Originally created 01/06/98

FDA to monitor managed-care companies that dictate drug coverage



WASHINGTON -- Concerned about possible misleading drug promotion, the government moved on Monday to ensure that drug companies don't unfairly promote their products through managed care.

At issue is how companies -- called pharmacy benefits managers -- influence doctors, pharmacists and patients in choosing particular medicines. Often, they persuade doctors to switch their patients from one drug to another by arguing the cheaper drug is just as effective.

But the Food and Drug Administration says pharmacy benefits managers, known as PBMs, sometimes give doctors and pharmacists false or biased information. On Monday, the FDA proposed regulating PBMs that are owned by drug manufacturers to ensure they provide accurate information.

Manufacturer-owned PBMs would have to submit promotional material to the FDA for an accuracy review, just as drug manufacturers already submit their own advertising. The new proposal means manufacturers can't illegally promote their products under the guise of a managed-care company, explained FDA's Laurie Burke, who helped write the proposal.

Drug manufacturers that don't own PBMs but have financial agreements with them also could be responsible for illegal drug promotion, the proposal says.

"We are particularly concerned about the health risks," said Burke, saying the most common problem is PBMs declaring one drug as effective as another without scientific evidence.

False information "may result in inappropriate medical decisions," Burke said.

An estimated 115 million Americans are enrolled in prescription drug plans administered by pharmacy benefit managers, companies hired to decide what medicines insurance plans will pay for -- on a list called a formulary -- and encourage doctors to prescribe only those drugs.

Burke said the FDA is not "against switching in general. Formularies are a very important thing for controlling costs."

Drug giants Merck, Eli Lilly and SmithKline Beecham own three of the nation's largest PBMs, and numerous other drug manufacturers have signed financial agreements with PBMs.

The FDA regulates drug companies, so it began investigating as manufacturers entered the managed-care business. In March, the agency asked doctors to report side effects from drug switching, and it now is looking into whether illegal drug promotion caused some of the problem switches, Burke said.

Because the FDA has never regulated managed-care companies, it did not immediately crack down on drug-owned PBMs that it already has caught giving false information, Burke said. Instead, the agency announced the change Monday, giving companies until April 6 to comment on the proposal. A final policy is expected later this year.

Merck-Medco Managed Care said in a statement Monday that its PBM program is run independent of Merck's manufacturing divisions, "and is based on the recommendations of independent medical advisory boards."

Lilly and the industry's Pharmaceutical Research and Manufacturers Association declined comment.

There is no good evidence yet whether PBMs are controlling health care costs or affecting disease outcomes, cautioned Thomas Moore of George Washington University's Center for Health Policy Research.

But drug switching is getting attention:

-- New York City Public Advocate Mark Green recently reported that one woman whose blood pressure medicine was switched came down with a respiratory infection "severe enough to almost cause death." He also cited an aggressive Lilly plan to get its PBM patients switched from competing antidepressants to Lilly's Prozac.

-- A 1996 Georgetown University study said Merck's product sales increased 10 percent after it bought Medco.

-- The General Accounting Office, Congress' investigative and auditing arm, said in 1995 that drug makers were buying PBMs to "help maintain the manufacturers' profits at a time when their drugs face increasing competition."

But Dr. Sidney Wolfe of the consumer advocacy group Public Citizen said the FDA's new proposal has a problem: Congress last fall passed a law allowing drug makers to tell managed-care companies certain cost-effectiveness information about drugs even if the data is not FDA-approved.

"It is a huge loophole, and it will be very difficult for FDA to enforce this," Wolfe said.