Prescription Drug Non-compliance

WSJ Health Blog has an interesting piece up on just how prevalent non compliance for prescription medicines is today that will be of interest to those benchmarking pharmaceutical compliance. This is a coachable moment for wellness advocates as 1/3 of americans do not adhere to their prescription routine.

The Mischief In Obama's $634B Health Care Fund

No man is exempt from saying silly things; the mischief is to say them deliberately. - Michel de Montaigne

Last week as reported in The Houston Comical Kelsey Seybold clinic announced plans to stop accepting Medicare patients except those enrolled in a Medicare Advantage Plan. The stated reason is that the reimbursement from Medicare is below the cost of actually providing that care. The article notes that in TX the percentage of physicians accepting Medicare is down from 78% in 2000 to 64% recently.

The WSJ reports today in an article by Laura Meckler that President Obama is proposing a $634B in new taxes as well as cuts in spending to fund a down payment on Health Care reform. The single largest spending cut is designed to come from Medicare.

The biggest chunk of savings in the budget proposal, estimated at $177
billion over 10 years, would come from changing the pay structure for private
managed-care plans that participate in Medicare. Under current law, payments for Medicare Advantage plans are set by a formula, and the result is that private
companies are paid, on average, 14% more to care for a Medicare patient than the
government would normally spend through the traditional Medicare plan.

So the bottom line is that for years physicians have been moving out of traditional Medicare due to poor reimbursement that has shifted costs to employers and individuals with insurance and cash payers which has fueled health care inflation and increased the number of uninsured Americans. Many have moved to Medicare Advantage where there remained an opportunity for a profit. That profit has now been targeted. Don't believe me? Managed care stocks with Medicare Advantage exposure are in free fall as pointed out here.

In a note today downgrading both HealthSpring and Humana, along with
$575 million Universal American Corp. (UAM)
to “Underperform” from “Market Perform,” BMO Capital analyst Dave Shove writes today that Medicare’s profitability growth “will all but disappear” as a result. Medicare programs will see “significant” reductions in enrollment in 2010 and a 1.5 percentage-point drop in profit margins, writes Shove, and the movement of many of the insured to public programs away from private Medicare coverage. The last time HHS “dealt a crushing blow to Medicare Advantage capitation rates,” in 2000, writes shove, “the program lost roughly 10% of enrollees in the first year, and bottomed out with 22% participation loss over a three year span.” (Bear in mind, the capitation rates statement is preliminary: final rates will be decided on April 6 and could potentially be higher, meaning, more
profitable.)

For decades the US government has shifted costs for entitlements like Medicare to the private sector leading to rampant health care inflation. As we move towards the promised land of universal coverage such policies will no longer work. I only hope the media will begin to point out the mischief when silly statements crafted as policy are reported. As for me I am not amused.

Wal-Mart Expands $4 Generics Program

Wal-Mart has expanded its $4 prescription drug program it include a 90 day supply for $10 and OTC drugs have been added. Lot of drugs are included here folks.

I wonder when PBM's are going to figure out their business model is in trouble?

Hearts or Minds

I have written about the hiring practices of Pharmaceutical Companies in A Picture is Worth 1000 words and Prilosec OTC, Wine & Cheese.

A Hat tip to Joe Padua at Managed Care Matters for providing details on a 21 year old pharmacy rep in South Florida without a degree yet but with the title of Miss FHM 2006 whose picture I have included here.

So now I have another image for use in enrollment meetings to illustrate how certain drugs come to be commonly prescribed and trust me the employees get the picture immediately as to what is really happening.
You really cannot make this stuff up.

Rx Plan Design & Diabetes

An interesting story from The Chicago Tribune on employers eliminating co-pays for diabetes medications is here.

After years of raising co-payments and deductibles for prescription pharmaceuticals, some employers are taking an unorthodox approach to lowering health-care costs in an experimental program by -- get this -- paying for diabetes drugs and consultations.

For patients the savings could amount to $2,000 a year.

If the program proves successful it could be expanded to include other common diseases and chronic conditions such as asthma, depression or arthritis and extended beyond its one-year pilot phase, according to the Midwest Business Group on Health, a Chicago-based coalition of employers that is coordinating the program.

Nationally, more than 30 employer groups are rolling out similar programs this year in cities including Milwaukee, Pittsburgh and Los Angeles.

I have written on the Black Hole of STD as well as Lowering Rx Co-pays to reduce costs so here is a related item which focuses on the connection.

