Meeting Summary - Pharmaceutical Pricing Practices, Utilization and Costs

III. Pharmaceutical Utilization Issues

The third session of the conference explored changing trends in the utilization of prescription drugs, the effects of health insurance on utilization, and questions pertaining to the value of prescription drug utilization and expenditures. The session opened with four formal presentations:

Cindy Parks Thomas, Ph.D., Schneider Institute for Health Policy, Brandeis University presented data on changes in utilization and costs of prescription drugs in three therapeutic classes.
Nancy Ostrove, Ph.D., Center for Drug Evaluation and Research, FDA, reported on the FDA's role in regulating consumer advertising of prescription drugs and on FDA's recent research on consumer-directed advertising of prescription drugs.
John Poisal, Office of Strategic Planning, Health Care Financing Administration (HCFA(now known as CMS)), reported recent findings regarding prescription drug utilization among Medicare beneficiaries from HCFA(now known as CMS)'s Medicare Current Beneficiary Survey.
Bruce Stuart, Ph.D., Peter Lamy Center for Drug Therapy and Aging, School of Pharmacy, University of Maryland, presented a framework for maximizing the value from prescription drug therapy.

The session also included a Panel Discussion and a discussion of Research Questions.

Dr. Thomas reported findings from a study of changes in the utilization and costs of prescription drugs in three therapeutic classes: (1) gastrointestinal disease medications, (2) antiarthritics, and (3) cholesterol-reducing medications. The study was conducted by researchers at Brandeis University and PCS Health Systems. It relied on 1996-99 prescription claims data from PCS Health Systems, a PBM, for an insured population of 1.3 million employees and their families.

The study found large increases in expenditures in all three therapeutic classes. However, the relative contribution of price and utilization differed across classes.

Gastrointestinal disease medications. A large portion of the growth in expenditures in this category was due to increases in cost per prescription. Since the introduction of proton pump inhibitors (PPIs) (e.g., Prilosec®) in the 1990s, the cost of medication per prescription has been increasing very quickly. PPIs are much more expensive than the older H2 receptor antagonists (e.g., Cimetidine®).
Antiarthritics. Much of the growth in expenditures in this category was due to increases in the cost per prescription. Since the market entry of Cox-2 inhibitors (e.g., Celebrex®, Vioxx®) in January 1999, the utilization of these new medications has skyrocketed. Cox-2 inhibitors are five times more expensive than traditional nonsteroidal anti-inflammatory drugs (e.g., ibuprofen).
Cholesterol-reducing medications. The growth in expenditures in this category was due largely to increased utilization. The threshold of treatment for high cholesterol has been lowered in recent years, causing rapid growth in the number of people using statins (e.g., Lipitor®, Zocor®, and Prachol®).

Dr. Ostrove explained that FDA regulates the content of prescription drug ads. No Federal law or regulations have ever prohibited the advertising of prescription drugs. In the spring of 1999, FDA conducted a national survey of adults to assess the effects of FDA guidance pertaining to prescription drug ads issued in 1997 and the effects of direct-to-consumer (DTC) promotion of prescription drugs. About three-fourths of the adult respondents had seen a DTC ad for a prescription drug in the last 3 months, either on television or in a magazine. More than three-fourths of the respondents who had seen a DTC ad recalled the product's benefits, risks/side effects, who should not take the drug, and who should take the drug. Seeing product advertising was associated with an increased likelihood of asking a physician about whether there is a drug to treat the patient's condition and a specific brand. Survey respondents reported that their doctors were positive about their asking about a specific brand-name prescription drug.

Mr. Poisal reported findings regarding prescription drug utilization trends based on 1993-97 data from HCFA(now known as CMS)'s Medicare Current Beneficiary Survey. HCFA(now known as CMS) compared utilization among Medicare beneficiaries with prescription drug coverage at any point during the year and at no point during the year. It used two measures of prescription drug utilization: (1) the proportion of beneficiaries filling prescriptions in a given year; and (2) the number of prescriptions per beneficiary in a given year.

