Migraine sufferers might be popping vitamin B2 supplements instead of the industry standard--sumatriptan at $10 per dose--if those watching the dollars at Healthcare Partners Medical Group have their way.
Like all providers today, Torrance, Calif.-based Healthcare Partners is wrestling with the conflicts inherent in soaring drug costs. So when a Belgian study found a regular, hefty dose of riboflavin can sometimes reduce migraine episodes by half, the good news was promptly passed along via the group's newsletter to its 300 employed physicians and the 1,700 other providers with which it contracts.
Such lucky-find "pearls" of wisdom are just one weapon Healthcare Partners is using in its ongoing fight against skyrocketing pharmaceutical costs, says Austin Fite, M.D., co-chairman of the group's pharmacy and therapeutics committee.
Among the many other cost-saving strategies the group has implemented are profiling physicians' prescribing habits, educating physicians about which medications are both cost- and care-effective and limiting direct access to physicians by drug company representatives.
The healthcare industry has seen pharmaceutical costs explode from $50.6 billion in 1993 to $93.4 billion in 1998, according to a report by the Washington-based National Institute for Health Care Management. The report contends that advertising aimed at consumers, on which the pharmaceutical industry spent $1.3 billion last year, up from $1 billion in 1997, is a dominant factor in the $42 billion-plus rise in drug costs during the past five years.
The report found that four classes of drugs accounted for about 31% of the increase: oral antihistamines, antidepressants, cholesterol-reducing statins and ulcer medications. Seven of the 10 drugs most advertised to consumers are in those classes.
The pharmaceutical industry counters that the growth in the use of prescription drugs, not price hikes, is driving the increase in pharmaceutical spending. The Washington-based Pharmaceutical Research and Manufacturers of America says that last year only 3.2% of the 15.7% increase in pharmaceutical expenditures nationwide was due to cost inflation. The remainder, according to PhRMA spokesman Jeff Trewhitt, was due to a "dramatic increase in the use of drugs," which, in many cases, supplanted other therapies.
Ample evidence, Trewhitt says, shows that many drugs, such as statins, are more cost-effective than alternative treatments, which in the case of statins includes coronary bypass surgery.
However, while even the industry's most implacable foes admit plenty of evidence exists showing drugs can be cost-effective in the overall continuum of care, that evidence does not begin to explain the enormous, ad-driven increase in pharmaceutical spending.
"Certainly, you can point to uses of drugs that are very cost-saving," says Ed Newschler, a senior policy adviser at the NIHCM. "But I don't think Claritin is keeping too many people out of the hospital."
Curtailing drug costs is a complex job, Fite says, and it's not getting any easier. The rise in drug prices, coupled with pressure from payers for more productivity, has hit physicians like pincers, he says. On one hand, doctors are facing the demand from payers that they expedite patient visits, which leaves them feeling stretched for time. On the other, patients bombard them with information they've gleaned from advertising or the Internet about yet another wonder drug that they are eager to try.
"It's all too easy to prescribe expensive, brand- name drugs to patients," Fite says. The pressure is ubiquitous. One bit of evidence: The 55 member groups of the California Physician Groups Council lost an estimated $35 million in unpaid pharmacy benefits last year. The council functions as an advocate and lobbyist.
"Overall, pharmacy risk is being driven by marketing and consumer demand," says Craig Stern, president of Northridge, Calif.-based Pro Pharma Pharmaceutical Consultants. "The bottom line is, from the physician groups' side, it's a loser, and from the (payers') side, it's a loser."
Indeed, pharmacy risk is often a hot potato that payers are eager to pass to provider groups. For example, although Healthcare Partners shares pharmacy risk equally with payers, it does not receive manufacturers' rebates as payers do.
This uneven structure necessitates even more vigilance in the effort to contain drug costs, Fite says.
With no syllabus to follow, providers and payers have had to improvise cost-cutting strategies. At Healthcare Partners, Fite watched medication expenses per member per month drop to about $10 at sites with a pharmacist on staff because the pharmacist is available to recommend generic or less expensive brand-name drugs that are therapeutically equivalent to higher-priced options.
At sites with no pharmacist, medication costs per member per month are running between $30 and $50, he says.
In addition, the group uses computerized claims data to identify which physicians consistently prescribe higher-priced drugs. Those in the top 20% costwise receive a visit from a company pharmacist who tells them about less expensive drugs that are equally effective. As a further incentive for physicians to monitor costs, prescription patterns are a part of their reviews.
Finally, Healthcare Partners has taken steps to keep drug company representatives from having free run of the groups' offices, as they once did.
Today, they are given two to three hours to display their products in an area that is away from patients, a change that was implemented, Fite says, not only to control spending but also to protect patients from delays and doctors from unnecessary interruptions.
Product samples are kept out of the central supply cabinets, unless the sample is a drug already on the group's formulary. Doing so makes it harder for physicians to give patients samples of expensive drugs, which they may then demand for ongoing treatment.
All that effort appears to have paid off: For the past several years Healthcare Partners has managed to limit annual increases in its pharmaceutical costs to the single digits, despite an industry average that is significantly higher--18.4% in 1998.
Like Health Partners, the Northern California Kaiser Permanente Group has found having a pharmacist on site is clearly cost-effective. The group employs at least one pharmacist at each of its facilities to serve as a drug-education coordinator. The coordinator makes it easy for physicians to get up-to-date information on drugs and, when appropriate, to tell patients when a less expensive medication will be as effective as whatever drug they've seen on television, says Sharon Levine, M.D., associate executive director of the group.
All of Kaiser's California facilities also use a systemwide database of clinical and pharmaceutical information, which provides physicians with reports on their own prescribing patterns and that of their peers. Because the plan already has a high rate of generic drug use, the database is used less as a cost-cutting measure than a tool to gauge the effectiveness of a particular intervention, says Matt Nye, drug-use management director for Kaiser's California operations. Kaiser's drug costs have risen 14% to 18% annually over the past three years.
Among its other advantages, the database gives Kaiser physicians the means to track each patient's history and, therefore, avoid prescribing drugs that are contraindicated.
Because use of the same database systemwide is in its infancy at Kaiser, no one has analyzed its impact on costs as yet. However, getting doctors to use the system hasn't been a problem, Levine says, because Kaiser's pharmacy policies are created by its physicians. "When docs create the formulary and the rules, you don't have a problem with compliance," she says.
Like medical groups, payers also are scrambling to find ways to control patient demand for costly new drugs. One idea that has caught the attention of several plans is a three-tiered co-payment system. Under such a system, the co-payment for generic drugs is lowest, for branded drugs on the plan's formulary it increases some and for nonformulary drugs it increases further. Aside from saving costs, the model is valuable because it doesn't raise patients' ire, consultants say; they still have access to a broad range of drugs. "Eighteen months ago, you didn't see much in the way of the three-tiered plans," says Debi Reissman, president of Rxperts, an Irvine, Calif.-based pharmacy benefits consulting firm.
Another attempt by health plans to control pharmaceutical costs is to carve pharmacy benefits into different components: drugs for acute illnesses, chronic conditions and catastrophic diseases. In doing so, payers can price drugs according to utilization trends, Reissman says.
Reissman also says that in the future it's likely payers will set co-payments based on the specific cost of the drugs needed, in lieu of having a set co-payment for all drugs. And that rate will probably be higher than the traditional 80%-20% co-pay split, she says.
Although he's on the provider side of the fence, Fite endorses some of the changes payers have in the works: "(They allow) patients to take some of the responsibility," he says. "(They require) everybody to participate in the solution."
Greg Goth is a Redondo Beach, Calif.-based healthcare writer.