What Some Employers Think About Drug Prices

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frustrationAsk a human resource exec or benefit managers why drug prices keep rising and you’re likely to hear them blame direct-to-consumer advertising. And why not? The ads are not only ubiquitous, but promote meds that are, generally, expensive.

This year, however, a survey of 100 companies with at least 1,000 employees finds that DTC advertising is generating fewer complaints. This year, 33 percent of the managers, vp’s and directors queried blamed ads for the higher prices their employee benefit plans paid for meds. That’s down from 45.5 percent in 2007 and 36 percent in 2006.

Instead, the blame is shifting to manufacturer price hikes - 13.4 percent cited this as a problem, compared with 6.9 percent last year, according to Arxcel, a pharmacy benefits consultant that sponsored the survey (which was not scientific, by the way, but provides an interesting glimpse, nonetheless, into industry sentiment toward pricing).

“There’s a signifcant amount of frustration out there,” Chris Robbins, Arxcel’s ceo, tells us. “I think they’ve figured out how to squeeze the price per unit through lower pharmacy reimbursement rates, driving people to mail order or raising the empooyee co-pay. But we’ve about run those price points out of the system. Now, they’re trying to concentrate more on utilization…and focusing more on value - how do you prove increased drug spending will decrease medical costs? And they’re seeing so much more generic utilization that they don’t see DTC as big a factor.”

What else gets blamed for higher drug costs? The survey cited what Robbins calls the “biologic phenomenon.” There’s a higher utilization rate this year of 27.8 percent, up from 24.6 percent last year.

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  1. Novartis’ branded pharmaceutical sales representatives have been required to get generic medications over branded ones for several years now. A bit contradicting?

  2. Dan,

    I believe this only applies to brands that have A/B generic equivalents–ie, the same chemical entity. In other words, generic substitution is OK, but not therapeutic substitution where one brand is replaced by another chemical entity (most often a generic). By the way, Novartis is among the largest manufacturers of generic drugs.

    Atlex

  3. I know when Zyprexa’s sales went down in the U.S. they just arbitrarily raised the price. Who to blame? I think most of the price raising was under Taurel’s watch. Lechleiter has been too busy threatening Massachusetts.

  4. What they think is this- HMOs and generic drug programs. Go to some contract negotiations and see.

    Irony Is…
    Having great insurance and no decent branded drug to be treated with.

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