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Busting the Myth of “Perverse Physician Incentives” to Prescribe High-Cost Drugs

Authored by

Nicolas Ferreyros, Director of Communications, Community Oncology Alliance


J Clin Pathways. 2019;5(3):8.

COAAs proposals directed at reducing the cost of prescription drugs are being discussed at the national level, the Community Oncology Alliance (COA) has taken a closer look at the assertion that oncologists who prescribe and administer drugs within the Medicare Part B system are incentivized to prescribe more expensive drugs for profit. As it turns out, the studies cited to support this claim do not hold up under scrutiny and are more myth than fact.  

In a recent analysis titled “The Myth of Perverse Incentives: Examining Research and Accusations in the Medicare Part B ASP Reimbursement System for Oncology,” a volunteer group of COA members evaluated 5 often-cited studies that critics use to support claims that a prescribing incentive exists that affects which Medicare Part B drugs patients with cancer are prescribed. Included in the evaluation is a sixth study that was published in the Journal of Oncology Practice in December 2018.

COA’s investigation revealed that the studies used to support such claims often ignored contributing factors beyond drug prices. “In many cases, study authors—most of whom are neither practicing physicians nor oncologists—demonstrate a lack of clinical knowledge and judgement that influence the treatment decisions oncologists and their patients make in determining optimal cancer treatment,” COA states in the paper. “This leads the studies to confuse or conflate correlation with causation in prescribing where none exists.”

The analysis found that several of the studies were based on patient data from before the Medicare Modernization Act (MMA) of 2005, which means the authors drew conclusions about prescribing patterns and behavior based on a completely different reimbursement system. The MMA set the reimbursement rate for drugs at the average sales price of the drug plus 6% which was intended to cover costs associated with things such as the procurement, storage, preparation, and waste disposal for chemotherapy drugs, which are highly toxic. Thus, data from before the MMA’s implementation cannot be used to justify the conclusion about physician prescribing patterns.  

Likely due to their lack of experience in oncology and patient care, the authors of these studies also failed to analyze factors such as patient status, drug toxicity, drug efficacy, changes in treatment protocols, and the development of better drugs. In many types of cancer, treatment protocols have advanced to the point where study conclusions are no longer applicable to cancer decision-making and prescribing. 

In addition to critiquing studies commonly cited to support the now-disabused claim that physicians are incentivized to prescribe more expensive drugs for profit, the COA paper highlights 5 studies on physician prescribing patterns that reached very different conclusions yet are often overlooked. 

With no compelling evidence of a perverse incentive in oncology prescribing within the Medicare Part B system, COA firmly believes that other factors which influence the cost of drugs should be examined. These include profit incentives in the federal 340B drug pricing program, the impact of site differential payments (between hospitals and independent practices), or the utilization of middlemen, such as pharmacy benefit managers.  

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