War on drug costs Featured

5:45am EDT August 31, 2004
A Canadian pharmaceutical company has found in a study that patients with mild to moderate Alzheimer's disease responded favorably to treatment with one of its newly developed drugs, Alzhemed.

The study included a small number of subjects -- just 58 patients -- and larger studies will be required to determine safety and efficacy. Nonetheless, researchers are encouraged by the early results and the potential of the drug to stabilize the disease in some patients and even reverse its effects in others.

The good news may prove to be that Alzhemed is an effective treatment for the disease, which afflicts an estimated 4.5 million people in the United States alone.

The other side of the coin is that the drug may be expensive, and while it could improve and extend life for millions, it will also mean that those millions will continue to consume health care services, quite possibly for longer periods than they might have otherwise.

Pharmaceuticals have introduced some dramatic quality-of-life and live-saving benefits for many people. They've also meant an increase in costs and a greater share of overall health care expenditures.

In 2000, prescription drug costs made up 9.4 percent of total health expenditures, according to the Centers for Medicare and Medicaid Services. By 2012, pharmaceuticals are projected to be 14.5 percent of total health costs.

And there are lots more drugs in the pipeline. One of the problems, says Ken Melani, president and CEO of Highmark Inc., is that too many are "me too" drugs that offer slightly incremental benefits but often at much greater costs.

Highmark has responded in a couple of ways to get its drug costs under control. It has formed Medmark Inc., a specialty pharmaceutical distribution company that centralizes the purchase of specialty drugs administered in physician offices. Highmark estimates that the program can lower the costs for selected pharmaceuticals to between 16 percent and 20 percent below average wholesale costs.

Taking a page out of pharmaceutical companies' marketing manuals, Highmark is trying a tactic similar to theirs to influence physicians to recommend lower-costs drugs to patients. Drug company reps routinely "detail" physicians, trumpeting the benefits of their products and providing drug samples for distribution to their patients.

Physicians distribute the samples and, unless they experience side effects or no improvement, patients are likely to continue to use the drug. Highmark has partnered with Medco Health Solutions Inc., a pharmacy benefit manager, to encourage doctors to distribute generic drug samples to patients to encourage patients to use less expensive alternatives to patent medicines.

In addition to having access to free generic drug samples, a select group of Highmark's physicians are visited by clinical consultants for one-on-one discussions on the availability, clinical benefits and economic value generic medications.

"The combination of offering physicians generic drug information and free samples has a significant impact on their prescribing habits," says Glen Stettin, vice president of clinical products for Medco Health.

The select group of physicians participating in the program, dubbed Generics First, experienced a 10.5 percent increase in their generic dispensing rate from 2002 to 2003.

Says Robert Wanovich, Highmark's manager of clinical services: "By providing generic drug information and access to free drug samples, we can increase the level of acceptance of generics by both physicians and their patients."