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The Brand-Name Pitch

Friday, August 1, 2008
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Even the best-laid employee-benefit plans can fail to meet their cost-control objectives -- and the latest in prescription-drug benefit plans are no exception. The multi-tiered benefit schemes, usually administered by pharmacy benefit managers, are designed to offer employees financial incentives for switching to generic versions of popular brand-name drugs or preferred brands that give the PBMs discounts and rebates.

But the incentives aren't always enough to convince employees to challenge their doctors' first instinct to prescribe the latest and most expensive drugs. Why? Stick around after your next doctor's appointment and watch where your employee-benefits expenditures are going. Watch the parade of pharmaceutical representatives dragging in roller suitcases of drug samples, free office supplies and much more.

"There's plenty of doctors' offices where the staff never buys a lunch," says Carl Mowery, managing director of Smart Business Advisory and Consulting LLC, a human resource and employee-benefits consulting company in Chicago. "The drug reps are bringing in bagels, pizza, sandwiches, whatever they can use to get friendly access to the physicians."

And the drug samples they provide to physicians are the cornerstones of an expensive prescribing pattern. The docs may give them away to patients -- along with a prescription that represents a profit margin that more than pays for the samples and the snacks. Once physicians begin treatment with a specific drug that has achieved the desired effect, they are reluctant to step down to generics or less expensive brands.

Consumer advertising has become a huge obstacle to the cost-reduction efforts, too, Mowery says. Individuals are more aware than ever of the most expensive brand names and may believe they work better than generics.

In May, Mollyann Brodie, vice president and director of public opinion and media research at the Henry J. Kaiser Family Foundation in Washington, testified before the House Committee on Energy and Commerce's subcommittee on oversight and investigations about the impact of direct-to-consumer drug advertising.

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"We know from our survey data that prescription-drug ads are doing what they are designed to do . . . prompting people to talk to their doctor about a specific drug that they saw advertised," she says. "On the one hand, most Americans agree with the proponents of drug ads who say that they raise awareness, help educate the public and reduce stigma. On the other hand, most people agree with the critics of these ads who say they raise prescription drug prices and lead some people to take medications they don't really need."

Mowery says PBMs are fighting back with plan design, including "step therapy," challenges to high-potency expensive drugs before cheaper, less powerful drugs have been tried and higher co-pays for non-preferred brands, but doctors and patients are rebelling.

The doctors want to keep control of their prescribing and "if a patient thinks he needs the purple pill he sees advertised, that's what he tells the doctor. He doesn't want a cheaper substitute," he says.

Len Strazewski can be e-mailed at lenstrazewski@cs.com.

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