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Top executives at Memorial Sloan-Kettering in New York City recently announced the center will not offer patients an $11,000 per month cancer drug called Zaltrap. They don't believe it's worth the price. Vivian Ho, James A. Baker III Institute Chair in Health Economics, applauded the move, writing in an Oct. 15, 2012, commentary that at "any other facility that chooses to use this drug, the additional costs will most likely be passed on to the patient in terms of higher out-of-pocket costs, or to insurers, who then raise health insurance premiums in order to cover higher medical costs."

Ho recalled a conversation with a hospital resident who said that some physicians at her hospital were never informed of the costs of any of the drugs they prescribed to patients. Some doctors may not want costs to factor into their decision about how to treat patients, but "why not let the patient and the patient's family decide?" Ho writes.

"We are living in a fee-for-service health care system, where hospitals and doctors are able to pass increased costs of drugs and devices on to patients, whether or not they yield any demonstrated improvement in health," Ho says. "Patients don't have the necessary information to point out cases in which such waste occurs. In the long run, we need to change the financial incentives in the system to encourage doctors to eliminate waste, while maintaining high quality care for patients."

Read Ho's commentary, "A prescription for lowering health care costs," at the Baker Institute Blog.