Wasting Medicare Money?

Here’s a clever idea for how to save Medicare some cash without hurting patients. Don’t pay for treatments found to be useless.

FLOYD NORRIS

Notions on high and low finance.

The Food and Drug Administration today revoked the approval of the drug Avastin as a treatment for breast cancer, saying, according to the Times article, that “the drug was not helping breast cancer patients to live longer or control their tumors, but did expose them to potentially serious side effects such as severe high blood pressure and hemorrhaging.”

Notions on high and low finance.

The drug remains on the market for other uses, meaning doctors can prescribe it if they wish to do so. The article states it is most likely that private insurers will refuse to cover the $88,000 cost of the drug, but that “Medicare, however, has said it would continue to pay for the drug’s use in breast cancer.”

How can that be?

The article explains:

Medicare is obligated to pay for off-label use of cancer drugs that are listed in references known as compendia, such as the one published by the National Comprehensive Cancer Network, an organization of major cancer hospitals.

In July, shortly after the F.D.A. advisory committee voted to revoke the approval, a committee of breast cancer specialists assembled by the cancer network reaffirmed that Avastin should remain listed as “an appropriate therapeutic option for metastatic breast cancer.”

So a committee that includes doctors who may stand to profit from getting the government to pay for useless medicines — or even have ties to the drug maker — can get to overrule the F.D.A. on how to spend scarce taxpayer money.

Can anyone explain why there should a law requiring that Medicare to pay for off-label uses, other than by referring to the lobbying power of pharmaceutical companies such as Genentech, which makes Avastin?

Podcast: Insider Trading, Job Creation and Fighting Cancer

A federal judge in Manhattan this week imposed the longest insider-trading sentence ever in the United States.

In a conversation on the new Weekend Business podcast, Peter Lattman, who covered the sentencing of the hedge fund manager Raj Rajaratnam in the case, says the government argues that it will have a powerful deterrent effect.

Mr. Lattman said that it contrasts, however, with a comparative lack of prosecutions, convictions and long sentences for executives whose firms may share responsibility for the financial crisis that began in 2007.

In a separate conversation, Robert Shiller, the Yale economics professor, discusses the argument he makes in the Economic View column in Sunday Business that the government should put people to work in large-scale infrastructure projects. The proposal was included in President Obama’s American Jobs Act, which was blocked at least in its full form by the Senate last week.

Natasha Singer talks to David Gillen in the podcast about her Sunday Business cover article on the “pinking of America” — the rise of a marketing powerhouse in the fight against breast cancer.

And Steve Lohr discusses the importance of default choices on the Internet and in other parts of contemporary life. As he says in the Unboxed column in Sunday Business, much of the Internet is wide open, but the design of Web sites and the order of Web searches helps to determine what consumers actually see and select.

In the news portion of the podcast, I discuss the Nobel prize in economics, which has been labeled a “Non-Keynesian Nobel.” In my Strategies column in Sunday Business, Professor Christopher Sims of Princeton, one of the new Nobel laureates, makes it clear that he actually places his research within the Keynesian tradition.

You can find specific segments of the podcast at these junctures: the insider trading case (30:23); news headlines (23:50); fighting breast cancer (21:23); Robert Shiller (11:55); designing for the Web (7:36); the week ahead (1:48).

You can download the program by subscribing from The New York Times’s podcast page or directly from iTunes.