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Pharmaceutical Companies Shafting Healthcare Insurance Companies

Stanley Feld M.D.,FACP,MACE


The pharmaceutical companies are marketing kings. The large increase in generic sales has affected their bottom line. When they are up against the wall marketing gets innovative.

EXECUTIVES of a small insurance company in Albany were mystified when, almost overnight, its payments for a certain class of antibiotics nearly doubled, threatening to add about a half-million dollars annually in costs.”

The drug benefits costs for this healthcare insurance company increased as it did for others because the drug company was innovative. It started giving out coupons to cover the patients’ co-pay. It did not cost the patient to pay for this new expensive medication. It cost the insurance company dearly because patients stopped using the generics since their co-pay was covered by the drug company. The effectiveness difference between the generic and the new antibiotic was questionable.

This is not the first time drug companies have given patients co-payment coupons. The coupons paid the branded drugs’ co-pay. This is another example of consumer driven power. Consumers will seek the best price and highest quality.

The use of such co-payment cards and coupons and other types of discounts has more than tripled since mid-2006, according to IMS Health, an information company that tracks the pharmaceutical industry.

Consumers are smart. They know when they are getting a good deal. Pfizer, the maker of Lipitor, introduced a new coupon card that reduces the co-pay for Lipitor to $4 a month. The co-pay for Lipitor is about $50 for a month’s supply. The coupon card saves consumers as much as $50 a month. The coupon gives Pfizer a chance to have Lipitor compete with generic Zocor at Wal-Mart and other chains.

The healthcare insurance industry pays much more for Lipitor than it does for generic Zocor. The clinical evidence for a difference in the medications is small. The marketing of the clinical evidence is a gimmick. The both work the same. Lipitor is twice as potent therefore, you need half the dose to achieve the same effect.

Drug companies say the coupon plans help some patients afford medicines that they otherwise could not. “

The health insurance companies say the coupons are a marketing gimmick. In reality they are. The healthcare insurance industry is just going to pass the cost to its bottom line to consumers by raising the price of insurance premiums.

The member is somewhat insulated from the cost of the prescription,” said Kevin Slavik, senior director of pharmacy at the Health Care Service Corporation, which runs Blue Cross and Blue Shield plans in Illinois and three other states. “In essence, it drives up the total cost of providing the prescription benefit.”

President Obama, where are you when the public needs you? The Food and Drug Administration has been ineffective.

The Food and Drug Administration, meanwhile, is studying the effect of the discounts on consumer perceptions, concerned that the coupons will make consumers believe that a drug is safer or better than it really is.”

The differences in costs are astounding.

  1. Once a day Minocycline is $700 per month. The price of a twice a day generic Minocycline $40 per month
  2. In New York City in a union representing public employees, 59 percent of claims were brand-name statins whose co-pay was coupon supported. The claims cost the union $17.3 million. The other 41 percent of claims were for generic statins. It cost the union only $179,000. The union has eliminated the co-pay on generic statins to encourage their use.
  3. Jazz Pharmaceuticals has quadrupled the price of its narcolepsy drug Xyrem, to about $30,000 a year, over the last five years. In order to cushion patients’ out of pocket cost, the company recently increased its co-pay assistance to as much as $1,200 a month.

“It seems the best strategy for a pharmaceutical company is to price their drug as high as they possibly can and offer that co-pay assistance broadly” to insulate consumers, said Joshua Schimmer,

Co-payment coupons are distributed by drug company sales representatives to physicians. Physicians are made to believe they are helping their patients. The coupons are also available directly to patients over the Internet. Patients present them at the drugstore when paying for their prescriptions and receive the discount.

Medicis, the company that sells Solodyn(Minocycline extended tablet), have told investors that the co-payment card is used by an “overwhelming majority” of patients, and is largely responsible for doubling use of the drug, to 26,000 prescriptions a week.

The use of once a day Minocycline vs. twice a day generic Minocycline results in a difference in cost of $2.6 billion dollars a year for this one drug.

There is something wrong. Physicians are not aware of the drug companies’ gimmicks. They think they are helping their patients. The pharmaceutical industry is indeed the king of marketing.

Pharmaceutical Companies Shafting Healthcare Insurance Companies. Healthcare Insurance Companies in turn will shaft patients by increasing their premiums.

President Obama’s healthcare reform act should be doing something about this if it wants to keep the cost of healthcare down. It is not doing anything about this problem.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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