ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Monday, January 27, 1997 TAG: 9701270069
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: DEBRA GORDON LANDMARK NEWS SERVICE
INCENTIVES FROM drug companies may determine the medicine you take.
The state is trying to crack down on the practice of using rebates and kickbacks from drug companies to influence which prescription drugs consumers get.
Not long ago, getting a prescription filled worked like this: Your doctor decided which 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. Kickbacks, rebates and discounts from drug companies to insurance providers and third-party payers called drug benefit managers mean money, as much as medicine, may determine which pill you swallow.
But a bill pending in the General Assembly - 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 would protect consumers against the potentially dangerous complications drug switching may cause, and would keep prescription decisions solely between doctor and patient.
Drug manufacturers once 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 managers 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 pay deep discounts in the form of rebates and kickbacks to get their drugs on the lists.
Kickbacks and rebates are payments made to insurance companies and benefit managers for selling a particular drug.
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, manufactured by Glaxo Wellcome Inc., to Pepcid, manufactured by Merck & Co., Inc.
The drugs are designed to treat the same problems, but are often chemically different.
And that, say advocates for the General Assembly bill, can be dangerous.
But the physician does have the final say in which drug to dispense, said Trigon Blue Cross Blue Shield spokeswoman Brooke Taylor.
It is true that only physicians can change prescriptions, said Forrest Anne Hill, spokeswoman for the Medical Society of Virginia. But doctors' offices are being flooded with calls from pharmaceutical companies, pharmacy benefit managers and pharmacists trying to get them to switch prescriptions.
And, Hill said, doctors who prescribe too many drugs that aren't on the approved lists risk getting bumped from HMO provider lists.
Opponents argue that the bill would prohibit 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.
Trigon's Taylor said it would forbid pharmacists from 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 ``Butch'' Davies, D-Culpeper, noted 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 they can pick up that phone in a heartbeat.''
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 around how large a role they play in determining which drugs get on formularies.
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 independent druggists.
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.''
Dave Halla of Gray's Pharmacy in Norfolk calls such pharmacy rebates bad patient care.
``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.''
LENGTH: Long : 110 lines KEYWORDS: GENERAL ASSEMBLY 1997by CNB