Results from a model project launched in 1997 by the city of Asheville, N.C., show a 50 percent reduction in sick days and no worker's compensation claims filed by the diabetes patients in the program between 1997 and 2003.

Asheville has expanded its program to people with asthma and high blood pressure.

So far, Chicago-area employers Pactiv Corp., the City of Naperville and the Jewish Federation of Metropolitan Chicago have agreed to participate in the program.

"Employers are beginning to realize that cost-shifting by itself will not change behaviors," said Larry Boress, chief executive of the Midwest Business Group on Health. "This is not just an isolated incentive where you are giving away trinkets or dollars but is part of a change in employee-benefits strategy to move people away from an entitlement mentality. The idea is that in order to change employee behavior and change the attitude in the way employees manage their health, employers are moving to value-based benefit designs."

Direct and indirect costs of diabetes to the U.S. health-care system are more than $130 billion a year, including emergency room visits, extended hospital stays and absenteeism, the Chicago group said, citing national studies. Some 20 million people have diabetes, including 600,000 in Chicago.

Lowering Rx Co-pays Produces Big Savings

If your company has been increasing co-pays on prescription drugs in order to offset steadily rising pharmacy costs you may wish to consider how Blockbuster was successful in reducing pharmacy costs by over 33.5% by lowering co-pays and adopting a 4 tiered approach as noted here.

Lowering or eliminating co-pays for low cost or OTC generics while raising brand co-pays can produce dramatic results by raising your overall generic utilization rate while at the same time lowering your pharmacy trend to a negative number.

But do not allow your pharmacy claim data to languish on some PBM rep or pharmacy consultants hard drive. There is meaningful and compelling data there which can be mined to provide a prospective picture of your "at risk population to become a chronic "whose behavior needs further modification beyond just the pharmacy co-pay if your strategic objectives of controling benefit costs are to be achieved. You need analysis from someone with an understanding of your overall objectives in benefits as well as deep practical experience in arriving at proper plan design recommendations in your other benefit offerings--Medical, Dental, STD, LTD, Behavioral & EAP to allow the data from your pharmacy claims to impact all of your benefit offerings. You need an integrated view.

One of the observations on the health care space in the last 3-5 years I would make is that employers who have adopted consumer driven long term strategies have a much greater appreciation of the interdependence of their benefit offerings than many of the intermediaries who serve them. You see many intermediaries are transaction oriented, they are historically project or account acquisition driven. Essentially, at many consulting firms you have a partially extroverted actuary functioning as a relationship manager who trots out subject matter experts for absence management, disease management, disability management, behavioral & EAP and Pharmacy. The problem with such a business model is it does not lend itself to integrating thought leadership very well across product lines. No offense to actuaries but communication has never been what one could refer to as a group strength. If you take offense at that statement perhaps you should scan this proof statement (Its a letter from The American Academy of Actuaries on the lessons learned from the 1st year under Medicare Part D) and comment below on the salient points below. Do tell. There will be a prize for the best comment or barring that anyone who can finish and still talk.

The point is mining data will provide useful data. Putting that data together to arrive at appropriate plan design changes across multiple products requires the application of both plan design and cross- product expertise. Since most actuaries are so specialized-health, life, disability, pensions, good luck with that as the person with that skill set in America works for themself, especially if they are an actuary, because they can.

Can't you smell that smell? Follow The Money

60 Minutes ran its episode today titled Under the Influence about the incestuous and corrupt influence of the Pharmaceutical Lobby and the full text and video are here.

The episode has been well covered at Pharmalot.

I have never been a big fan of 60 Minutes but have to admit they got this story right.

Prepare yourself for non-stop media coverage of all things pharmacy and PBM related through the 2008 elections. Have no delusions this attention will leap the firebreak into employer sponsored plans and be a featured part of The Healthcare Debate, as well it should. Employers should not have any illusions they fare any better via their formulary/rebate driven PBMS. Psst, they are doing it to you as well. Quick somebody find me a Physician on the Board at Express Scripts, MEDCO, or CVS CareMark.

Spring is here and 12 months from the 2008 primaries we have 60 Minutes airing a story that will be whipping Seniors into righteous indignation. It is interesting how 60 minutes waited 3.5 years after the vote to run the story though--just had to wait for the 1st candidate to promise free health care. Imagine what was talked about in retirement communities all over Florida tonight? I bet it had to do with this;

"You push this bill through that produces a windfall for the drug companies. And then a short time later, you go to work for the drug lobby at a salary of $2 million. That doesn't look good," says Kroft.

