Sunday, February 8, 2004

OTC drugs shift cost burden

Insured patients may pay more for medicines previously covered

By Christopher Rowland
The Boston Globe
and Cliff Peale
The Cincinnati Enquirer

The over-the-counter launch of popular prescription medicine like the heartburn drug Prilosec is supposed to be a boon to consumers, giving them wider, cheaper access to best-selling drugs.

But with Prilosec, broader availability of what's widely known as the "little purple pill" is costing people more money in some cases. That's because the price at the drugstore may now be higher than insurance co-payments patients used to pay to get the drug in prescription form. In addition, health insurers and Medicaid programs in some states are driving people to the over-the-counter version by eliminating or restricting coverage for prescription Prilosec; its successor, Nexium; and similar competing prescription drugs.

The drug's manufacturer, AstraZeneca Pharmaceuticals LP, and its marketing partner, Procter & Gamble Co., are chalking up sales by extending the life of a blockbuster drug with an expired patent. Insurance companies are saving tens of millions of dollars by moving people off coverage. Patients with no insurance have a cheaper alternative. But people with insurance - the majority of Americans - are seeing no financial benefit or taking a hit in the pocketbook.

"Consumers may end up paying more for the same amount of the same medicine once it goes over the counter," said Becky Derby, senior policy analyst at Health Care for All in Boston.

In addition to cost differences, restricted access to prescriptions is beginning to generate complaints from patients. Jane B. Kelly of Sharon, Mass., whose husband suffers from reflux disease, said she was notified that Tufts Health Care would no longer cover prescription Prilosec. Her husband tried generic Prilosec, she said, but it made his condition worse.

"They are different drugs," she said. "They are trying to save money. That's the bottom line. I know you have to save money somewhere, but not at the risk of harming someone."

P&G said the pill costs less than $1 a day, less than the national average co-payment of $32 per month for similar class of drugs.

So far, Prilosec has racked up sales of $89 million in less than four months, not counting sales in Wal-Mart Stores, P&G's biggest customer. It's one of P&G's biggest product rollouts ever, with expected first-year sales of up to $400 million.

P&G has three years exclusivity on over-the-counter rights for Prilosec, and hopes to use that period to establish a widespread brand loyalty.

The rollout should help P&G reach more deals to convert prescription products to over-the-counter sales, chairman and chief executive A.G. Lafley said late last year.

"The key thing is, we're going to get a shot at just about anything that becomes available," he said.

A similar phenomenon marked the over-the-counter rollout of Claritin in 2002, which wound up costing many people more money than when Claritin was available only in prescription form. Specialists say the over-the-counter introduction of many anticholesterol drugs, the next likely category for a switch, will probably end up like Prilosec.

That's because insurance companies are trying to cover fewer expensive, popular medications, said Joshua Cohen, a senior research fellow at the Tufts Center for the Study of Drug Development, an independent research group affiliated with Tufts University.

"They are quite happy," he said, "to shift the cost burden onto consumers as much as they can."

Switching potent drugs to over-the-counter status is becoming a more prominent feature of U.S. health care as regulators gain confidence in Americans' ability to choose medications themselves and take them responsibly.

Generally, consumer groups favor the move because it greatly reduces costs for people without prescription drug insurance. FDA Commissioner Mark McClellan, an economist appointed in 2002, has said Americans should be given better and cheaper access to more effective medicine through over-the-counter switches and has set aside additional money in the FDA budget to tackle the issue.

Prilosec OTC, approved for the treatment of "frequent heartburn," was launched in September with much fanfare - and a twist. P&G worked through insurance companies to distribute hundreds of thousands of $10 discount coupons to heartburn patients, sometimes along with letters describing restrictions on prescriptions.

Derby, at Health Care for All, said the coupon program appeared to be designed to "soften the blow." But it could be unfair to patients who ultimately pay more, particularly if insurance companies do not disclose the availability of a prescription version of generic Prilosec, she said.

"Prior to this, the insurer was paying for the drug. Now this is encouraging consumers to not use their insurance," said Derby. "This is hooking them back on a brand name over the counter when they could be buying a prescription generic for potentially less money."

A spokesman for P&G, Dr. Kurt Weingand, declined to discuss the coupons.

Insurance companies that participated in the coupon program say encouraging members to buy Prilosec OTC ultimately helps employers and health-plan members by keeping premium increases in check. It also frees up money to provide coverage for the latest brand-name drugs coming on the market, insurers said.

"As costs of medications rise and new drugs enter the market, we need to make sure we are diligent in OTC and try to take advantage of the other side of the product life cycle," said Eric Elliott, president of Aetna Pharmacy Management. Aetna, a national health insurer that distributed 100,000 $10 coupons to its members, took prescription Prilosec and generic Prilosec off its coverage list, but it does cover two competing brands.

Humana of Ohio, with 400,000 members in Greater Cincinnati, still covers prescription products of the same type as Prilosec, with an average co-payment of $35 to $50 per month, a spokesman said. The actual co-payment is negotiated with individual employers.

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