the international supply chain.

 

Neither Dr. Kincaid nor (apparently) Canada Drugs were aware that the Avastin was fraudulent, but both bear some moral (if not legal) responsibility for the fraud, and whatever harm that fraud caused. Provenance is as important for drugs as for fine art, and in the era of gray market drugs circulating through the global supply chain it is harder to guarantee bona fides. Having the right widgets matters. If you forgo Uncle Sam’s laws, you forgo Uncle Sam’s protection, and shouldn’t be surprised when the fish you bought over the Internet stink when they arrive in the mail.

 

What’s more, Dr. Kincaid was charged with defrauding the government, over-charging his state’s financially stretched Medicaid program. He wasn’t Robin Hood: he was taking money from the poor.

 

I suspect many of us feel some sympathy for Dr. Kincaid. Medicaid is a losing proposition for a private medical practice, and as a result many practices refuse to accept Medicaid patients. This is particularly a problem in small towns in rural areas. We can imagine him rationalizing: I can keep providing care to Medicaid patients in Union City with the profits I make from the Swiss/Indian/Canadian Rituxan and Avastin. I’m not really hurting anyone, after all.

 

But this is the logic of bank robbers: I’m not really hurting anyone, after all. I’m not stealing anything from the depositors. The bank’s FDIC insured, they will get it all back.

 

6.          The High Cost of Cancer Drugs. No one counterfeits pennies: there’s no profit in it for the counterfeiter. Similarly, it makes little economic sense to counterfeit anything other than obscenely priced, high-margin, on-patent drugs. The global supply chain has allowed vermin to flourish in several dark corners of the world, and the regulators are having trouble keeping up with them.

 

Counterfeiting cancer drugs is despicable. Can you imagine anyone going home at night and telling his children “Today I sent off a batch of fake drugs to be used by a sick cancer patient”?  There is no excuse for this behavior. One hopes (in vain, I suspect) that the victims might have their revenge “in this world or the next,” to quote a favorite movie line, but patients with metastatic cancer are the most vulnerable people on earth. They don’t get justice. They just die.

 

It is the high price of the real drugs that drives the counterfeiting, just like it drives fake Hermes scarves, Prada bags, and Rolex watches. And it is the high price of the drugs, and the high margins one might obtain by using a non-U.S. source, that tempted Dr. Kincaid and (one suspects) the 155 practices in 33 states that have received warnings from the FDA.

 

The system’s economic reward to oncologists is the price differential, so we should not be surprised when some oncologists act like homo economicus and attempt to maximize that price differential on high-priced drugs. Disappointed, perhaps, but not surprised. It is a system designed to corrupt. We need to change the system, and we need drugs that are not priced up in the stratosphere.

 

7.         Just a business. There is often a temptation, by economists and others, to say of medicine “it’s just a business.” And medicine is a business: one-seventh of the multi-trillion dollar American economy, give or take a few bucks. But to view it as “just a business” is not just morally bankrupt, it is deeply impractical. Ignoring the ethical component of the business (in this case, failing to guarantee the bona fides of the drug supply in the interest of profit) violates the basic purpose of our business, which is to save lives. 

 

The great management expert Peter Drucker wrote that ”Profit is not an objective, but it is a requirement.” This is certainly true of medical oncology. We require profits to pay nurses and receptionists and store drugs and keep the lights on, and to make a reasonable living wage for ourselves, one that reflects our years of training, our long hours, and the emotional burdens we bear. But the objective of medical oncology is not to make a profit. It is to care for cancer patients.

 

As physicians we get our medical licenses and our privileges, and the comfortable living they afford, not just because we have specialized training, but also because our profession embodies an ethical tradition of caring for our fellow citizens. This privileged position is not, or should not, be just an economic fortress defended by lobbyists. We aren’t bankers. We’re doctors. We’re not “just a business.” Forgetting this will cost us all -- patients, physicians, and society -- in the long run.

About the Author

George W. Sledge, Jr., MD
GEORGE W. SLEDGE, JR., MD, is Chief of Oncology at Stanford University. His OT writing was recognized with an APEX Award for Publication Excellence in the category of “Regular Departments & Columns.”