Give Me Drugs!

The pharmaceutical industry is big bucks…research, manufacturing, registration with the Feds, marketing, and sales. Billions and billions of dollars every year are spent not only on new medications, but also existing medications, whether they are generic or brand name. Is America the most medicated nation on Earth? Could be, according data released by the Department of Health and Human Services (HHS). At least half of all Americans take at least one prescription drug, with one in six taking three or more medications. Prescription drug use is rising among people of all ages, and use increases with age. Five out of six persons 65 and older are taking at least one medication, and almost half the elderly take three or more. Man, that’s a lot of meds!

Among the report’s findings:

• Use varied by sex, race and ethnicity. Three times as many white adults as black or Mexican adults took antidepressants, and women take more drugs than men;
• Boys were prescribed drugs to treat attention deficit hyperactivity disorder (ADHD) twice as often as girls, but antidepressants were prescribed to boys and girls at the same rates;
• Private health insurance covered almost half of prescription drug costs, and 30% of people pay out of pocket.
• Those who were without a regular place for health care, health insurance, or prescription drug benefit had less prescription drug use compared with those who had these benefits.
• The most commonly used types of drugs included: asthma medicines for children, central nervous system stimulants for adolescents, antidepressants for middle-aged adults, and cholesterol lowering drugs for older Americans.

According to the CDC, these patterns reflect the main chronic diseases common at these ages, but may also likely reflect more aggressive treatments for chronic medical conditions such as high cholesterol and high blood pressure as recommended in the updated clinical guidelines. Lack of access to medicines may impact health and quality of life, as prescription drugs are essential to treat acute and chronic diseases.

Finally, with older Americans using multiple medications, this likely reflects the need to treat the many diseases that commonly occur in this age group; however, excessive prescribing or polypharmacy is also an acknowledged safety risk for older Americans, and a continuing challenge that may contribute to adverse drug events, medication compliance issues, and increased health care costs.

Prescription drug use in the U.S. has been rising steadily in the past decade and the trend shows no signs of slowing, the CDC says.  Plus, according to WebMD, the CDC also says that:

• People with a regular place for health care were 2.7 times as likely to have used prescription drugs in the past month compared to those without the benefit.
• People with health insurance were about twice as likely to have used at least one prescription medication in the past month as those without health insurance.
• People with prescription drug benefits in their health insurance plans were 22% more likely to use prescription medications than those who did not have that benefit.

All these statistics boggle the mind, especially when the cost of prescription medications continues to increase. According to HealthExecMobile.com, a market basket of 100 commonly used prescription drugs increased at an average annual rate of 6.6% from 2006 through the first quarter of 2010, compared with a 3.8% average annual increase in the consumer price index for medical goods and services (medical CPI).

The increase in the price index from the first quarter of 2009 through the first quarter of 2010--prior to passage of health reform in March 2010--was 5.9 percent, less than the increase for the 2 years prior but higher than in 2006. The study also found that the U&C price index for the second basket of 55 brand-name drugs increased at an average annual rate of 8.3 percent during the time period. In contrast, the U&C price index for the third basket of 45 generic drugs decreased at an average annual rate of 2.6 percent.

What do all these numbers mean? Drugs cost money, and in certain cases people are forced to choose between medications, and food and rent. Typically, those that are not insured experience the greatest hardship as the price paid at the pharmacy is out of pocket and not covered by an insurance plan. That’s one reason that the Wal-Mart $4 generics are so popular. Seniors who are in the Medicare Part D “doughnut hole”, and those under 65 who are low income families and individuals are forced to find alternative ways to pay for their prescription medications.

According to the Kaiser Foundation, prescription drugs are vital to preventing and treating illness and in helping to avoid more costly medical problems. Three main factors drive changes in prescription drug spending: changes in the number of prescriptions dispensed (utilization), price changes, and changes in the types of drugs used.  The cost of drug-related morbidity, including poor adherence (not taking medication as prescribed by doctors) and suboptimal prescribing, drug administration, and diagnosis, is estimated to be as much as $289 billion annually, about 13% of total health care expenditures. The barriers to medication adherence are many: cost, side effects, the difficulty of managing multiple prescriptions, patients’ understanding of their disease, forgetfulness, cultural and belief systems, imperfect drug regimens, patients’ ability to navigate the health care system, cognitive impairments, and are reduced sense of urgency due to asymptomatic conditions.

Prescription drug spending is affected when new drugs enter the market and when existing medications lose patent protection. New drugs can increase overall drug spending if they are used in place of older, less expensive medications; if they supplement rather than replace existing drugs treatments; or if they treat a condition not previously treated with drug therapy. New drugs can reduce drug spending if they come into the market at a lower price than existing drug therapies; this can occur when a new drug enters a therapeutic category with one or two dominant brand competitors. New drug use is affected by the number of new drugs (new molecular entities) approved by the US Food and Drug Administration.
Employers are the principal source of health insurance in the United States, providing coverage for 176 million (58%) of Americans in 2008, according to Kaiser. Sixty percent of employers offered health insurance to their employees in 2009, and 65% of employees in those firms are covered by their employer’s health plan. Other employees may have obtained coverage through a spouse. Nearly all (98%) of covered workers in employer-sponsored plans had a prescription drug benefit in 2009. For individuals, according to a survey by America’s Health Insurance Plans, the vast majority of policies purchased by individuals (rather than employer or other group coverage) had drug benefits.
Department of Health and Human Services data show that as of February, 2010, approximately 41.8 million (90%) of the 46.5 eligible Medicare beneficiaries had drug coverage. The total number of beneficiaries in a Medicare Part D plans was 27.7 million (60%), including 17.7 million beneficiaries (38%) in stand-alone prescription drug plans and 9.9 million (21%) in Medicare Advantage drug plans.

