HealthBiz: Drug prices still top issue

By ELLEN BECK, United Press International  |  June 10, 2004 at 2:00 PM
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WASHINGTON, June 10 (UPI) -- Drug prices, whether generally or connected to the Medicare drug discount card, remain the focus of healthcare concerns inside the Washington Beltway.

A Senate Finance Committee hearing this week on the new drug cards saw Republicans accuse Democrats of deliberately trying to sabotage the program, which Sen. Charles Grassley, R-Iowa, the committee chairman, described as a "deliberate campaign to discredit it and confuse seniors about how it works."

Democrats didn't directly challenge that assertion, but Sen. John Breaux, D-La., said the program poses a difficult challenge for seniors in deciding which, if any, card was right for them.

"Choices are important and this is about giving them more choices," he said. "I'm just concerned they now have too many choices."

That lead in allowed Sen. Kent Conrad, D-N.D., to bring up his visits home, during which he got an earful from unhappy seniors.

"People are just confused and they're confused because there are so many cards," Conrad said.

There are more than 70 cards from which seniors can choose, so Conrad said he was introducing legislation -- he called it the Drug Card Simplification Act -- to require the Health and Human Services Department to reduce the number of approved drug cards per region to three in 2005.

The legislation also calls for prohibiting drug card sponsors from offering smaller discounts than what were offered at the time of card approval and would force sponsors to continue to cover drugs they offer at the beginning through the duration of the program.

Of the 7 million seniors HHS had hoped would sign up for the cards, only about 500,000 have done so voluntarily, with another 2.5 million automatically enrolled in cards offered specifically by their Medicare managed care plans.


Pharmacy benefit manager ExpressScripts this week launched GenericsWork to help health plans encourage members to use generic prescriptions to reduce drug costs.

Brenda Motheral, vice president of research and development, told UPI's HealthBiz the program can increase general fill rates from 50 percent to 70 percent. The problem with generics, she said, is not that people don't believe they are as effective as brand drugs, it's that they don't know the generic is available.

"Starting from anywhere (the plans) are today we can work with them," Motheral said of implementing GenericsWork. "It involves the high performance formulary, communication tools and step therapy."

Step therapy has been a key element in ExpressScripts efforts to reduce drug costs. It requires people to use less-expensive generic or brand name medications on a trial basis before moving to more expensive brand name medications.

ExpressScripts plans to hold workshops, training programs and Web casts for plan sponsors on GenericsWork and additional communications efforts will be aimed at plan members.

A study by ExpressScripts finds higher generic use in 2003 reduced per prescription cost increases to 7.9 percent, from 13.1 percent in 2001-2002.


Hewitt Associates says HMO rates for 2005 are expected to increase by almost 14 percent, but are showing signs of settling down as plans are reaching "comfortable margins."

Its survey of 160 large employers also finds companies are dealing with rising prescription drug prices by increasing co-pays for employees.

Hewitt said companies offering a 5 percent drug co-pay for generic medications went from 52 percent in 2001 to 28 percent in 2004. Looking at a $10 generic co-pay, 27 percent of firms required it in 2001 but 50 percent did in 2004.

Co-pays for brand drugs were higher, of course. A $10 co-payment was the norm at 39 percent of employers in 2001 but that fell to just 12 percent in 2004. The $20 co-pay was in force at 12 percent in 2001 but that rose to 33 percent by 2004. A $30 co-pay was the policy at 1 percent of employers in 2003 but that increased to 6 percent in 2004.


A study out this week by the Robert Wood Johnson Foundation has found market reforms will not significantly help individual insurance more affordable for people who are not covered by employer-sponsored group plans.

Only about 7 percent of under-65 Americans purchase individual coverage and that figure has decreased in the past decade. The individual insurance plan is more expensive and carries the risk of being rejected for pre-existing conditions or chronic illnesses.

In the early 1990s, the study said, many states enacted legislation to try to make the individual insurance market more affordable and accessible. The measures included limitations on pre-existing condition clauses, guaranteed renewal -- which came partly from the Health Insurance Portability and Accountability Act of 1996 -- and guaranteed issuance of policy for individuals. Some states also tried to regulate rates in this market and implement risk adjustment and risk pools to help plans deal with covering high-risk, chronically ill patients.

The result, the study found, was in some states individual insurance generally became more available -- because of the guaranteed issue requirements -- but some insurers left the marketplace because they didn't like the rate regulations.

As for costs, the study found average premiums and premiums paid by healthier people rose in states that enacted comprehensive reforms but premiums for sicker and higher-risk people declined. Premium increases were less when reforms were phased in.

Overall while more coverage was available it didn't necessarily translate into more people buying coverage.

The study concluded that tax credits, such as those proposed by President Bush, may not be viable options for high-risk uninsured individuals who try to purchase health coverage outside the group market. It added, however, that combining additional government subsidies to market reform and tax credits could have a bigger impact on reducing the ranks of the uninsured.


The non-partisan Center for Studying Health System Change's healthcare spending survey for 2003 shows a rise of 7.4 percent.

It is the first major slowdown in almost 10 years, but it still is growing twice as fast as the overall economy, which increased 3.8 percent, as measured by per capital gross domestic product.

The study, published in online edition of the journal Health Affairs, said the 2004 growth rate compares to 10 percent in 2001 and 9.5 percent in 2002.

Brad Strunk, the CSHSC study co-author, told a Kaiser Network briefing on the report: "The trend in healthcare costs slowed down by a significant amount. And what we saw is that it's actually a reflection of slowdowns in all categories of healthcare spending."

Inpatient hospital spending increased by 6.5 percent in 2003 -- down from 8.4 percent in 2002 mainly because of less utilization. Outpatient hospital expenditure growth dropped from 12.9 percent in 2002 to 11 percent in 2003.

"A significant slowdown in growth and utilization of hospital services," Strunk said. "And we think that we've really touched on what's going on. There is what we call the completion of the transition to more loosely managed care. You know, as people get more familiar with the new managed care, the looser managed care, some of those effects that were occurring during that transition to that kind of managed care are sort of coming to their completion."

For the fourth year prescription drug spending per privately insured person increased more slowly, at 9.1 percent in 2003 -- compared to 13.2 percent in 2002 and 18.4 percent in 1999.

Paul Ginsburg, the CSHSC co-author, said, "To the degree that people are using more generics, that would help slow the prices."

Commonwealth Fund President Karen Davis commented to news media the continued high increases in health coverage premiums -- the study put the 2003 increase at 12 percent -- is "troubling" and that market forces "may bring premiums more in line with costs in coming years but should be watched carefully."

She said high co-payments for patients may be part of the reason why healthcare expenditures on a business level decreased.



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