Sam Uretsky

Big Pharma Gets US Drug Benefits

Just think of it as the grift that keeps on giving. The Medicare drug benefit does offer benefits, if you happen to be selling drugs, but of course that was just the start. The bill, as passed, offered impressive benefits to the pharmaceutical manufacturers and insurance companies. It's not clear what, if any, benefits will trickle down to the elderly people who need help with drug costs, but that never mattered much.

The prescription drug benefit plan has always been a plan to benefit the makers of prescription drugs -&endash; there hasn't even been an attempt to hide that. Written into the legislation is a requirement that Medicare pay list price. This is something like walking into a supermarket and asking "what's not on sale?" Everybody else in the world at least comparison shops. The Medicare benefit plan is like applying for a credit card that doesn't give frequent flyer miles. It's crazy. The copies of the bill should have come with stickers that said "vote yea if you love deficits!"

But, the insurance companies had their own ideas. While they couldn't negotiate discounts the way the Veteran's Administration and Medicaid do, they could at the very least cash in on the most basic of discounts, the quantity discount that's factored into the list price of drugs. It's the same discount anybody gets -&endash; buy the giant economy size and your unit price goes down. It's that basic -&endash; the cost per tablet in a bottle of 1,000 is lower than in a bottle of 100. The insurance companies were going to set formularies, just as Medicaid does, just as hospitals do, and buy only a restricted number of drugs. They might have one or two drugs from every class, and then buy only those drugs that had the lowest list price. Even this restriction would be enough to help reduce costs.

But, according to a June 14 report in the New York Times, Medicare officials are pushing for the insurance companies to offer more drugs than the insurers ever intended, including "all or substantially all" of the drugs in several classes, including antidepressants, anti-retroviral drugs (anti-AIDS medications), cancer medications and immunosupressants (drugs to prevent rejection of transplants.)

Some of this makes sense, but only some. There are two facts to consider: Insurance companies usually do know what they're doing, and pharmaceutical manufacturers are big on imitation. When an insurer or hospital puts together a formulary, it's not designed to cover every possibility. Rather, it has a wide enough drug selection to cover the needs of 90% to 95% of patients. Usually it will have the best drug in each class, or if not the best then at least the cheapest, and a suitable alternative for patients who have adverse reactions to the first choice drug. There's usually a mechanism for review of requests for non-formulary drugs since some people do have special needs, but the overwhelming majority of cases do well on the limited selection. When you read about a cold-hearted insurer turning down a life-saving therapy, you can believe they've done a statistical analysis of the situation. They may be heartless SOBs, but they know their statistics and know to the seventh decimal what they can get away with.

Meanwhile, drug manufacturers have all the originality of television programming directors. In the antidepressant group there are amitriptyline, clomipramine, doxepine, imipramine and trimipramine, all of which are about as closely related as Barbara and Jenna Bush. There's a second group, amoxepine, desipramine, nortriptyline and protriptyline that do the same things -&endash; but are chemically slightly different from the first group. It's arguable that you need one from the first group and one from the second, and if you're really feeling flush you could go with two from each group, making sure that you include the cheapest choice. The FDA may have approved all nine, but then, Antonio Vivaldi wrote 230 violin concertos. Beethoven only wrote one.

Medicare could have reduced costs, if not by negotiating with the manufacturers for discounts, then at least by developing a formulary that used only the least expensive drug in a chemical class (unless, as sometimes happens, there's a good therapeutic reason for buying a more expensive variant). But whatever potential economies the Congress accidentally left in place, the administration is apparently intent on tossing to the pharma industry as a gratuity. And then they tell us we can't afford Sesame Street.

Sam Uretsky is a writer and pharmacist living on Long Island, N.Y.

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