Fla. Fails to Renew Drug Company Program
Posted on Mon, Jul. 26, 2004
Source: The Mercury News
NEW YORK - Highly touted programs sponsored by drug companies in Florida to illustrate the role medicines can play in controlling health care costs failed to save the state enough money to warrant their renewal.
Facing soaring drug costs, Florida began demanding rebates from pharmaceutical companies in 2001 to have their medicines included on the preferred list for the state's Medicaid population.
Pfizer Inc. struck a deal that allowed it to fund disease management programs instead of paying rebates. The theory was that if patients took the appropriate medicines and learned how to take care of their conditions they would have fewer expensive emergency room visits and hospital stays. Hailed as a major innovation, Bristol-Myers Squibb Co, AstraZeneca PLC and GlaxoSmithKline PLC quickly followed with similar, smaller programs.
The combined programs, which focused on patients with chronic health problems like asthma and diabetes, were supposed to save $108.4 million from July 2002 through September 2005. Pfizer's program was the largest, promising 56.3 million in savings during that period.
But after an independent government report found that the state would save more from rebates than disease management programs, and another found Pfizer was overstating the savings from its program, the state legislature voted not to renew the programs. In late May, the governor signed the law that will eliminate the programs after they expire in 2005.
"We believe the cost savings we will announce for the second year of this program will send a very strong message to legislators in Florida about the value of this innovative partnership between Pfizer and the state," Pfizer said.
Spokeswomen for Glaxo and AstraZeneca said they were disappointed with the legislature's decision. Bristol-Myers didn't return a call seeking comment.
The defeat comes as drug companies are desperately trying to highlight the positive role of medicines in people's lives as the high drug costs have raised the ire of senior citizens to state legislators to federal lawmakers to the uninsured. In March, Glaxo began an advertising campaign stressing the difficulties of drug discovery and the benefits of medicines. Last month, Pfizer unveiled a program offering discounts to the uninsured.
Failing to renew the Florida programs is a blow to the industry because the projects demonstrated that health costs can't come down through better care alone - drug prices also have to fall, according to Alan Sager, director of the Health Reform Program at the Boston University School of Public Health.
"Complicated arrangements are no tradeoff for lower prices," said Sager.
Princeton University health care economist Uwe Reinhardt lauds Pfizer and the other drug companies for their willingness to try a new approach to lowering health costs. He believes the programs were not as successful as they might have been because disease management involves getting doctors and patients to change their behaviors, which is not easy or quick.
"Disease management is seductive," said Reinhardt. "But I think the lesson learned is trying to turn the health system is harder than turning an aircraft."
Florida will continue to use disease management programs - but they won't be run by drug companies. "After two bad reports in a row it is time to try something new," said state senator Carole Green.
In the first year, Pfizer's program saved $15.9 million. But excluding free medicines, investments and expenses to start the program, the savings totaled $7.5 million.
A May 2004 report by the Office of Program Policy Analysis and Government Accountability, an independent arm of the legislature, found flaws in Pfizer's reporting methodology. It said the program overstated savings by at least $5.1 million.
An April 2003 report by the same group said the state would save an additional $64.2 million in 2003-04 by requiring companies to pay cash rebates instead of allowing them to run disease management programs.
Green said it probably didn't make sense to have drug companies running disease management programs.
"I think you have to be skeptical about a company that is trying to sell a product (for a disease) and doing disease management," she said. "Isn't it sort of like the fox watching the hen house?"