Wisconsin Shows How to Curb Health Costs
Wisconsin State Journal
October 4, 2004
Wisconsin’s success in holding down costs in the state’s group health insurance plans offers lessons for other governments and the private sector.
The results of the strategy the state is using are nothing short of stunning. The average cost for state employee health insurance next year will rise only 5 percent, roughly half of earlier projections.
…the state’s accomplishment shines a spotlight on a part of the health care system called pharmacy benefits management.
Pharmacy benefits managers administer prescription drug insurance benefits.
However, not all pharmacy benefits managers are created equal. Many governments and businesses get stuck with poor pharmacy benefits management because they leave the job to health maintenance organizations or they look for the benefits manager who charges the lowest fee for the job.
…Wisconsin’s state government has taken the job away from HMOs in the state insurance plans and contracted with a single benefits manager, Navitus, based in Appleton and Madison. Navitus is a joint venture of Dean Health Plan and Touchpoint Health Plan.
…Navitus focuses on truly controlling costs. It has encouraged the use of generic drugs by waiving co-payments for the first filling of a generic prescription. It has boosted the use of mail-order drugs, and it has encouraged savings by pill-splitting, a technique that allows a consumer to buy a double-dose pill and split it in two to get the required dose cheaper.
Because of the way it does business, Navitus charges a higher fee than managers who dip into rebates or use other means to profit at consumers’ expense. But the fee is proving to be more than worth its cost because of the savings gained by the improved management.
http://www.madison.com/wsj/home/opinion/index.php?ntid=11732&ntpid=0
Comment: First, a comment about pill splitting. The marginal cost of producing most medications is negligible. Pharmaceutical firms frequently price their products based on a day’s dosage rather than the milligram amount. A 5 mg tablet may be the daily dose for one individual and a 10 mg tablet for another. The pharmaceutical firm may decide that this treatment should be priced at $90 per month or $3 per day. Thus both the 5 mg and 10 mg tablet may be priced at $3 each. It is obvious why pill splitting has become a common practice. But it has been condemned because of possible dosing errors due to crumbling pills or perhaps absorption differences due to disruption of the pill coating. We do need much more rational drug pricing policies, but we don’t need middlemen recommending unacceptable, potentially dangerous, cost saving practices.
Choosing a generic equivalent over a brand name drug may be a wise decision if the products are truly comparable, but that should be a clinical decision and not one based on paying the patient a bribe to make the switch (waiving the co-payment at the time a decision to offer the generic is made by the pharmacy benefit manager rather by than the physician).
Also, a rational system of drug pricing would not delay access to necessary prescriptions, a process which reduces patient compliance, by offering discounts for mail delivery.
But what is especially outrageous here is that the state of Wisconsin is rewarding Navitus above-market fees for having adopted policies that are detrimental to the health of their employees.
A universal, publicly funded and publicly administered health insurance program would ensure that medications would be available in the right amount, at the right time, in the right place, and that negotiated pricing would ensure that they would remain affordable for all of us.
Again, is there something about rational reform that our policymakers don’t understand?