American College of Physicians: Internal Medicine — Doctors for Adults ®

Friday, September 14, 2012

The drug formulary death cage match of awesomeness

I got an unusual request last week. I written a prescription of a generic medication (which has been generic for a couple of years) and the prescription was denied by the insurance carrier. The reason for denial: I had to try a brand-name medication first.

Stop. Read that again. They wouldn't allow me to give a prescription for the (cheaper) generic drug because I had to try the brand-name medication first.

This is opposite of the usual reason for denial, the availability of a cheaper alternative than the prescribed drug, and, to my knowledge, is the first time I have ever seen it upside-down like this, and I have been in the ring for the duration of the drug formulary death cage match of awesomeness. I've seen it all unfold.

Here is what happened.

I am not, like many physicians and patients, against the idea of cost-control through the use of drug formularies. Medications are very expensive (unnecessarily expensive, as I have discussed previously), and the previously strong influence of drug reps made many doctors quick to jump for the latest and greatest medication. I did this myself, during the first few years of practice, before the advent of drug formularies. We were constantly detailed on new NSAID's, antibiotics, cholesterol, and blood pressure pills. There was always a reason the latest drug was worth using over the old one (sounds a lot like fancy smart phones, doesn't it?), and since insurance paid the same for brand drugs, I was often influenced by the drug reps.

Round 1 went to drug companies.
Then came the first drug formulary, which, to my initial consternation, told me I could not prescribe whatever I wanted. The drug class impacted most during that initial wave of formularies was the NSAID (non-steroidal anti-inflammatory drugs, like ibuprofen) class. I quickly discovered something amazing, however: my patients did just as well on generic naproxen as they did on the far more expensive brand medications. Cost savings didn't hurt my patients! What a concept!

This opened my mind toward other generics, which became more bountiful as patents expired. It became a hard-sell for the drug reps to talk down a drug they had previously touted as the "next big thing." This got worse for the drug reps when the "next big thing" ended up being the "next big class-action lawsuit," with drugs that would interact with every other drug or have toxic effects on internal organs. Patients became less enamored with new drugs, and less upset with generic substitutes.

Round 2 went to insurance companies.
The game changed once again with the advent of direct-to-consumer advertising for prescription drugs. "Ask your doctor if Nexium is right for you!" the commercial said. Well, Nexium is an isomer of Prilosec, which used to be the greatest drug invented. Prilosec, of course, replaced Zantac as both the treatment choice for GI problems and as the greatest drug ever invented. Both Prilosec and Zantac went generic (and OTC eventually), so drug companies needed a new way to make money. There was still pushback from insurers and formularies, but with consumer demand created by clever commercials about "purple pills," the pushback was bad for PR.
Round 3 went to drug companies.
But then the goose with precious metal ovulation went into menopause. Block-buster drugs lost patents, and the "tweak drugs" like Nexium (tweak the molecule and get more patent) became less impressive or simply tiresome. Crestor is great, but Simvastatin is much cheaper and almost as powerful.

Add to this the intrusion of Wal-Mart into the ring, bringing $4 drugs (or cheaper) into the public mindset, and the fight once again took a turn toward the insurers. It is much harder to get someone to pay $150 per month for something that is 5% better than a $4 drug (or even 25% better). Drug companies took control and were met with few cries from doctors or patients.

Round 4 went to insurance companies.
This is where things got hazy. Drug companies, awash in the generic onslaught realized they could not stay alive forever, so they took a new approach: they starting making generic drugs. I couldn't believe that this was legal when this first happened, as the term "generic" implies "non-brand." A company who has simply to change the labels on the drug has a huge advantage over those who must go through all of the FDA steps to produce approved generics, so they automatically took the lead in the market. This lowered the number of competitors in generic manufacturing, raising the cash price for them significantly. Hence, the insurance companies were no longer seeing the financial benefits of pushing generics.

Round 5 went to drug companies.
There is more to this fight than what meets the eye. Behind the scenes in this fight (as is the case with the real purveyors of pugilism) are shady deals going on in smoke-filled rooms. This is not exactly a mano-a-mano winner gets the prize affair. The drug companies and insurance companies are engaged in deals to benefit both sides. The biggest area of behind-the-scene dealing is in the arena of drug rebates. A "rebate," which usually refers to money paid back to the person buying an item, is different in the insurance/drug world. Drug rebates are paid by the drug companies to the insurers in exchange for advantageous positioning in drug formularies.

I saw behind the scenes on this when I had the "honor" of serving on the drug formulary committee for a large insurance company in our area. In consideration of inclusion on the formulary we were supposed to consider the following:
--Is the drug effective for the condition?
--Are there other drugs of equal or more efficacy?
--What is the cost of the drug?
--What is the demand for the drug?

After all were considered, if there was no obvious choice, the subject of "rebates" was considered. Drug companies would pay extra for the following:
--If their drug was exclusive
--If it was not exclusive, then rebates were paid based on reaching a certain market share.

