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These doctors' mission: Keeping drug costs down


Frustrated by the impact on patients and their own pocketbooks, physicians are exploring ways to keep the lid on Rx spending.


These doctors' mission: Keeping drug costs down

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Choose article section... The Pine Tree State leads the way The price-control debate widens Peer selling with a twist in the Green Mountain State Gambling on lower drug costs via the Internet

Frustrated by the impact on patients and their own pocketbooks, physicians are exploring ways to hold the lid on Rx spending.

By Wayne J. Guglielmo
Senior Editor

Open a newspaper these days—or turn on the radio or TV—and you're almost certain to come across yet another story about America's escalating prescription-drug crisis. The high cost of prescription drugs appears to be on everyone's mind—patients, payers, health plan officials, legislators, and, of course, doctors.

Physicians, in fact, are in the very eye of the storm. Alarmed by the impact of high drug costs on patient care and on their own reimbursements, especially within Medicaid programs, doctors are searching urgently for workable solutions.

Some have temporarily shelved their big-government suspicions and backed state-mandated remedies, including price controls if voluntary incentives fail. Following Maine's lead last year, at least 11 states are currently debating bills that would set a ceiling on drug prices.

Other doctors are taking a more active approach. "The solution won't come easily from above," says Vermont internist Frank J. Landry, who travels throughout the state schooling colleagues in the art of cost-effective prescribing.

The threat of state or federally imposed price controls raises the biggest red flag for US drug makers. PhRMA (Pharmaceutical Research and Manufacturers of America), the Washington, DC-based industry trade group, thinks the real problem isn't price but lack of insurance coverage, particularly for the nation's seniors. It has called for a Medicare drug plan that emphasizes private market choice.

With the cost debate hotter than ever, and with Medicare reform once again on the Congressional to-do list, there's no better time to examine which remedies doctors think will work and which they think will only make things worse.

The Pine Tree State leads the way

When Maine lawmakers came up with a groundbreaking law last year to control prescription drug prices, few in organized medicine gave it much chance of passing muster with the state's physicians. After all, the AMA has long opposed such controls.

The medical pundits could not have been more wrong.

"During last summer, we surveyed 200 of our members," says Gordon H. Smith, executive vice president of the Maine Medical Association, which had supported the general proposal but not the price cap provision. "Traditionally, doctors had been very supportive of the drug companies. But this time they came out overwhelmingly in favor of all provisions of the law."

Smith thinks there are several reasons why. First, he says, Maine doctors treat a lot of people who can't afford to fill their prescriptions. "Part of the explanation is just a heartfelt feeling toward patients," he says. Second, "doctors are really ticked off about direct-to-consumer advertising. They resent the time spent explaining to patients why the medication they're on is working perfectly and why they don't need the high-end, brand-name drug they're demanding." And third, Smith continues, "there's been so much publicity about the cost of drugs that astute physicians realize that their ability to get paid adequately is being imperiled by 20 to 30 percent increases in state drug budgets."

Data from Maine's Bureau of Medical Services—which oversees the state Medicaid program—bear Smith out. The overall cost of the program is about $1.25 billion. Of that, expenditures for prescription drugs have risen more than 20 percent annually—or from about $135.5 million in 1999 to a projected $200 million for 2001. During this same period, expenditures for physician services have remained stagnant at around $38 million per year.

Holding the line on drug costs wouldn't necessarily have resulted in higher physician fees, everyone agrees. But not holding the line, many Maine doctors believe, makes it all but certain their fees will remain fixed. Says Smith: "I've heard a number of doctors say, 'The problem is that we're under price controls, and the drug companies aren't. So their percentage of the Medicaid budget goes up and up.' "

The MainesRx Program might have helped right this imbalance by giving the state the authority to negotiate rebate agreements with pharmaceutical manufacturers and labelers. Companies failing to achieve certain reductions by July 2003 would have been subject to price controls. As the law was written, participation in the program was voluntary for retail pharmacies, but mandatory for manufacturers and labelers participating in the Medicaid program. Medicaid suppliers who refused to negotiate lower prices, including those operating outside the state, would be subject to preauthorization restrictions on their products.

The pharmaceutical industry reacted quickly. PhRMA labeled the program a "bad idea" and urged other states not to follow the Maine model. "Government—whether state or federal—should not control the health care system through price controls on the pharmaceutical industry," said PhRMA President Alan F. Holmer.

Then, on Aug. 10—two days before the new law was scheduled to take effect—PhRMA asked the US District Court in Maine to halt implementation. The trade group argued that the law interferes with the federal Medicaid program by limiting beneficiaries' access to a manufacturer's drugs. The suit also claimed that the law violates the US Constitution's commerce clause in attempting to regulate "transactions occurring outside the state."

