Comparing Prescription Drug Proposals: Bush v. Gore
Table of Contents
Options for Controlling Rising Drug Costs
The driving force behind higher drug costs is the increased use of drugs, not increases in prices. For example, a study published in Health Affairs of large managed care and major employer-sponsored health benefit plans nationwide, covering more than two million people, found that increased volume of prescriptions accounted for $5 of cost increases for every $1 of price increases, even when the price of new drugs was taken into account.6 That being the case, controlling the total cost of prescription drugs becomes more of a challenge, especially when considered on a stand-alone basis rather than as a part of a comprehensive health plan.
"Under both proposals costs will probably be higher than expected."
Pharmacy Benefit Managers. Managed health care plans in general have attempted to hold down their drug cost increases by using pharmacy benefit managers (PBMs) to negotiate discounts with pharmacy chains, to limit coverage to lower-price generic drugs instead of patented, branded drugs and to encourage the use of prescription drug therapies only if the benefits to the patient's health clearly justify the added cost. However, these efforts have had limited success in co percent in 1998.7
Drug Formularies. Formularies probably will exist under either a Gore or Bush approach. A formulary is a list of generic and brand-name medications a health plan will cover. The question is: under which plan will these lists of drugs be more likely to be used to limit access to new and better drugs at the price of increased risk to patients?
"Even the better-run federal programs try to control drug spending with restrictive formularies and price controls."
Dr. Susan Horn conducted a study of pharmaceutical restrictions in six managed care plans.8 She found that restricting seniors' access to pharmaceuticals was associated with more emergency room admissions, hospital stays and doctor visits for such illnesses as depression, heart disease, ulcers and diabetes. The elderly were twice as likely to be harmed by formulary limits as people under the age of 65. That is, faced with the same restrictions as someone age 65 and under, an elderly person in the same HMO was twice as likely to be hospitalized or see a doctor as a result of the loss of choice.
Closed Formularies. Pharmacy directors sometimes close all or part of a formulary to new drugs. In a 1997 survey of HMOs, at least 50 percent of pharmacy directors reported that they had closed or planned to close at least some formulary classes to any new drugs. According to the survey, these decisions are rarely made with any outcomes data to support the use of one product over another.9 As a result, decisions are based solely on available safety, efficacy and cost data, which would seem to conflict with the move toward outcomes-based "disease management."
"The elderly are twice as likely to be harmed by restrictive formularies."
Techniques Used by Other Government Health Programs. Even the better-run federal programs that provide prescription drug benefits, such as the Federal Employees Health Benefits Plan (FEHBP) and the Veterans Affairs health care system, try to control spending - the FEHBP with restrictive drug formularies and the VA with both restrictive formularies and price controls. Similarly, to control drug costs, Medicaid limits both the number of prescriptions people can obtain and their access to new drugs, often without regard to the impact such limits have on total health spending or individual well-being.
"The VA system -- regarded as a model by some Gore advisors -- places strict limits on where people can get drugs and what drugs they can get."
The U.S. General Accounting Office (GAO) concluded in a report, "Pharmacy benefit managers and plan officials, as well as industry experts, acknowledge that any additional efforts to control FEHBP pharmacy benefit costs in the future might require plans to adopt more restrictive cost-containment procedures that could possibly limit enrollees' access to drugs and pharmacy services and reduce enrollees' satisfaction with their pharmacy benefits."10
Many advocates of the Gore drug proposal point to the VA system as an example of how to provide drug coverage to the elderly. A closer look reveals that the VA places strict limits on where people can get drugs and what drugs they can get:
- Patients are restricted from obtaining prescriptions anywhere except VA pharmacies.
- VA patients with pancreatic cancer are not allowed to receive Gemzar, the newest drug for that disease, as a matter of course. They must "fail" on other drugs first.11
- A study which found that VA patients at risk for heart attacks are more likely to respond to newer ACE inhibitors concluded that these drugs should be first-line antihypertensive therapy in elderly patients and that they should be considered for elderly patients who are unresponsive to older ACE inhibitors; yet the VA formulary limits access to newer ACE inhibitors as a matter of course.12
- Another study was conducted to determine whether VA patients felt a difference in the efficacy, side effects and value of omeprazole versus lansoprazole for gastroesophageal reflux disease maintenance therapy after a formulary conversion, and to evaluate the costs of the conversion. Although the study found that patients preferred omeprazole, the VA restricted access to omeprazole.13
- Several studies have demonstrated that VA patients suffering from schizophrenia have a better quality of life under clozapine in both high and low hospital user groups; yet haldol -- an older drug - is on the formulary, while clozapine and newer drugs such as risperdal and olanzapine are not.14
"Drug innovation is related to greater life expectancy."
Potential Danger of Price Controls. As the number of old people grows and as people have longer lifespans, the prevalence of many diseases is increasing. Between 1984 and 1995, the prevalence of stroke increased by 1 percentage point, diabetes by 2 percentage points, arthritis by 3 percentage points, heart disease by 5 percentage points and cancer by 7 percentage points.15 What would happen to the growing ranks of seniors with chronic illnesses under a cost containment regimen that severely limited access to new, innovative drugs?
A study by Columbia University professor Frank Lichtenberg found that "...in the absence of pharmaceutical innovation, there would have been no increase and perhaps even a small decrease in mean age at death, and that new drugs have increased life expectancy, and lifetime income, by about 0.75-1.0 percent per annum. The drug innovation measures are also strongly positively related to the reduction in life-years lost [from 1970-1991]. Some of the more conservative estimates imply that a one-time R&D expenditure of about $15 billion subsequently saves 1.6 million life-years per year, whose annual value is about $27 billion."16
"New drugs are the principal reason for the decline in chronic disability and nursing home episodes among the elderly."
In other words, based on the Lichtenberg study, one could argue that if seniors had been limited to older drugs or generic substitutes from 1980 through 1991, there would have been a decrease in life expectancy. A principal reason the incidence of nursing home admissions among the elderly declined between 1985 and 1997 is the introduction of new drugs for stroke and depression.
- In 1985, the age-adjusted nursing home residence rate was 54 persons per 1,000 age 65 or older.
- By 1997 the residence rate had declined to 45 persons per 1,000.
- Residence rates declined by 14 percent among persons ages 65 to 74, 21 percent among persons ages 75 to 84 and 13 percent among those ages 85 and older.
In part because of access to new drug therapies, the proportion of Americans age 65 or older with a chronic disability declined from 24 percent in 1982 to 21 percent in 1994.17 However, if disability rates had not declined, then the disabled population would have increased by almost 1.5 million.
