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Sequester expected to cost Roswell Park $6 million in research funds

Researchers trying to find a cure for cancer in Buffalo labs and doctors fighting cancer in their patients’ bodies are bracing for the effects of across-the-board federal cuts resulting from Washington’s ongoing budget battle.

The National Institutes of Health, the federal agency that allocates grants for cancer research, faces a $1.6 billion cut this year from the budget reductions known as a sequestration. The impact on Roswell Park Cancer Institute as well as other research facilities across the nation could be huge, as those cuts include more than $250 million in cancer research funding in fiscal year 2013, according to the American Cancer Society Cancer Action Network.

“Whenever people talk about the effects of sequestration, science and medicine rarely get mentioned,” said Dr. Candace Johnson, deputy director of Roswell Park. “Yet it’s one of the most exciting times to be in cancer research.”

In 2012, Roswell Park received more than $60 million in direct and indirect funding from the NIH or the National Cancer Institute. A steep drop in funding would slow progress in cancer treatment and cost jobs, officials have been saying for several months.

“We have a bunch of grants in the queue at NCI and NIH, and we don’t know how this will play out. The lack of not knowing what will happen makes this difficult. We’re trying to plan for bridge funding of [current projects] so people don’t lose their jobs,” said Johnson.

The cancer center, which operates on an annual budget of about $500 million, has prepared for a cut in research funding of about $6 million.

Sequestration came at a bad time for the cancer center, which is in the midst of preparing for the renewal of its five-year core grant from NCI. The grant is based on the institute’s budget at the time of renewal, and budget cuts won’t help, Johnson said.

That’s a major reason why more than 50 Roswell Park researchers are expected to attend the annual meeting next week of the American Association for Cancer Research, a massive convention that will attract more than 17,000 people to Washington, D.C. The association and 100 other organizations will conduct a rally, planned to coincide with the meeting, at 11 a.m. Monday on the steps of the Carnegie Library.

In addition, key scientific leaders here will join Rep. Brian Higgins, D-Buffalo, at an event at the same time in Buffalo to raise awareness of the issue.

Meanwhile, a group of cancer-related organizations warned this week that sequestration cuts to Medicare payments for cancer drugs and services that took effect April 1 will force many community oncology practices to stop seeing new Medicare patients.

“The sequestration cut is a blunt ax to cancer care that will have a devastating effect on patients,” Dr. Mark Thompson, president of the Community Oncology Alliance, said in a statement.

“In some areas, particularly rural communities, practices will simply be driven out of business and close their doors, causing access problems,” he said. “Others will be forced to send patients to hospitals for chemotherapy, if the hospital will treat them, or simply merge into the hospital, resulting in higher costs for both patients and Medicare – the exact opposite of the intent of health care reform.”

Doctors here said they were unaware of patients in the Buffalo area being turned away for treatment but noted that the payment cuts for administering expensive chemotherapy remain a threat to be concerned about if Congress and the White House fail to act.

The potential for disruption is serious because many cancer patients are covered by Medicare, the federal health program for individuals 65 and older.

Medicare cut payments for cancer care services and drugs by 2 percent. Medicare reimburses for outpatient chemotherapy based on an average sales price for the medications and an additional services payment of 6 percent for administrative costs associated with handling, storage, preparation, administration and disposal of the drugs.

Current Medicare payments at many cancer clinics do not fully reimburse the cost of the treatment, and the sequestration cuts will only make things worse, according to the advocacy groups.

The American Society of Clinical Oncology and other groups in a recent letter asked Health and Human Services Secretary Kathleen Sebelius to exempt cancer drugs from the sequestration cuts. But it’s unclear what will happen.

Meanwhile, cancer specialists here said medical practices are reluctant to make major changes to infusion treatment policies in the hope that lawmakers will eventually take action to reverse the cuts, which are likely to be felt more acutely later in the spring as Medicare pays claims at the lower rate.

“The problem for oncology practices is that they have large fixed costs for obtaining these medications. Because the Medicare payment is based on the average sales price, many practices are already operating underwater or with razor-thin margins. It’s a crazy business model,” said Dr. Robert Zielinski, an oncologist at the Buffalo Medical Group.

The Buffalo Medical Group is one of the region’s largest providers of oncology care, as are Roswell Park and Century Medical Associates/CCS Oncology.

Zielinski said Buffalo Medical Group is better positioned than smaller groups to weather the storm, at least temporarily, because it has reasonably good purchasing arrangements for the expensive cancer drugs commonly used by patients.

“We’ve decided to hang in there – watch and wait – hoping this is temporary,” he said. “If it’s not, we would have to re-examine our contractual arrangements.”

The impact is most likely to hit hardest among smaller oncology groups and, as has been happening nationwide in recent years, could lead to more closures and consolidations of oncology groups.

“You are probably going to see the continual contraction of availability of providers,” Zielinski said.

Roswell Park is similarly hopeful that sequestration’s cuts to Medicare, which amount to a $2 million loss at the cancer center, will be addressed in some way.

“The cuts will impact community oncologists more than us because we’re a big institution that can move things around so that we take the financial hit elsewhere. The community oncologists don’t have that luxury,” said Johnson.

However, Roswell Park may not be able to accommodate an influx of patients if the Medicare cuts turn out to eventually restrict services, she said.

“We have increased our capacity [in recent years], but there is a limit to how many patients we can handle,” Johnson said.