During the 5-year period, the proportion of Medicare beneficiaries filling prescriptions showed an upward trend. Although the number of prescriptions per beneficiary rose for both Medicare beneficiaries with prescription drug coverage and Medicare beneficiaries without coverage, the number was higher among Medicare beneficiaries with coverage.

In seeking to obtain the full value that pharmaceutical therapy has to offer, Dr. Stuart explained, the focus should be striking an optimal balance between maximizing appropriate use and minimizing inappropriate use.

Appropriate use of prescription drugs requires that drugs be safe and meet the standards of good medical care. A reasonably good definition is "the right drug, for the right patient, taken in the right way, and at the right cost."
Inappropriate use of prescription drugs encompasses overuse (medications are prescribed when other therapy is warranted), misuse (a patient needs a medication but is given the wrong one), and underuse (a patient's medication need is overlooked or ignored).

Dr. Stuart reviewed the empirical literature on the causes and consequences of inappropriate drug use in the elderly and identified needed areas of future research to help maximize value from prescription drugs. One challenge in seeking to maximize value from pharmaceutical therapy, he noted, is to relate prescription drug therapy to the whole regimen of therapies that are available. An even greater challenge is determining from whose perspective value is to be assessed.

Finally, Dr. Stuart presented a conceptual framework for assessing appropriate and inappropriate drug use that focused on the knowledge and behavior of the principal actors in the medication decisionmaking process. In an ideal scenario, he suggested, drug manufacturers, FDA, physicians, pharmacists, patients, purchasers, insurers, and others would encourage the appropriate use and discourage inappropriate use of prescription drugs (see Table 1).

Limitations of the Study on Drug Utilization in Three Therapeutic Classes

A few panelists noted the limitations of the study presented by Dr. Thomas on drug utilization trends by therapeutic class. One researcher, explaining that a substantial portion of the U.S. population experiences spells without health insurance, cautioned against drawing conclusions about these people from a study among people with continuous health insurance coverage. A physician on the panel warned against drawing conclusions about the appropriateness of the utilization of prescription drugs based on findings with population-based claims data in the absence of clinical data. Another panel member suggested that clinical data from individual physicians can be misinterpreted just as easily as population-based data; the two types of data are complementary.

Effects of Consumer-Directed Ads for Prescription Drugs

There was a lengthy discussion by panel members of the effects of consumer-directed ads for prescription drugs on drug utilization and costs.

AARP member survey on print DTC ads
One panel member reported that the AARP recently surveyed its members on the effects of DTC ads for prescription drugs in print media. AARP survey respondents said they wanted to see the DTC ads. Since they generally thought the ads sponsored by drug manufacturers were biased, they trusted their doctor to tell them whether a drug was good or bad for them.

Perspectives on DTC ads
Several panel members gave their perspectives on DTC ads for prescription drugs:

A representative of a major pharmaceutical company said he views DTC advertising as part of the process of making physicians and patients partners in health care.

Several physicians on the panel said they were surprised by the FDA survey's findings that patients' doctors were positive about their patients' asking for advertised brand-name drugs. In part because managed care organizations are pushing them to see patients in 7 minutes and to view patients as customers who must be kept satisfied, physicians often succumb to pressure from their patients to prescribe specific brand-name drugs. A representative of the American Academy of Family Physicians said she believes that DTC advertising could help make physicians and patients partners in health care if physicians were not so pressed for time.

PBM representatives said that many of their customers--HMOs, large employers, insurance carriers, etc.--hate DTC ads because they increase utilization and costs. Plan sponsors do not want to encourage prescription drug utilization, even appropriate utilization, particularly in the age 55-64 age group, because the plan sponsors won't benefit--Medicare will.

