In this case, the doctors actually do buy the drug. Out-patient use of physician administered drugs is done through "buy and bill".

The physician purchases the drug and keeps an inventory. When a patient is treated, the doctors bills the insurance company and receives the cost of the drug (usually average selling cost) plus a mark-up.

Drug companies are allowed to offer rebates to physicians (it falls under the "safe harbor") as long as it doesn't create perverse incentives for use (as determined by the DOJ). The other thing to keep in mind is that any rebates gets subtracted from the average selling price, so in essence any rebate is clawed back with a few quarters.

Or, they don't want to explain in court why they picked the cheap drug and the procedure went wrong.

Particularly when the cheap drug isn't FDA approved for the treatment in question.