Originally created 05/08/00

State aims to cut drug-benefit costs



ATLANTA -- Health advocates and doctors are hoping a plan by the state to control prescription costs won't keep millions of Georgians from getting the medicine they need.

Earlier this year, Georgia health officials launched a plan to save tax dollars by bringing the more than 650,000 state and school system employees and University System workers under a single health plan. A key point of that plan involves steering enrollees away from costly fee-for-service coverage into managed care.

Now, the Georgia Department of Community Health is trying the same approach with drug benefits -- this time involving even more people. Later this month, the department is expected to contract with a pharmacy-benefit management firm not only to oversee the State Health Benefit and Board of Regents plans but also to cover 1.2 million Georgia Medicaid recipients.

Children enrolled in the PeachCare for Kids program also will be part of the plan.

But with such a diverse group to serve, health advocates, doctors and druggists are worried that too much emphasis on the bottom line and not enough on individual patients' needs could damage the state's health-care delivery system. In the long run, they argue, a less healthy population would eat up any potential savings and drive up costs.

"Physicians should be free to prescribe the drugs they believe will be most effective," said Jeff Trewhitt, spokesman for Pharmaceutical Research and Manufacturers of America. "They are the ones who are most familiar with patients. They are the ones who can develop individual patient profiles."

As used throughout public and private sectors, pharmacy benefit managers generally buy drugs in bulk so they can qualify for large rebates from drug companies. In keeping with the concept of managed care, they tend to restrict the drugs that are most available to enrollees to a preferred list.

Five health-care firms that met the deadline set by the department's request for proposals are vying to become the state's pharmacy benefit manager. A team of more than 40 officials from various state agencies is working to narrow the field.

Once finalists are chosen, the department will turn to an external committee including doctors, health advocates and pharmacists. The panel will interview representatives of the finalists and visit their facilities.

The Georgia Board of Community Health is scheduled to award the contract May 22.

State bean counters are hoping to reverse a steady rise in drug costs that has taken place in recent years despite reductions in the number of Medicaid recipients and enrollees in the State Health Benefit Plan. Those costs mirror a national trend, Community Health Commissioner Russ Toal said.

"Thank God we're living longer," he said. "The incredible success of pharmaceutical research has given us some great products, but they carry a high price tag."

The 2001 state budget signed last week by Gov. Roy Barnes relies on the new pharmacy benefit manager to generate almost $40 million in savings, nearly 10 percent of the $430.1 million the state spent on drugs for Medicaid recipients in fiscal 1999.

Those watching the selection process from the sidelines are waiting to see whether those savings come at the expense of the doctor-patient relationship.

Paul Shanor, executive director of the Medical Association of Georgia, said such control mechanisms as "formularies," which limit medicines doctors may prescribe to a predetermined list, and prior-approval requirements tend to cut drug costs. But those kinds of restrictions can increase the overall cost of health care by increasing hospitalizations and doctor visits, he said.

"You may not have the right drugs in formularies for each patient," he said. "After all, we're all different."

Health advocate Linda Lowe said she'd like to see the new pharmacy benefit manager put more emphasis on using medicine to keep chronic diseases under control.

"That can reduce costs in a good way," she said. "For example, people with diabetes can avoid diabetic comas with the proper medication and asthmatics can avoid attacks."

Mr. Toal said such concerns are addressed in specifications the department is requiring companies to meet. He said the department is looking for a pharmacy benefit manager who can make sure drugs the state is paying for are being used as effectively as possible, a concept that helps patients and the budget.

"We believe there are people who are incurring medical costs that are expensive because they're not accessing pharmaceuticals when they need them or are on the wrong pharmaceutical regimen," he said. "If we have people with diabetes, hypertension or asthma who should have their condition being treated and are not, we want to find them."

Although cost will count for 35 percent of the scoring as the department evaluates the bids, it won't be the determining factor in which drugs get on the state's preferred drug list and which don't, Mr. Toal said.

"It's not our intent to deprive anybody of pharmaceuticals that they need," he said.

If the selection process goes smoothly, the department plans to bring the new pharmacy benefit manager on board in August for Medicaid and PeachCare recipients. The coverage will kick in for State Health Benefit and Regents plan enrollees in January.

Medicaid drug costs

The state Department of Community Health spent almost $120 million more on drugs for Medicaid recipients during the past fiscal year than in fiscal 1996, despite a significant reduction in the number of recipients. The same trend occurred in spending on prescriptions for enrollees in the State Health Benefit Plan (SHBP). The department plans to hire a pharmacy benefit manager to gain control over those rising costs.

 FY....Medicaid....Recipients...Spending......SHBP....Enrollees..Spending

......spending...............per recipient..spending............per enrollee

1996...$310.5 m....896,041......$347.......$112.9 m...449,610.....$251

1997...$335.8 m....861,628......$390.......$124.1 m...430,971.....$288

1998...$362.2 m....827,008......$438.......$143.6 m...418,449.....$343

1999...$430.1 m....829,398......$519.......$187.9 m...409,989.....$458

Source: Georgia Department of Community Health