THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Monday, January 27, 1997 TAG: 9701270048
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY DEBRA GORDON, STAFF WRITER
LENGTH: 202 lines
Some state lawmakers are trying to crack down on the practice of using ``rebates'' and ``kickbacks'' from drug companies to influence what prescription drugs consumers get.
Not long ago, getting a prescription filled worked like this: Your doctor decided what medicine you needed and wrote a prescription. You took that slip of paper to the drugstore and walked out with the drug the doctor ordered.
Today, the transaction isn't so simple. As a bill in the General Assembly says, kickbacks, rebates and discounts from drug companies to insurance providers and third-party payers called drug benefit managers mean that money, as much as medicine, may determine what pill you swallow.
But the bill - which experts say is the first such legislation in the country - would outlaw using financial incentives as a basis for drug selection.
The bill establishes civil penalties ranging from $10 to $25,000 every time a drug is switched for financial reasons. Public hearings on the bill will begin this week before House and Senate subcommittees.
Opponents say the bill's passage would interfere with the relationships between patients, doctors and pharmacists and would result in higher health care costs for consumers.
Supporters say it protects consumers against the potentially dangerous complications that drug switching may cause, and keeps prescription decisions solely between doctor and patient.
``We need to protect the patient,'' said pharmacist Dave Halla of Gray's Pharmacy in Norfolk. ``Somebody needs to say enough is enough.''
Used to be, drug manufacturers pitched their wares to the more than 600,000 individual physicians in this country. That changed as managed care, with its emphasis on controlling costs through volume and oversight, gained prominence.
Now pharmaceutical firms focus their efforts on HMOs and other insurance companies, and on the pharmacy benefit managers whom these companies hire to oversee their drug benefits.
The benefit managers do everything from processing payment claims to running mail-order services to developing pharmacy networks.
They act as middlemen. They contract with drug companies for discounted prices on drugs, and with individual pharmacies, mail-order firms and chain drug stores to dispense them.
And they have enormous influence in the world of health care - nearly 80 percent of all pharmacy claims are paid through pharmacy benefit managers.
Many benefit managers also design an insurance company's formulary, the list of drugs a health insurance plan will cover. Managed care companies like HMOs require doctors to prescribe those drugs only, unless they get special approval from the plan.
Drugs make it onto these lists based not only on their safety and efficacy, but also on price. Drug manufacturers provide deep discounts on their medications, through rebates and kickbacks to insurers and benefit managers, to get their drugs on the lists.
So if the drug your doctor prescribed isn't on the list, you either have to pay the full price - often many times greater than the co-payment you would otherwise be charged - or get the doctor to switch the prescription.
Drug switching does not mean substituting a generic version, which is usually significantly cheaper and chemically identical to a name-brand drug. It means switching between brand-name medications for which a generic usually doesn't exist. For instance, switching from the stomach medication Zantac, made by Glaxo Wellcome Inc., to Pepcid, manufactured by Merck & Co. Inc.
The drugs are designed to treat the same problems, but they are often chemically different.
And that, say advocates for the General Assembly bill, can be dangerous: Patients - especially elderly people who may be taking several other medications - may not respond well to a switch or may suffer a negative reaction.
``It's appropriate and fine for HMOs and PBMs (pharmacy benefit managers) to come up with lists of drugs they think are the most effective or best,'' said Kenneth McArthur, an attorney with the Richmond law firm of Durrette, Irvin & Bradshaw, which represents pharmacies in federal anti-drug switching litigation and which was instrumental in drafting this bill.
``But in every case, the physician and pharmacist who treat that patient knows that patient better than anyone else, and they should be the ones with the final decision-making authority as to drug therapy.''
But the physician does have the final say in what drug to dispense, says Trigon Blue Cross Blue Shield spokeswoman Brooke Taylor. And, she added, therapeutic interchanges between similar drugs occurs frequently. ``It's not like we're asking someone to take Tylenol with codeine instead of regular Tylenol,'' she said.
The problem is that doctors' offices are being flooded with calls from pharmaceutical companies, pharmacy benefit managers and pharmacists trying to get them to switch prescriptions, said Forrest Anne Hill, spokeswoman for the Medical Society of Virginia, which supports the bill.
Some benefit managers and drug companies even hire telemarketers who sit at banks of telephones calling doctors' offices to induce them to change the drugs they prescribe.
``If you're getting 30 or 40 calls a day, then you don't have time to see patients,'' Hill said.
Pharmacists who call physician offices say they rarely get to talk to the doctor. ``Only in about 5 percent of the time,'' said pharmacist Jay Levine, of Atrium Pharmacy in Norfolk. Usually, he said, he leaves a message with the nurse, who then calls him back with the doctor's decisions.
Hill also noted that doctors who prescribe too many drugs that aren't on the approved lists risk getting bumped from HMO provider lists.
Opponents argue the bill prohibits pharmacists from ever calling a doctor to recommend a drug switch, even if the reason for the switch has nothing to do with drug rebates, such as recommending less expensive, but equally safe and effective, drugs.
``In an age when consumers are worried about the rising cost of health care, that doesn't make sense,'' Taylor said.