In late October, the court temporarily enjoined the state from implementing the mandatory portion of the law. If the state wished to continue "the [Rx] program as a voluntary program with public stigma being the only incentive," the court said, that would be fine.

"Some companies might want to participate in this program," says PhRMA spokesman Jeff Trewhitt. "But it should be their choice."

Meanwhile, the state has appealed, but few observers give it much chance of success.

Some doctors were concerned that what happened in Maine would have a chilling effect on other states. "I think lawmakers elsewhere are going to have second thoughts about this legislation because it raised expectations, cost a lot of money to defend, and ultimately didn't work," said Bangor endocrinologist Clifford J. Rosen late last year.

Perhaps. But lawmakers in other states have already proposed bills similar to Maine's.

The price-control debate widens

In 11 states to date—Alabama, Arizona, Arkansas, Connecticut, Massachusetts, New York, Oklahoma, Oregon, Rhode Island, Tennessee, and Texas—lawmakers have introduced bills to control the price of prescription drugs.

In some of these states, costs would be held in check by a drug-pricing board. Other states put the responsibility in the hands of state health officials.

The proposals set out a variety of formulas for determining maximum allowable prices. Under the Arkansas proposal, for example, the maximum manufacturer price for a drug sold within the state could not exceed the price of that same drug sold in Canada or Mexico, whichever is lower. Drugs sold in Arkansas that aren't available in these countries could not "exceed the maximum price for all other prescription drugs within the same classification of drugs."

The Tennessee proposal employs a different formula. It authorizes the state to negotiate rebates and discounts on behalf of qualified elderly and disabled residents without drug coverage. Within the Tennessee Rx Program, the prices of prescription drugs must be "reasonably comparable" to the lowest price paid for the same drugs within the state's medical assistance program, known as TennCare. If they aren't, the commissioner must impose "maximum retail prices for any or all prescription drugs sold in the state."

The fate of the bills is far from certain. David Wroten of the Arkansas Medical Society is pessimistic that the state's bill will survive. "It's more than likely unconstitutional, although it's been very effective in placing the spotlight on the issue," says Wroten. Like others in the physician community, Wroten is waiting for Congress to come up with a "national solution" to the Medicare drug problem.

So is the pharmaceutical industry. "The last thing we need is the development of a patchwork of differing and perhaps conflicting state laws," says PhRMA's Jeff Trewhitt. "This is a national problem that requires a national solution."

Peer selling with a twist in the Green Mountain State

Many doctors would agree that a national solution is called for, but more and more physicians aren't content to wait for Congress. One who's launched his own grassroots campaign is Vermont internist Frank J. Landry.

For a little over a year, Landry and his colleagues have traveled throughout the Green Mountain State talking to groups of up to seven doctors about their prescribing habits. To bolster attendance, the team plies participants with lunch or dinner, a small stipend, and a free T-shirt—all things a promotion-minded drug company might do on a somewhat plusher scale.

But Landry's goal is education, not marketing. "We teach doctors how to prescribe more rationally and cost-effectively," he says. "We let them know there may be drugs that do the same things at a lot less cost than the big, well-promoted drugs."

To get Vermont doctors to rethink their prescribing habits, Frank Landry draws repeatedly on years of work in the area of therapeutics and pharmacy, as well as his own clinical experience.

In the Army, he served on committees charged with reducing pharmacy budgets while improving quality of care. Then, as now, he spent a lot of time talking to young doctors about how to prescribe more cost-effectively. He continued to address the issue as a pharmacy committee member at Fletcher Allen Health Care, an integrated delivery system allied with the University of Vermont in Burlington.

Meanwhile, as a practicing physician, Landry experienced firsthand what many of the doctors he taught were up against: He hated juggling multiple health plan formularies, while fending off his patients' increasingly adamant demands for specific drugs. He also felt pressure to identify less-costly therapies for patients who were forced to pay for their prescriptions out of pocket.

Frustrated, Landry and several colleagues applied for funding from a collaborative—which includes The Vermont Health Plan, an HMO; Fletcher Allen Health Care; and the Vermont Health Foundation, a nonprofit organization. The goal was to teach doctors how to navigate what Landry saw as an increasingly irrational system.

Using the case-study method, Landry or another project member leads group discussions at medical meetings and other places where doctors congregate. Each discussion centers on one of several common conditions: hypertension, hyperlipidemia, depression, perennial rhinitis, or gastroesophageal reflux. In the area of antihypertensive therapies, for instance, Landry stresses that the newest drugs aren't always the best choice.

"We now know the traditional generic beta-blockers and diuretics are excellent, as are the somewhat newer ACE inhibitors, which many patients tolerate very well," he says. "But the drug companies are pushing the newest and more expensive angiotensin receptor blockers, even though there is more evidence for the efficacy of ACE inhibitors for heart failure and hypertension."