"There was nothing I could've done in my life after leaving Congress that wouldn't have had — I didn't have some impact on in 25 years in Congress … If that looks bad to you, have at it," Tauzin says. "That's the truth."

In fairness to Tauzin and former Medicare chief Tom Scully, they weren't the only public officials involved with the prescription drug bill who later went to work for the pharmaceutical industry.

Just before the vote, Tauzin cited the people who had been most helpful in getting it passed. Among them:

John McManus, the staff director of the Ways and Means subcommittee on Health. Within a few months, he left Congress and started his own lobbying firm. Among his new clients was PhRMA, Pfizer, Eli Lilly and Merck.

Linda Fishman, from the majority side of the Finance Committee, left to become a lobbyist with the drug manufacturer Amgen.

Pat Morrisey, chief of staff of the Energy and Commerce Committee, took a job lobbying for drug companies Novartis and Hoffman-La Roche.

Jeremy Allen went to Johnson and Johnson.

Kathleen Weldon went to lobby for Biogen, a Bio-tech company.

Jim Barnette left to lobby for Hoffman-La Roche.

In all, at least 15 congressional staffers, congressmen and federal officials left to go to work for the pharmaceutical industry, whose profits were increased by several billion dollars.

"I mean, they — they have unlimited resources. Unlimited," Burton says. "And when they push real hard to get something accomplished in the Congress of the United States, they can get it done."

As this story gets legs, and it will, quite a few HR/Benefits People may be answering questions about how they know with certainty they are getting the best deals on Drugs from their PBM? Prudent employers should be prepared with data for the phone call. It is time to get ahead of the snowball before it becomes an avalanche.

The Answer is Blowing In The Wind

Great summary from Roy Blount, III at Health Plan Law on the implications of Fraud Lawsuits against Pharamaceutical Companies for Health Care Reform here.

In this recent opinion, the district court denied the defendants’ motion to dismiss, thus permitting the plaintiff-relator’s case to go forward on all but one count of California’s False Claims Act. This case serves to illustrate several points.

First, it provides an overview of how state False Claims Act statutes may be employed to challenge costs imposed on Medicaid programs.

Second, the case serves as an object example of why specific attention to pharmaceutical company business practices must be a central component of any serious health care reform proposal.

Third, the case sheds light on the often clandestine profit vectors associated with the sale of pharmaceuticals.

Throw in a presidential election year, the volatility of seniors discovering their Medicare dough nut hole and 2008 could see the brushfire threaten the ammo dump that is the pharma-industrial complex not to mention the powder keg of health care reform in the employer sector as Hillarycare II gets under way. There are Santa Ana winds heading for this little brushfire.

Follow the Money II

The Florida Office of Program Policy Analysis and Government Accountability(OOPPGA) does independent research for the Florida Legislature and pursuant to a legislative request last month published a review of PBM business practices.

Due to the number of retirees in Florida prescription drug costs are a jugular issue and we are heading towards a 60 Minutes moment as the media begins to understand how PBM'S business models function.

Prescription drug costs are the single largest component of employee out of pocket expenses for healthcare. The US Supreme Court has already rejected challenges to Maine's PBM Disclosure Law as noted here and excerpted below.

In a key legal setback for pharmacy benefit managers (PBMs), the US Supreme Court shot down a challenge to Maine's controversial law requiring disclosures of prescription drug deals by PBMs. The Maine statute, which was challenged by PBM lobbyists for the Pharmaceutical Care Management Association (PCMA), requires PBMs to disclose rebates, conflicts of interest, and discounts from drug manufacturers that PBMs are retaining as profit rather than passing on to plan sponsors.

A few weeks ago I was speaking to an old friend who started in group school with me many years ago, a group gal if you will who works for a major Big 4 managed care company. When I shared some insights into the PBM work my firm was doing for several clients she began to comment that she hoped it would expose the corruption that existed in her market where unknown to many large self-funded employers for whom they supposedly worked some brokers, TPA's and consultants were accepting non-reportable rebates, commisions and fees.

It was not too long ago when I worked for insurance carriers that certain brokers and consultants made it abundantly clear to me that a non-reportable, non-5500 schedule A override was the price of admission to be considered a viable market. This type of behavior was wrong then and it is wrong today. Frankly, its hush money. One of the byproducts of PBM disclosure legislation at the state and federal level will be further exposure of some of the business practices PBM's utilize to assure they acquire and retain customers. Just follow the money.