Pharmaceutical Trade Secrets Revealed

Despite state laws requiring disclosure of payments made by pharmaceutical companies to physicians in 5 states and the District of Columbia, very little information about who receives and in what amounts is actually revealed according to Reuters reporting on a study in The Journal of The American Medical Association. Two states, Vermont and Minnesota require disclosure to the public.

The analysis included data from January 2002 to December 2004 in Minnesota and from July 2003 to June 2004 in Vermont.

The researchers found that obtaining the payment information was not easy. In Vermont, extensive negotiation with the Office of the Attorney General was needed, while in Minnesota, manual photocopying of individual disclosure forms at the State Board of Pharmacy was required.

Missing disclosure information was common in both states.

In Vermont, 61% of payments were not released to the public because the drug companies classified them as revealing trade secrets and 75% of disclosed payments lacked information to identify the recipient.

A study by a professor at UCLA medical school found physicians only discussed costs, co-pays, re-fills, insurance and money saving alternatives 1/3 of the time with their patients. The patients only ask questions 2% of the time of their doctors on these subjects. The study notes patients need to engage their doctors with questions about the low cost alternatives and many of the patients on multiple medications for chronic conditions cannot afford to comply with their maintenance drugs.

But those trade secrets being discussed between pharmaceutical manufacturers and physicians so proprietary they result in payments never do seem to translate into conversations with patients about the available drug options 2/3 of the time. Think about that for a minute, no make it two minutes. This is precisely how formulary driven PBMS drive serious Profit.

So here in a nutshell is the trade secret revealed for the entire pharma-PBM industry for the very first time; patients do not ask about cost and doctors do not tell. There is nothing insidious this is a product of behavior which can change with the appropriate incentives. The good news is this problem is fixable for employers by plan design (going to $0 co-pay for low cost in class generics) and a cost + administrative fee PBM model that has no price spreads on generics, no rebates and an evidence based formulary. Many insured(see link to BCBS no-pay co-pay) and self-funded plans plans with a good group guy have already figured this stuff out.

This post is not intended to disparage physicians only to reveal how behavior produces the results which will create nuclear fallout by the 2008 election as the entire population of the US capable of sentient thought will know a dough-nut hole is found in Medicare not a bakery. If you think healthcare is expensive now just wait until John Edwards or Hillary Clinton make it free.