Several panelists, including consumer representatives, suggested that consumers need information to counter DTC advertising, which is not just educational but also intended to promote the utilization of particular drugs. RXHealth Value, a coalition of organizations including AARP, believes that it is important to get information to consumers about risks and benefits and appropriate utilization in DTC advertising. A health benefits consultant said some DTC ads are irresponsible ads and suggested that government regulation is needed to curb such ads.

One panel member, noting that much of the growth in the utilization of prescription drugs occurred before the advent of consumer-directed advertising, suggested that people who have cardiovascular problems, arthritis, or other health problems are looking for something to help them. Another panelist suggested that Baby Boomers are particularly receptive to DTC advertising that promises a pill to fix a problem.

Research questions related to DTC ads and marketing of brand-name drugs.
Several panel members suggested topics for research related to DTC ads and marketing efforts by brand-name manufacturers.

What are the differential impacts of DTC ads on people with good prescription drug coverage and those without it? Are DTC ads more of a driver of utilization among HMO members with $5 copayments than among people without health insurance?

Do patient requests for drugs that are advertised DTC improve the appropriateness of physician prescribing and ultimately favorably impact patients' health status, or does it promote use of more expensive drugs when there are less expansive alternatives?

What are the effects of physician detailing and the intersection of that with DTC ads on the utilization and costs of prescription drugs? Is there anything else that might be pushing more expensive therapies that are not any better than alternative therapies?

HCFA(now known as CMS)'s Study of Drug Utilization Among Medicare Beneficiaries

Noting that the HCFA(now known as CMS) study of drug utilization patterns among Medicare beneficiaries compared beneficiaries without coverage and beneficiaries with coverage at any point during the year, a researcher on the panel said that it is important not to think of coverage as a dichotomy--i.e., having coverage or not having coverage. In terms of their prescription drug utilization patterns, people who are intermittently insured are more like people with no insurance than like people with continuous coverage. Beyond that, this researcher noted, some work suggests that when you take a group of individuals who don't have insurance coverage and give it to them, there is a big bump in utilization in the first year or two, but then utilization tends to even out. This phenomenon has an important cohort effect in studies of people who are newly covered vs. people who are continuously covered.

Appropriate Use of Drugs: Responsible Parties and Roles

Panel members discussed the table showing responsible parties and roles in the appropriate use of drugs (Table 1) at considerable length. Several panel members, including PBM representatives, observed that in the real world, we never get over to "at the right price" (on the far right side of the table). In fact, for the most part, we never get past "for the right patient."

"The Right Drug"

Role of drug manufacturers and FDA. Before marketing a new drug, manufacturers have to (1) demonstrate the product's safety and efficacy to FDA; and (2) negotiate product labeling with FDA. A researcher on the panel asked: How much prescription drug use is off-label use? Dr. Ostrove said that off-label use is probably very high in some areas of medicine (e.g., oncology, 50-75%), but much lower in other areas. Another panel member suggested that the Federal Government should pay for clinical trials to evaluate the effects of pharmaceuticals on elderly people with multiple conditions, perhaps even taking multiple medications. Physicians and other panelists disagreed, noting the nearly insurmountable methodological challenges that such trials would pose.

"For the Right Patient, Taken the Right Way"

Role of physicians. Some consumer organizations, including the AARP, believe the ultimate decision about what drug a patient should get should be made by the patient's physician--not a health plan, HMO, or PBM. As noted earlier, a recent AARP survey found that the current generation of elderly consumers trust their physicians to make decisions about what drugs they should get. Disturbingly, however, the survey found that 54% of respondents did not usually receive counseling about the risks and benefits of the drugs they received at the time of prescribing or dispensing. Physicians on the panel said they often just prescribe the drugs that their patients request. Although they would like to counsel their patients more than they do, they feel pressured by managed care organizations to see patients quickly and to keep them satisfied.

