October 31, 2005
Creative competition and distributed healthcare
Aetna continues to surprise and amaze. After years of being on the wrong side of multiple issues with providers, as I saw as an MD as an CEO, they are starting to do some innovative things at point of service. (see: Humpty Dumpty said…Sept.13 blog)
The latest thing that caught my eye was a story in the Wall Street Journal on October 12 entitled “Generic Drugs Sampled Freely in Aetna Test.
The issue is a bit complex but here it is: Prescription drugs are expensive. Brand name drugs cost many times more than generic drugs in general. Big Pharma makes essentially all of their profit on brand name drugs. Big Pharma really hates it when a physician prescribes generic drugs. So, Big Pharma gives physicians samples of brand name drugs they would like the physician to write prescriptions for. This is an enabling behavior. The physician is highly likely to pass out some samples and write a prescription for the same medication, bypassing the generic form. In fact, most physicians don't know which drugs are even available in generic form most of the time.
This sort of co-dependency between Big Pharma and physician can become extreme. And sometimes the physicians slip into the muck a little. A friend of mine called me once in frustration to ask me for a prescription for a cholesterol-lowering statin drug. It seems his physician wouldn't give him a prescription. Instead, the physician would have him come monthly for a physician visit (ka-ching for the doc) and give him 30 days worth of “free” samples for the medication. My friend thought this could be unethical. Uh, yeah!!! Find another physician.
Aetna has a drug benefit. Aetna pays more for brand name drugs than generics. Lots more. Hence, Aetna has an incentive to facilitate physician behavior in the direction of generic prescriptions. And it is cheaper for the patient. Everyone wins but the Big Pharma dudes. The physician doesn't really care much. Just so it's not a hassle.
OK, that's the background. Here's the story:
“Moving to trim drug spending, several insurers are paying to put ATM-style machines dispensing generic-drug samples in doctors' offices around the country… Aetna Inc. this week plans to unveil a pilot program in which it wants to place the machines with physicians around Philadelphia , in advance of a possible national rollout.”
“The generic-drug dispensers aim to provide a counterweight to the samples of branded drugs distributed freely by sales representatives working for pharmaceutical companies. Last year, doctors received more than one billion branded drug samples -- three for every person in the U.S. -- valued at nearly $16 billion, an 18% increase over 2003, according to data from IMS Health, Fairfield, Conn. Makers of low-priced generic drugs don't provide samples to doctors, except in rare cases, because of the expense and lack of sales forces.”
“The automated dispensers of generics offer some advantages over branded samples. Samples of brand-name drugs, for example, usually last only a week or so. The generic-drug machines usually dispense 30-day supplies of medication. To use one of the machines, a doctor would punch in a security code and receive a packet of medicine used for some of the most commonly treated conditions, such as high blood pressure, depression or diabetes. To make the machines easy to use and to encourage generic prescribing, Aetna and MedVantx want doctors to dispense appropriate generic samples to all patients, regardless of their insurance plan.”
“The machines in the Aetna pilot will be installed and supplied with drugs by MedVantx, a closely held San Diego company. They stock as many as 20 different generic drugs used in treating nine categories of illness, including diabetes, high blood pressure, heartburn and depression.”
“Neither MedVantx nor Aetna, of Hartford , Conn. , is offering payments or other inducements to doctors who agree to accept the machines in their practices. Richard Payne, an Encinitas, Calif. , family physician, says, "Patients thank us if we can give them a drug that will cost them less."
What a great idea. It takes a giant to battle a giant at least front on. Physicians for the most part don't have a dog in the fight, but find the use of samples of medications a handy way to get a patient started on their treatment. Again the indirect payment scheme in healthcare drives the bizarre behaviors.
The healthcare system can never be rationalized until the financial transaction and service transaction occur between the same two people.
These ATM-like generic drug dispensers, given the limitations of the third party payment system, promote distributed healthcare…care when and where you want it. It's not perfect, but a step in the right direction.
The Center for the Future of Health promotes the principle of distributed healthcare. Once again I find myself praising Aetna. Perhaps dogs and cats are living together after all!!