If the first four factors were equal, then rebates were the decision maker. The problem, of course, is that "efficacy" of drugs is never real clear when compared with another (due to the nature of drug studies, head-to-head trials are often unethical or dangerous from a marketing standpoint). Is Lipitor the same as Zocor or Crestor? What about $4 Lovastatin, which also lowers cholesterol? There is seldom enough information to judge them equally, so money comes in to play very early in the process.

In truth, "rebates" are probably better re-labeled as what they are: "kickbacks." You scratch my back, I scratch yours. They seem to realize this doesn't look good, as they are largely kept secret from the public. How secret? I was once a part of a physician group who teamed up with an insurance company to lower cost and improve their rolls. We accomplished both, and were eventually quite profitable. There was an out clause from the deal that freed them from the partnership if the plan wasn't profitable, which they tried to exercise at a time in which the plan was growing and seeming to do well. They opened their books for us to show us the lack of profit, but insisted that the rebates were not part of the formula (even though the prescribing habits of us physicians were responsible for meeting the quotas). It ended up going to court, and the judge sided with us, showing a huge profit. They settled before the numbers went public, so nobody ever did see the actual size of the rebates.

So what about the brand drug that the insurance company favored over the "generic?" Coincidentally, the main generic manufacturer is the same one who makes the brand drug you have to use before changing to generic. You don't have to be paranoid to see a problem with this. It seems the two fighters have teamed up and are now beating the crap out of whoever challenges them in the ring. I am not sure who wins this fight in the end, but I know whose money is being spent, so I know who loses.

After taking a year-long hiatus from blogging, Rob Lamberts, MD, ACP Member, returned with "volume 2" of his personal musings about medicine, life, armadillos and Sasquatch at More Musings (of a Distractible Kind), where this post originally appeared.

Labels: , , , ,


Post a Comment

Subscribe to Post Comments [Atom]

<< Home

This is a printer-friendly version of this page

Print this page  |  Close the preview




Contact ACP Internist

Send comments to ACP Internist staff at

Blog log

Members of the American College of Physicians contribute posts from their own sites to ACP Internistand ACP Hospitalist. Contributors include:

Albert Fuchs, MD
Albert Fuchs, MD, FACP, graduated from the University of California, Los Angeles School of Medicine, where he also did his internal medicine training. Certified by the American Board of Internal Medicine, Dr. Fuchs spent three years as a full-time faculty member at UCLA School of Medicine before opening his private practice in Beverly Hills in 2000.

And Thus, It Begins
Amanda Xi, ACP Medical Student Member, is a first-year medical student at the OUWB School of Medicine, charter class of 2015, in Rochester, Mich., from which she which chronicles her journey through medical training from day 1 of medical school.

Ira S. Nash, MD, FACP, is the senior vice president and executive director of the North Shore-LIJ Medical Group, and a professor of Cardiology and Population Health at Hofstra North Shore-LIJ School of Medicine. He is Board Certified in Internal Medicine and Cardiovascular Diseases and was in the private practice of cardiology before joining the full-time faculty of Massachusetts General Hospital.

Zackary Berger
Zackary Berger, MD, ACP Member, is a primary care doctor and general internist in the Division of General Internal Medicine at Johns Hopkins. His research interests include doctor-patient communication, bioethics, and systematic reviews.

Controversies in Hospital Infection Prevention
Run by three ACP Fellows, this blog ponders vexing issues in infection prevention and control, inside and outside the hospital. Daniel J Diekema, MD, FACP, practices infectious diseases, clinical microbiology, and hospital epidemiology in Iowa City, Iowa, splitting time between seeing patients with infectious diseases, diagnosing infections in the microbiology laboratory, and trying to prevent infections in the hospital. Michael B. Edmond, MD, FACP, is a hospital epidemiologist in Iowa City, IA, with a focus on understanding why infections occur in the hospital and ways to prevent these infections, and sees patients in the inpatient and outpatient settings. Eli N. Perencevich, MD, ACP Member, is an infectious disease physician and epidemiologist in Iowa City, Iowa, who studies methods to halt the spread of resistant bacteria in our hospitals (including novel ways to get everyone to wash their hands).

db's Medical Rants
Robert M. Centor, MD, FACP, contributes short essays contemplating medicine and the health care system.

Suneel Dhand, MD, ACP Member
Suneel Dhand, MD, ACP Member, is a practicing physician in Massachusetts. He has published numerous articles in clinical medicine, covering a wide range of specialty areas including; pulmonology, cardiology, endocrinology, hematology, and infectious disease. He has also authored chapters in the prestigious "5-Minute Clinical Consult" medical textbook. His other clinical interests include quality improvement, hospital safety, hospital utilization, and the use of technology in health care.

Juliet K. Mavromatis, MD, FACP, provides a conversation about health topics for patients and health professionals.

Dr. Mintz' Blog
Matthew Mintz, MD, FACP, has practiced internal medicine for more than a decade and is an Associate Professor of Medicine at an academic medical center on the East Coast. His time is split between teaching medical students and residents, and caring for patients.

Everything Health
Toni Brayer, MD, FACP, blogs about the rapid changes in science, medicine, health and healing in the 21st century.

Vineet Arora, MD, FACP, is Associate Program Director for the Internal Medicine Residency and Assistant Dean of Scholarship & Discovery at the Pritzker School of Medicine for the University of Chicago. Her education and research focus is on resident duty hours, patient handoffs, medical professionalism, and quality of hospital care. She is also an academic hospitalist.