Another 14.2 million beneficiaries (31%) had coverage from either employer or union retiree plans including FEHB and TRICARE (8.3 million, or 18%) and drug coverage from the VA and other sources (5.9 million, or 13%). About 4.7 million Medicare beneficiaries (10%) had no drug coverage.

Medicaid is the joint federal-state program that pays for medical assistance to 60 million low-income individuals and is the major source of outpatient pharmacy services to the nonelderly low-income population. Although prescription drugs is an optional service, all state Medicaid programs cover prescription drugs for most beneficiary groups, although there are important differences in state policies with regard to copayments, preferred drugs, and the number of prescriptions that can be filled. Since January 1, 2006, states have been required to make payments to Medicare (known as the “clawback”) to help finance Medicare drug coverage for those who are dually eligible for both Medicare and Medicaid.

According to the Kaiser Foundation, the new PPACA provides for a significant expansion of coverage to the uninsured through a Medicaid expansion, an individual requirement to obtain health insurance, and subsidies to help low and middle income individuals buy coverage through newly established Health Benefit Exchanges. PPACA provides that prescription drugs are one of the “essential health benefits” that must be included in health plans in the Exchanges and in the benchmark benefit package or benchmark-equivalent for newly eligible adults under Medicaid.

Also, it provides for a $250 rebate to Medicare Part D beneficiaries with out-of-pocket spending in the Medicare Part D coverage gap in 2010, a 50% discount for brand name drugs for beneficiaries in the coverage gap that started this year, a phasing-in of coverage in the gap for generic and brand name drugs which will reduce the beneficiary coinsurance rate from 100% in 2010 to 25% in 2020, a reduction between 2014 and 2019 in the threshold that qualifies enrollees for catastrophic coverage, and elimination of the tax deduction for employers who receive Medicare Part D retiree drug subsidy payments, starting in 2013.

The HHS projects US prescription drug spending to increase to $457.8 billion in 2019, almost doubling over the next several years. In the coming years, implementation of various provisions of PPACA will affect prescription drug coverage, utilization, prices, and regulation. Coverage and utilization of prescription drugs will be expanded by PPACA’s health insurance mandate and premium and cost-sharing subsidies; the designation of prescription drugs as an essential health benefit to be covered by private health plans through the new health benefit Exchanges and by Medicaid for newly eligible adults; and Medicare’s prescription drug rebate, cost-sharing, and catastrophic threshold changes, according to the Kaiser Foundation.

Prices charged to government programs will be affected by changes to Medicaid rebate requirements and expansions to the Section 340B program. Prescription drug regulation will be affected by the new process for licensure of bio-similar versions of brand name biological products and by drug labeling requirements. These and other PPACA changes will ultimately impact national spending for prescription drugs in ways yet to be seen.

Another option is to include a discount pharmacy card for customers. There are many of these available through various sponsors; including pharmaceutical companies such as AstraZeneca, pharmacy benefit managers (PBMs) like CVS Caremark, plan administrators like Careington International, and other sources. Customers can enroll through websites, over the phone, or at pharmacy counters based on the business model for the card. Typically, in this arrangement, the customer gets a discount at the point of sale (and via mail order in some cases) and is able to save on both brand name and generic medications without worrying about over using or worrying about a maximum utilization of their pharmacy card. Discounts can range from 5% up to 40% depending on the store and the medication. Often, PBMs will share available some small revenue for eligible prescriptions with the sponsor to help offset the cost of marketing to consumers.

Discount pharmacy cards can be used by anyone at almost any pharmacy nationwide, and the savings are immediate. The cards have broad application for uninsured and underinsured individuals, and the cards can be used as a stand- alone service or embedded as a value added component in a health plan, limited medical benefit plan, or discount medical plan with other services. However, you cannot use a discount pharmacy card in conjunction with a co-pay; no double dipping just to save extra money.

Pharmacies make money when they dispense medications, so the more medications available to sell, the more profit is generated for the manufacturer, the pharmacy, and the sponsor. And, since PBMs have tracked utilization for years with electronic adjudication of claims, you can find out how much has been saved and what drugs are being dispensed. Although HIPAA regulations will not allow personal customer information to be disclosed, at least information is available on the types and amounts of drugs being dispensed. Plus, the customer saves money. Everybody wins.

So, when someone says “Give me drugs,” let’s hope it’s for the right reason. Profitability, patient care and advocacy, and prescriptions—a great antidote for what ails you.

About The Author

Mark Roberts’ professional sales background includes almost 30 years of sales and marketing in the tax, insurance, and investment markets. Currently his key focus is developing relationships with clients at Careington International (www.careington.com). Mark also is a licensed life, health and accident insurance agent in all 50 states and DC. Additionally, Mark has been writing a health care blog for the past 3 years, found at www.yourbesthealthcare.blogspot.com , which is a topical weblog about various health care issues. He has been noted recently as the Medical Reporter for an online news service with over 110,000 subscribers at www.thecypresstimes.com , and he has been pleased to regularly contribute articles to magazines for both medical and dental topics both in the US and the UK. You can contact Mark at markr@careington.com or 800.441.0380.