Patients feeling squeezed
Published Sunday, May 16, 1999
San Jose Mercury News
BY LISA M. KRIEGER
Mercury News Staff Writer
For the past decade, America's managed care health system has been
able to cut expenses by restricting access to doctors and hospitals. With
little room left to cut further, the industry has shifted its sights to
pharmaceuticals.
Coupled with the skyrocketing cost of medicines, that means patients
across California are facing steep increases in out-of-pocket charges
for agents that relieve pain, fight disease and enhance the quality of
their lives.
Patients such as 73-year-old Bill Enos of San Jose are finding
themselves in a financial squeeze.
Enos is scrambling to find a way to pay a $980 monthly prescription bill
out of his modest savings and $783 monthly Social Security check. He's
taking about half a dozen medications for some of the standard ailments
of aging: a minor stroke, high blood pressure, an ulcer and cholesterol
concerns.
''It's unbelievable. This medicine is keeping me healthy, but it'll
bankrupt me,'' said the former National Cash Register salesman.
Insurers complain that the U.S. drug industry has grown fat on the
price-is-no-object attitude that prevails among both doctors and their
patients -- and that it's time for a change.
''If you ask the average consumer, they don't know the true price of
medicines,'' said Ron Yukelson of HealthNet. ''They think a
prescription costs $5.''
Skyrocketing prices
Prescription prices have climbed at a rate of 16 percent in the past
year, according to the Consumer Price Index. That's more than three
times the rate of overall national health spending.
The nation's drug companies defend prices, pointing to complex drugs
new to the market as the main reason costs are going up. One small pill
can actually represent 12 to 15 years and $500 million of research and
development before it reaches consumers, according to Jeff Trewhitt,
spokesman for the Pharmaceutical Research and Manufacturers of
America
Regardless of the reasons, patients and doctors are facing more
barriers to having prescriptions filled, according to a 1998 drug audit by
pharmaceutical consulting firm Scott-Levin of Newtown, Pa.
Antidepressants, cholesterol reducers and heart drugs called calcium
blockers are among the classes with the highest number of restrictions,
it found.
Until recently, many cost-containment strategies -- such as limiting
hospital days, diagnostic tests and visits to specialists -- have been
abstract and largely invisible to consumers. Drug restrictions, in
contrast, are tangible and startling evidence to many patients of health
care rationing.
Health plans vary widely in what strategies they are using to contain
pharmacy costs. Among the most common are:
Price caps: Kaiser, Aetna, HealthNet and Blue Shield all have
$1,200 to $2,000 limits on what some of their plans will pay for. After
that, the consumer pays out-of-pocket.
Katie Shinnick, 36, of Redwood City quickly hit the ceiling of her
Kaiser coverage of an injectable new medicine called Enbrel, produced
by recombinant DNA technology in a hamster's ovary cells. Her
previous medicines to treat rheumatoid arthritis cost $10 or $20 a
month, but they caused nausea, ulcers and liver damage. Enbrel has
made it possible for her to get out of bed without pain and care for her
husband and two children, ages 1 and 3.
The cost: $882 a month, paid out of pocket since she reached the
ceiling of her $1,600-a-year Kaiser coverage in February.
''It works phenomenally,'' said Shinnick, ''but we're using money we
had put aside for college educations and vacations. I'm stuck.''
Restricted access: Increasingly, HMOs are limiting which drugs
they will pay for.
Kaiser Permanente of Oakland, Aetna US Healthcare of Walnut Creek
and HealthNet, a Woodland Hills-based plan, were among the six
California insurers who recently sought to stop payment of nearly 130
drugs for newly enrolled customers. Under orders of the Department of
Corporations, they have restored many of the drugs, including the
antidepressant Prozac and the ulcer treatment Prilosec.
Wellpoint Health Networks Inc. and Aetna U.S. Healthcare have
restricted use of Celebrex, an expensive anti-inflammatory drug to treat
arthritis.
''A lot of the new drugs are good, but they need to be used
appropriately, so the right patient gets the right drug,'' said Michael
Nameth, general manager of Wellpoint Pharmaceutical Management.
''New products are more expensive -- but that doesn't mean that
everyone with a particular illness needs them.''
Increased co-payments: Health plans are raising what patients
kick in, hoping to dampen demand. Kaiser, for example, reluctantly
agreed to cover the heavily hyped new sex dysfunction drug Viagra --
but requires that patients pay for half of its cost.
But standard $5 co-payments are more than doubling for many drugs
that patients have been using for years. Health Alliance Plan has
trotted out $15 to $20 co-payments for all brand name drugs.
Tiered payment schemes: In July, HealthNet will begin a new
three-step system for drug prices, with one fee for generics, a higher
one for brand-name drugs and the highest for brand name drugs that
are not on the official list.
PacifiCare already has implemented a similar system, by which patients
pay $5 for generic, $10 for brand name drugs and $20-$25 for drugs
that are not on the list.
Increased premiums: Drug prices are fueling further increases in
health plan premiums, according to a new survey by the Segal Co., a
New York-based consulting firm.
Segal predicts prescription drug costs will increase by 16.6 percent a
year -- causing traditional indemnity coverage to rise 12 percent and
HMO coverage 6.8 percent.
Plans are also closely monitoring physicians' prescribing habits. These
statistical profiles track how much doctors spend on prescriptions per
patient and rank them against others in their region.
The problem is compounded, according to a congressional report
released last week by Rep. Lynn Woolsey, D-Santa Rosa, and Rep.
George Miller, D-Concord, by the fact that consumers who are forced
to pay for drugs are charged twice as much as bulk buyers such as
HMOs and the federal government.
For example, Santa Clara patients who are forced to buy their drugs at
full retail price pay $101 for 30 tablets of 20 mg. Zocor, a common
cholesterol drug, at the neighborhood Safeway pharmacy -- compared
with the price offered customers like HMOs, $34.80.
''It's just not right to be gouging grandma and grandpa for the health
care they need,'' Woolsey said. ''Prescription drugs can literally mean
the difference between life and death.''
Pharmaceutical industry spokesman Trewhitt accused Congress of
using seriously flawed methodology to compare drug prices,
exaggerating the difference by looking only at higher-priced agents.
In many of the less expensive drugs, he added, there is a very small gap
between what consumers and HMOs pay.
''When prices are different, we are responding to the marketplace.
HMOs and federal agencies like (Veterans Affairs) have the market
clout to aggressively negotiated discounts,'' Trewhitt said.
There is no easy way out of this mess, according to a U.S. Health Care
Financing Administration report in the fall 1998 issue of the journal
Health Affairs. Prescription drug expenditures are forecast to climb 9
to 10 percent annually from 1999 to the year 2007.
Conflicting demands
Consumers, employers and health plans put conflicting demands on the
system, the report found. Consumers want unfettered access to the
newest, most promising drugs -- and want to pay as little as possible.
Employers want health plans to hold the line on costs.
''We, as a society, are faced with making judgments about which drugs
should be included in a plan and which should be available for individual
purchase instead,'' said Dr. Sharon Levine of the Kaiser Permanente
Medical Care Program.
''There is consumer demand for expensive alternatives,'' she said.
''But, in fact, it is consumers who bear the cost.''
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