Glass Hospital
John H. Schumann, MD, FACP, provides transparency on the workings of medical practice and the complexities of hospital care, illuminates the emotional and cognitive aspects of caregiving and decision-making from the perspective of an active primary care physician, and offers behind-the-scenes portraits of hospital sanctums and the people who inhabit them.

Gut Check
Ryan Madanick, MD, ACP Member, is a gastroenterologist at the University of North Carolina School of Medicine, and the Program Director for the GI & Hepatology Fellowship Program. He specializes in diseases of the esophagus, with a strong interest in the diagnosis and treatment of patients who have difficult-to-manage esophageal problems such as refractory GERD, heartburn, and chest pain.

I'm dok
Mike Aref, MD, PhD, FACP, is an academic hospitalist with an interest in basic and clinical science and education, with interests in noninvasive monitoring and diagnostic testing using novel bedside imaging modalities, diagnostic reasoning, medical informatics, new medical education modalities, pre-code/code management, palliative care, patient-physician communication, quality improvement, and quantitative biomedical imaging.

Informatics Professor
William Hersh, MD, FACP, Professor and Chair, Department of Medical Informatics & Clinical Epidemiology, Oregon Health & Science University, posts his thoughts on various topics related to biomedical and health informatics.

David Katz, MD
David L. Katz, MD, MPH, FACP, is an internationally renowned authority on nutrition, weight management, and the prevention of chronic disease, and an internationally recognized leader in integrative medicine and patient-centered care.

Just Oncology
Richard Just, MD, ACP Member, has 36 years in clinical practice of hematology and medical oncology. His blog is a joint publication with Gregg Masters, MPH.

Kevin Pho, MD, ACP Member, offers one of the Web's definitive sites for influential health commentary.

MD Whistleblower
Michael Kirsch, MD, FACP, addresses the joys and challenges of medical practice, including controversies in the doctor-patient relationship, medical ethics and measuring medical quality. When he's not writing, he's performing colonoscopies.

Medical Lessons
Elaine Schattner, MD, FACP, shares her ideas on education, ethics in medicine, health care news and culture. Her views on medicine are informed by her past experiences in caring for patients, as a researcher in cancer immunology, and as a patient who's had breast cancer.

Mired in MedEd
Alexander M. Djuricich, MD, FACP, is the Associate Dean for Continuing Medical Education (CME), and a Program Director in Medicine-Pediatrics at the Indiana University School of Medicine in Indianapolis, where he blogs about medical education.

More Musings
Rob Lamberts, MD, ACP Member, a med-peds and general practice internist, returns with "volume 2" of his personal musings about medicine, life, armadillos and Sasquatch at More Musings (of a Distractible Kind).

David M. Sack, MD, FACP, practices general gastroenterology at a small community hospital in Connecticut. His blog is a series of musings on medicine, medical care, the health care system and medical ethics, in no particular order.

Reflections of a Grady Doctor
Kimberly Manning, MD, FACP, reflects on the personal side of being a doctor in a community hospital in Atlanta.

The Blog of Paul Sufka
Paul Sufka, MD, ACP Member, is a board certified rheumatologist in St. Paul, Minn. He was a chief resident in internal medicine with the University of Minnesota and then completed his fellowship training in rheumatology in June 2011 at the University of Minnesota Department of Rheumatology. His interests include the use of technology in medicine.

Technology in (Medical) Education
Neil Mehta, MBBS, MS, FACP, is interested in use of technology in education, social media and networking, practice management and evidence-based medicine tools, personal information and knowledge management.

Peter A. Lipson, MD
Peter A. Lipson, MD, ACP Member, is a practicing internist and teaching physician in Southeast Michigan. The blog, which has been around in various forms since 2007, offers musings on the intersection of science, medicine, and culture.

Why is American Health Care So Expensive?
Janice Boughton, MD, FACP, practiced internal medicine for 20 years before adopting a career in hospital and primary care medicine as a locum tenens physician. She lives in Idaho when not traveling.

World's Best Site
Daniel Ginsberg, MD, FACP, is an internal medicine physician who has avidly applied computers to medicine since 1986, when he first wrote medically oriented computer programs. He is in practice in Tacoma, Washington.

Other blogs of note:

American Journal of Medicine
Also known as the Green Journal, the American Journal of Medicine publishes original clinical articles of interest to physicians in internal medicine and its subspecialities, both in academia and community-based practice.

Clinical Correlations
A collaborative medical blog started by Neil Shapiro, MD, ACP Member, associate program director at New York University Medical Center's internal medicine residency program. Faculty, residents and students contribute case studies, mystery quizzes, news, commentary and more.

Interact MD
Michael Benjamin, MD, ACP member, doesn't accept industry money so he can create an independent, clinician-reviewed space on the Internet for physicians to report and comment on the medical news of the day.

PLoS Blog
The Public Library of Science's open access materials include a blog.

White Coat Rants
One of the most popular anonymous blogs written by an emergency room physician.

Powered by Blogger

RSS feed