Role of pharmacists and PBMs. An advocate for seriously ill or disabled patients who must take 8-15 medications from different doctors stressed that such patients do not feel they can rely on a PBM to help them manage their medications. For these patients, pharmacists are vital. Representatives of pharmacy organizations emphasized that pharmacists are trained in the appropriate use of drugs and could play a much greater role in educating patients to use their drugs appropriately. They recommended conducting research on how to restructure the reimbursement system to compensate pharmacists for counseling patients on how to take their medications. There was considerable discussion by panel members of disease management programs implemented by PBMs and others to maximize the effectiveness of therapy and minimize its costs in the session on Strategies for Controlling Costs and Increasing Value From Pharmaceutical Expenditures.

Role of patients. Several panel members, including consumer representatives, argued that consumers need objective, factual information that they can use to make decisions about prescription drugs based on value to them, which includes considerations of risks, benefits, and costs. A health benefits consultant noted that there is a wide range of credibility and quality of the information on the Internet. At some point, we need a culling out of the most useful information and some sort of process to certify what information is "good" information. Consumer advocates noted that particular challenges will arise in developing information for low-income people without health insurance, who are disproportionately people with disabilities, people of color, and people without college degrees. These people are unlikely to use the Internet and will probably seek information from their physicians or other personal sources.

"At the Right Price"

As noted above, panel members noted that in the real world, we never get over to "at the right price" (on the far right side of Table 1).

Role of drug manufacturers. The prices of new drugs are set by pharmaceutical manufacturers. According to one panel member, much of FDA's new drug approval process focuses on product labeling. Brand-name manufacturers make huge investments to affect the labeling that they can use to detail to physicians.

Role of purchasers, insurers, and their agents. PBM representatives reported that many PBM customers--health plans and health plan sponsors--simply want to maximize their rebates from brand-name drug manufacturers. For customers that want to lower their net costs for prescription drugs, PBMs can implement mechanisms to steer health plan members to use generic products first, low-cost brand-name products second, and brand-name products with high rebates last. Mechanisms used by PBMs to control the costs of their customers' pharmacy benefit programs were discussed in the session on Strategies for Controlling Costs and Increasing Value From Pharmaceutical Expenditures.

Role of physicians. There was disagreement about the role that physicians should play in ensuring that drugs are provided at the right price, but it was clear that potential conflicts of interest could arise. Physicians and consumer representatives on the panel strongly opposed having physicians put at financial risk for the prescription drug utilization of their patients. Consumers want their doctors to make decisions based on the patients' best interest, not on what puts the doctor at least financial risk. PBMs and other panel members want physicians to be educated about the comparative costs of drugs, so that they can take costs into account when writing prescriptions. As discussed in the session on Strategies for Controlling Costs and Increasing Value From Pharmaceutical Expenditures, PBM representatives hope that Palm Pilots or other hand-held e-prescribing devices can be used to make physicians more aware of price differentials and price benefits to consumers at the point of prescribing. One panel member suggested that physicians could be educated to take both their individual patients' interests and societal interests into account when prescribing prescription drugs.

Role of pharmacists. Some PBM representatives and large employers said that they do not think that utilization controls at the level of the retail pharmacy are the answer to controlling the costs of prescription drugs. Employees do not want to go to the pharmacist to have their prescription filled only to be told (as they are now) that the drug is not approved by their health plan.

Role of patients. PBM representatives suggested that consumers need to be held more accountable for their prescription drug utilization and costs. Increasingly, PBMs and their customers are moving toward letting employees have the choices they want, but making them pay for that privilege, for example, through the use of three-tiered copayments for prescription drugs. Patients with three-tiered copayments pay the lowest price for generic drugs, a higher price for "preferred" brand-name drugs on a plan's formulary, and the highest prices for drugs not on the formulary. As noted earlier, consumer representatives emphasized that patients need objective, factual information that they can use to make decisions about prescription drugs based on considerations of both quality and price.

