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WASHINGTON, Nov 30, 2004 (United Press International via COMTEX) -- There's a tense behind-the-scenes tug of war going on to influence creation of the Medicare drug formulary -- the minimum list of drugs health plans should cover in the new prescription-drug benefit for seniors beginning in 2006.
Pharmaceutical companies want as many drugs on that A-list as possible for profit reasons. Pharmaceutical benefit-management firms and health plans want to limit that list so they have flexibility to offer drugs they consider the most effective and for which they can cut the best deals with drugmakers.
The Centers for Medicare and Medicaid Services wants a list that is solid enough so that, when health plans submit their proposals to participate in the drug program, regulators have a strong but efficient structure in place to determine whether the proposal meets Medicare standards. It also wants to make seniors happy -- so they will participate in the plan -- by offering a wide enough range of drugs to cover all the medical bases, so to speak.
United States Pharmacopeia, the highly respected non-profit science organization that deals with pharmaceuticals, is caught smack in the middle and recently let it be known -- albeit subtly -- that it will hear all parties' comments and advice, but it will not be pushed around in the process of establishing the science-based model formulary CMS has asked it to create.
Pharmacist Joel Owerbach, vice president and chief pharmacy officer for Excellus BlueCross BlueShield in upstate New York, told UPI's HealthBiz Tuesday the draft model USP came up with in August -- which generated more than 1,000 comments from the industry -- "appears to be sometimes different than what we have found to be very effective and efficient" in developing a formulary for senior citizens, who often face multiple health issues and chronic conditions.
One contentious issue in the draft model is the requirement of a minimum of two drugs in each drug class, as well as two drugs in each subclass -- which combined total in the hundreds. There even was talk of an additional third breakout of the classes -- which got the PBMs roiled.
"This is a question of balance," Karen Ignagni, president of America's Health Insurance Plans, told HealthBiz. "It's going to be a question of how CMS handles the issue of balance and cost containment. We agree with both goals. Beneficiaries expect to have access to the most affordable drug package."
A final draft model is expected to be forwarded to CMS next week and, this time, USP is not going to make it public. It just does not have time to consider and handle properly another deluge of comments from the industry. CMS then will review the draft by end of the year, making any changes it decides are appropriate, and finalize its formulary. Early next year, the process of plans bidding to participate in Medicare Part D will begin based on that outcome.
Going back to the nuts and bolts, Owerbach said there is no problem mandating two drugs in the 146 basic drug categories or classes. The problem, he said, is requiring that minimum for the many subcategories or subdivisions that dig down into specific diseases or conditions, because that "takes us well beyond" what the healthplan officials think is needed and affordable.
Using the subcategories brings up quality-of-care issues. For example, Singulair is the preferred drug in a specific subcategory for asthma. Most plans offer that drug, but Owerbach said requiring two drugs per category would mean plans also would offer the other alternative, accolate, which is older and actually less expensive but has more side effects.
"So we want to discourage its use," Owerbach said.
Failure to offer the second drug, however, would run afoul of the formulary and Owerbach said there are numerous other subcategories where plans would be "somewhat challenged to provide two" choices. For some it is a question of side effects, efficacy for seniors or reasonable cost. For others -- such as in a specific subdivision for Alzheimer's -- there simply may only be one drug available.
"The normal way we do this," Owerbach said, "(is) we look across the spectrum of all drugs available and where medical evidence exists. We need flexibility to use tools we have ... to promote affordability and best coverage. What we have found is that we're able to provide access to the drugs that people need in an affordable way through the use of time-tested programs."
Early in November, the Pharmaceutical Care Management Association questioned the influence Big Pharma was having on USP committee and board members as the final draft model was worked out. USP had held a briefing for reporters on its efforts and after the PCMA comments issued a public statement that said, in part: "USP is committed to an open and public process and has made available on its Web site detailed information about this process, the members of the model guidelines expert committee, records of committee meetings, and public comments. In addition, each Board and Expert Committee member is subject to USP's conflict of interest rules."
The statement added: "USP has a high standard of quality that underlies its public health mission. To that end, USP's model guideline expert committee has endeavored to maintain an objective process that is based on scientific evidence and expertise."
Following that, a letter was sent to Dr. Mark McClellan, the CMS administrator, urging the agency to ensure the final formulary reflected the flexibility Owerbach said was important. The letter was signed by PCMA, health plans and big business -- including General Motors, Daimler Chrysler, Deere & Co., Eastman Kodak, Ford Motor Co. and General Electric.
Big business has skin in the game. Companies that maintain their retiree drug coverage beginning in 2006 stand to reap millions of thank-you dollars from Medicare for not dumping their seniors into the benefit program. But there is a catch. The company's drug benefit must meet the minimum requirements set by the Medicare drug formulary. So, the more drugs covered, the more likely people will use more expensive medications -- and costs go up.
For the most part, Big Pharma has been publicly quiet, working behind the scenes in its advisory capacity of giving comments and advice to USP.
Alan Holmer, president of the Pharmaceutical Research and Manufacturers of America, the industry's lobby group, did issue a statement on the USP original draft formulary guideline that called for a comprehensive revision of the design.
"USP's current Draft Model would allow plans to exclude from coverage numerous types of medicines that patients routinely need and that private plans routinely cover," Holmer said. PhRMA contended health plans now cover drugs the draft guidelines would allow them to drop.
"It's about making sure we have the flexibility," Phil Blando, spokesman for the PCMA, told HealthBiz.
PBMs and plans need to be able to negotiate the best prices for drugs by using their leverage of being able to decide which medications will be included on their formularies. So, what would happen if plans had to adhere to the draft model guidelines with the two-drug requirement?
Owerbach said an initial plan analysis for his company showed an immediate increase of from 3 percent to 6.5 percent in costs because of being forced to add drugs to meet the requirement. Some others, he said, have projected increases of up to 8 percent.
No one is sure what the final guidelines CMS implements ultimately will contain. Regardless, plans do not have to use the formulary guidelines in establishing their proposals to CMS -- but they might as well do so, because whatever they come up with will be compared against it for approval purposes. CMS has said it will consider the views of industry when making its final decision on the USP model.
Copyright 2004 by United Press International.