The bill's sponsor, Del. John J. ``Butch'' Davies III, D-Culpeper, notes that the underlying reason for the call is the determining factor. ``If the reason for the call is the health of the patient, to provide a more affordable or generic drug, then (pharmacists) can pick up that phone in a heartbeat.''
But if the intent of the call is to garner a rebate or other financial incentive, which some pharmacy benefit managers and drug companies offer if a pharmacist gets a drug switched, then, Davies said, the bill kicks in.
Caught in the middle of the debate are patients like Marie Williams of Richmond.
Williams, 56, had been taking the blood pressure medication Zestril for years. Then her employer changed insurance companies.
When Williams tried to refill her prescription earlier this month, the pharmacist told her it wasn't on the insurance plan's approved list and called her doctor.
The doctor switched her to another blood pressure medicine. Ever since, Williams said, she's felt ``cross and cranky, lightheaded and like bells are ringing in my head.''
``When you fool with someone's medication you're fooling with their life,'' said her husband, Calvin Williams, who will testify this week before the subcommittee. ``When you're paying several thousand dollars a year for medical insurance and they are going to tell you and your doctor that you can't have the medicines you've been on for two or three years, I get highly disturbed.''
Where does the money go?
The issue revolves around the rebates, discounts and kickbacks that HMOs and pharmacy benefit managers get from drug companies.
No one denies they exist. Rather, the discussion centers on how large a role they play in determining what drugs get onto formularies.
``When you strip it all down, very rarely is quality part of the discussion these days,'' said John Rector, general counsel for the Alexandria-based National Community Pharmacists Association. ``It's price: who can give them the best price on this drug.''
Price is just one variable, said Mark Szalwinski, director of pharmacy for Sentara Health System.
Sentara has a committee of 12 doctors and two pharmacists that meets monthly to make formulary decisions. They base their decisions on drug safety and efficacy as well as cost-effectiveness, he said.
Passing this bill, Szalwinski said, would take a tool for managing health care - the formulary - away from physicians.
The issue has done more than just pit insurance company against pharmacy. As pharmacy benefit managers have begun sharing the rebate pie with pharmacists, it has pitted large chain pharmacies against small, independent druggists.
PCS Health Systems - with 56 million members, the nation's largest pharmacy benefits manager - began offering financial incentives to its network of 54,000 pharmacies this summer. Nearly all of the company's 1,307 Virginia pharmacies are participating.
Pharmacies earn between $2 and $12 every time a pharmacist persuades the doctor to switch a prescription to one on which PCS gets a rebate from the drug maker, said Levine, who participates in the PCS program. PCS then passes part of the rebate on to the insurance company. The Scottsdale, Ariz.-based company is owned by drug giant Eli Lilly, and concerns abound that Lilly drugs get preferred status on formularies.
PCS even trains pharmacists in techniques it can use to persuade a doctor to switch prescriptions, according to PCS documents obtained by New York City public advocate Mark Green, who researched the PCS program.
Patients affected by this program are not covered by HMOs, said the Atrium's Levine, but by other kinds of health insurance plans that don't use restrictive formularies.
``We like to call it a win, win, win situation,'' said PCS spokesman Blair Jackson of the company's ``Performance Drug Program.''
``The patient receives clinically appropriate care and may save money, the health plan saves money and the pharmacy has the opportunity to be reimbursed for their involvement.''
Such reimbursements, said Rebecca Snead, executive director of the Richmond-based Virginia Pharmacists Association, are one reason most large chains oppose the bill. ``They either have arrangements to benefit them or are contemplating entering into them.'' The association, which represents 1,600 Virginia pharmacists, supports the bill.
Rite Aid even owns a pharmacy benefit manager, creating the opportunity to funnel additional rebates to Rite Aid pharmacies, Snead said.
The Virginia Association of Chain Drug Stores, which represents 700 large retail pharmacies in Virginia, including Revco and Rite Aid, calls the bill ``anti-consumer.''
``In theory, this bill takes away the ability to practice pharmacy,'' said Michael Ayotte, association chairman.
Dave Halla of Gray's Pharmacy disagrees. He calls pharmacy rebate programs like PCS' ``bad patient care,'' and refused to join.
``I just don't think it's right for anyone to call up a physician and ask them to change a drug that they have made a selection on for patient care,'' he said. ``There's always a good reason why a physician chooses a drug, and for you to influence him to choose another drug for monetary reward, really is not good for the patient.'' ILLUSTRATION: [Color Photo]
VICKI CRONIS
The Virginian-Pilot
At Gray's Pharmacy in Norfolk, pharmacist Dave Halla greets a
customer. Halla supports the bill, saying like other supporters that
it protects patients from possibly dangerous complications of drug
switching. But opponents see meddling, and higher costs for care.
BILLS' SPONSORS
HB 2714. Sponsor: Del. John J. ``Butch'' Davies III, D-30th.
SB 1114. Sponsor: Sen. Charles R. Hawkins, R-19th.
KEYWORDS: KICKBACKS GENERAL ASSEMBLY PHARMACY PHARMACISTS
DRUGS