Perspectives on the "Value" of Prescription Drugs

Panel members agreed that much of the debate about prescription drugs is about who should pay for them. They also agreed that the value of prescription drugs differs for different parties. Some panel members suggested that it would be helpful to obtain more information about the value of prescription drugs from different perspectives--especially from the perspective of society as a whole.

Value to society. How does society value prescription drugs in the context of social welfare, economic growth, the U.S. health care system, etc.?
Value to drug manufacturers. One researcher on the panel noted that in a monopolistic market, more of the value goes to the manufacturer than to other parties. Value to a prescription drug manufacturer may be very different from value to society as a whole or to individual patients.
Value to individual patients. Some panelists noted that in some situations, consumers are willing to pay almost any price for a prescription drug that relieves their (or a loved one's) pain or suffering. They suggested that competition does not work when there is a captive market.
Value to physicians. Physicians on the panel said that a paramount concern for them is making sure that patients get good quality care. They noted that sometimes drugs have subtle differences known to physicians that do not show up in analyses. Physicians also want to satisfy their patients and protect themselves from potential malpractice suits.
Value to employers/sponsors of health benefits plans. According to some panel members, the objective of employee health benefits--at least in a tight labor market--is to maximize employees' well-being. For that reason, large employers who offer health benefits to their employees are reluctant to antagonize their employees by saying that they are not going to provide coverage for products that patients want (e.g., antidepressants or antihistamines). At the same time, PBM representatives suggested, most PBM customers--large employers, HMOs, insurance carriers, etc.--want to minimize the costs of their health benefit program.

Conference participants suggested that the following questions might be addressed as part of a research agenda in the area of pharmaceutical cost pressures and trends:

What, if anything, can be done to help increase the value from prescription drug expenditures?
- Are drugs in specific therapeutic classes being appropriately used? What are the criteria for appropriate use? What outcomes research might be conducted to understand better what constitutes appropriate use of prescription drugs?
- Are drugs in specific therapeutic classes being inappropriately used--i.e., overused, misused, or underused? What are the criteria for inappropriate use? What accounts for this inappropriate use?
What are the characteristics of individuals most at risk for inappropriate prescription drug use? What are the costs and consequences of treating the sequelae of inappropriate prescription drug use?
If one defines the appropriate use of pharmaceuticals as "the right drug, for the right patient, taken in the right way, at the right cost," what could be done by the following parties to encourage the appropriate utilization of drugs by Medicare beneficiaries under a Medicare prescription drug benefit?
- Pharmaceutical manufacturers;
- Government agencies such as FDA, NIH, the Agency for Healthcare Research and Quality (AHRQ), and HCFA(now known as CMS);
- Physicians;
- Pharmacists;
- Patients;
- Managed care plans and PBMs; and
- Large employers.
What effect does DTC advertising have on the utilization of brand-name prescription drugs? Are there differential impacts on people with good prescription drug coverage and those without it? How does it intersect with physician detailing and other strategies used to increase the utilization of specific products? What impact does DTC advertising have on physicians' prescribing patterns and patients' health outcomes?
What are the effects of various pricing- and utilization-focused cost-control strategies, both singly and in combination, that PBMs use to control the costs of their customers' prescription drug programs--e.g., rebates, mail service pharmacies, use of drug formularies, drug utilization review, disease management programs, and patient cost-sharing arrangements?
What role might disease management programs play in encouraging appropriate utilization and discouraging inappropriate utilization of prescription drugs among individuals with chronic medical conditions? What roles should physicians, pharmacists, PBMs, and patients play in disease management programs? What financial incentives are needed to help ensure the success of disease management programs? How should such programs be funded?
What information is needed to enable physicians, patients, and others to encourage the appropriate utilization of prescription drugs and discourage the inappropriate utilization of prescription drugs? What is the best way of developing and conveying this information? Can new technologies such as Internet and e-prescribing initiatives play a role in encouraging the appropriate utilization of prescription drugs?