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A Nugget Of Gold

A Nugget of Gold

A few days ago, I attended a meeting with the board of trustees of a health and welfare plan and trust and a pharmacy benefit management company. As trustees, these men and women have a fiduciary responsibility to make certain the health plan is operating in a cost effective manner. Essentially, they are trying to get the best bang for their buck. In attempting to do so, they have contracted with a company to manage their pharmacy costs. This pharmacy benefit management (PBM) company vows to keep their out-of-pocket costs as low as possible by contracting with pharmacies to dispense medications at a below the market rate. Of course this service comes with a pretty hefty fee.

There are a number of PBM companies in the United States. The largest ones manage the pharmacy benefits of hundreds of thousands of patients. As you might imagine, they have great clout in the medical industry because they determine what drugs patients receive at the pharmacy counter. How do they do that? They have a formulary. What is a formulary? A list of medications that the PBM Company adopts as the drugs they will reimburse the pharmacy for dispensing. What happens if your doctor prescribes a drug that is not on the formulary? The patient must either accept an alternate drug or pay full price of the medication. The devil is in the details.

Full price for a medication is not a price that the PBM Company might be able to negotiate down if they were to carry the drug on their formulary. The pharmacy determines the full price by determining what the market will bear. It is not a price based on customary retail economic standards and most times it is outrageous. Sometimes patients pay hundreds of dollars for their medication, not knowing there are alternate ways to either treat their illness or find the medication cheaper. Many times the PBM Company’s formulary will only cover drugs that have an FDA approved use. That means that if a drug was approved for high blood pressure and a physician wants to use it to treat anxiety, the drug will not be reimbursed at the pharmacy counter because it is being prescribed for anxiety (off-label use) not high blood pressure, even if the drug may be very effective at diminishing both conditions. Physicians prescribe medications for off-label use far more often than on-label use.

The FDA's drug approval system is complex. Pharmaceutical companies find compounds that inhibit an enzyme or bind to a specific receptor or alter the flow of ions through specific cellular membranes. Afterwards, they hire a consultant to tell them what potential diseases for which the drug could be of use. The pharmaceutical companies then hire health care actuaries to determine the number of patients in the United States that could be suffering from each potential disease. Sometimes the actuary can predict world-wide disease incidence. It rationally follows that the company will get the drug approved for the disease with biggest potential market, knowing that physicians will use the drug for treatment in the other non-approved diseases. Drug companies are extremely skillful at flooding the clinical research literature with both the potential on-label and off-label uses as well as hiring physicians for marketing the drugs by arranging speaking engagements in large conferences.

In a perfect world, the FDA would change its approval process. It would examine the effect of the drug's mechanism of action on enzyme systems, receptors or cell membranes and approve a safe prescription dosage for prescribing the medicine. Then physicians could then use the drug based on its mechanism of action instead of its disease indication. A good example: Prozac®.

Prozac® is a serotonin reuptake inhibitor that works in the Raphe Nuclei located in the brainstem's reticular activating system in the brain. The Raphe Nuclei only has approximately one hundred fifty neurons out of the hundred billion neurons in the brain. Once the drug penetrates the blood-brain barrier, it promotes the accumulation of serotonin in the neuronal synapses of the Raphe Nuclei. This effect can lift a patient's mood as well as give them energy. It can correct fatigue that is caused by low serotonin levels when depression or a mood disorder is not present.

But because Prozac® was approved for depression as well as a number of other psychiatric disturbances, patients may be hesitant to use it as a treatment for systemic fatigue when they believe they are not depressed. Like it or not, Prozac® has a stigma associated with it due to the public's understanding that it is a drug used for mental disorders. It has been labeled an antidepressant. Let us assume a physician wants to prescribe the drug for the treatment of chronic fatigue, which is considered an off-label use of the drug. The PBM Company may deny reimbursement for the drug because it is being used for fatigue instead of depression. If the physician prescribes the brand only, the patient will be forced to pay at least four or five hundred dollars for one month supply. Everyone benefits economically but the patient. The PBM Company saved the medical insurance plan four hundred dollars a month and the pharmacy profited on the outrageous fee it charged to dispense the medication.

We all wish that the delivery of health care was simple and transparent. It isn't. And from the looks of things, it may only get worse during our future healthcare reformation. From what I can tell, there is gold in them there healthcare hills and there are some very clever people figuring out how to mine it. But healthcare gold is not a natural resource, it is money that comes out of your wallet. So be mindful when the pharmacist tells you she has a concern and she needs to call your doctor to discuss your pharmacy benefit to be on the safe side.

She may have just discovered another nugget of gold.


Posted by Amanda Sanders at 8:35 AM
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