Without offering comment on Landry's specific example, PhRMA's Jeff Trewhitt says that drug companies have the right to introduce their latest products. "After that, it's up to the doctor and patient to decide what's best in any particular case."

Landry also schools doctors in a number of cost-saving prescribing "tricks," including once-a-day vs twice-a-day dosing. "A lot of doctors use expensive drugs like lisinopril to treat either high blood pressure or congestive heart failure, and they typically prescribe 10 mg twice a day," Landry says. "But that significantly increases the cost of the prescription, since 10-mg and 20-mg tablets cost almost the same. Our recommendation is to prescribe 20 mg once a day for patients requiring the typical amount. Our experience tells us this works just as well."

The lessons seem to be taking hold. In a first-year study of the project, prescriptions of drugs recommended by Landry went up in all categories. The biggest jump occurred in the use of more cost-effective proton pump inhibitors and antihistamines.

The results have encouraged Landry, who vows to press on. Plans are in the works, for example, to broaden the range of case studies to include antibiotic use for upper respiratory infections and treatment options for erectile dysfunction.

He'll also continue to drive home the message that doctors are ultimately in charge: "The patient can tell me what to prescribe, and the drug rep can tell me what to prescribe. But I'm the one writing the prescription, and it's my fault if I prescribe the most expensive drug in a given category."

Fellow Vermonter, anesthesiologist David L. Johnson, agrees, adding, "I believe we not only have to raise the consciousness of doctors, but also of consumers. We need to let them know that physicians have a multiple responsibility—to treat the patient as well as they can, while never losing sight of how that treatment affects the entire system of care."

Gambling on lower drug costs via the Internet

Besides legislative and grassroots remedies, doctors have thrown their support behind efforts to make patients more savvy purchasers of prescription drugs.

The need, say proponents, is dramatic. "Patients are often inadequately informed about their choices," says Portland, OR, internist Miles Hassell. "So they'll get a $70 antibiotic for a cough, when a $5 one would be a better choice economically and medically." Osteopathic family practitioner Steven D. Kamajian of Montrose, CA, agrees: "This is a consumer-based economy. To make any changes, the consumer must know the cost."

Kamajian suggests listing a drug's wholesale cost to the pharmacy on the label, along with the pharmacy's markup to the consumer. He supports federal guidelines that would restrict the range of legal markups.

Some doctors want to see consumers have the means to compare drug prices online. One of the most recent ventures, DestinationRx ( ), was created by Los Angeles general surgeon William I. Park. He says the site searches online drug, health, and beauty-supply stores to offer patients price comparisons, along with product information.

Access to the site is free. Revenues at this point come largely from affiliate fees—what other sites pay DestinationRx for directing purchasers to them, mostly for over-the-counter products. Park hopes to generate revenues in two additional ways: by selling advertising and by licensing the site's trademarked search engine to other health-information e-businesses.

Another physician-created consumer site is Rxaminer ( Co-founded by Michigan cardiologist Joseph C. Rogers and his businessman son Toby, Rxaminer offers patients lower-cost alternatives to their current medications in addition to comparison shopping for specific drugs.

Rogers developed his online service as a result of trying to identify comparable but less costly cardiology drugs for his own patients. He struggled, especially when it came to figuring out equivalent dosages, but the savings he realized for his patients could be significant. Gradually, his search broadened to include drugs for other specialties.

For a $10 fee, patients receive a two-part consultation report from Rxaminer. Part 1 lists substitute medications and their prices; part 2 lays out their advantages and disadvantages over the originally prescribed drug. Typically, patients are asked to choose between a conservative and a more aggressive option, and then talk over those options with their physician.

"The first option usually involves substituting one brand-name drug that's just as good but costs less than another," says Rogers. The second option is designed to maximize savings without compromising benefits, although often at the cost of convenience to the patient. "It might mean switching a patient to a generic drug, and then splitting a higher dose of that generic, which often costs the same as the lower-dose pill," Rogers says.

Sometimes, to reap the maximum savings, patients must also take their medications more frequently. In such cases, says Rogers, keeping track of what's in the bottle is critical. Patients who have pills left over at the end of their prescription period should probably choose a treatment option that costs a bit more but is easier to comply with, he cautions.

Currently, the site receives about 2,000 hits and enrolls 100 users a day.

And how have doctors reacted to Rogers' alternative-prescription approach? "We haven't had any objections so far," he says. "I think physicians are likely to be more receptive to a consumer request, especially one that's all typed out and clear, than to a request from some third-party insurer or pharmacy benefit manager."

Currently, Toby Rogers has begun marketing Rxaminer to physicians and other providers. If that effort proves successful, Rogers will be doing online what Vermont's Frank Landry is pursuing the old-fashioned way.


Wayne Guglielmo. These doctors' mission: Keeping drug costs down. Medical Economics 2001;8:108.

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