Magazine article Workforce Management

Firms Acting to Wean Employees off Brand Drugs

Magazine article Workforce Management

Firms Acting to Wean Employees off Brand Drugs

Article excerpt


Executives at Caterpillar Inc. call their employees' penchant for costly brand-name drugs the "purple pill syndrome," a condition that burns a hole in company pockets.

Google the words "purple pill" and up pops the Web site, advertising Nexium. The medicine relieves the heartburn symptoms of acid reflux disease. Though generic versions are available, the seductiveness of the ads has led to high costs for companies like Caterpillar, where employees are running up expensive tabs at the drugstore with their preferences for more expensive brand-name drugs instead of a generic or over-the-counter equivalent.

"Someone sees an advertisement for a brand-name prescription drug and they think, 'Hey, that could be the answer,' and they go for that instead of an over-the-counter drug," says Caterpillar spokeswoman Rachel Potts, echoing a lament voiced recently by Sidney Banwart, the company's vice president tor human services.

Often the goals of the pharmaceutical companies-promoting their brand-name drugs-come at the expense of companies looking to keep their costs down, especially when cheaper alternatives are available. Companies, helpless to take pharmaceutical advertising head on, are changing their health plans to make employees pay more if they want a brand-name drug when a generic is available. Employers are also putting an end to rebates received by pharmacy benefit managers for pushing brand-name drugs.

Pharmaceutical companies spend nearly as much on promoting their drugs as they do on developing them. In 2003, money for research on new drugs dropped to $30.2 billion from $31.6 billion a year earlier. Spending on promotion of drugs, meanwhile, rose to $25.3 billion from $21.2 billion, according to the Pharmaceutical Research and Manufacturers of America, a pharmaceutical industry group, and IMS Health, a market research company covering the pharmaceutical industry.

IMS considers promotion to include direct-to-consumer marketing, which accounted for $4.2 billion in 2005, up from $2.6 billion in 2001. It also includes the retail value of samples, journal advertising, and office and hospital promotion. Employers, meanwhile, are spending an increasing amount on prescription drugs. In 2004, U.S. companies spent $188 billion on pharmaceuticals, up from $174 billion in 2003 and $20 billion 20 years ago.

Caterpillar, which spent 25 percent of its total health care costs, or $156 million, on prescription drugs in 2005, moved to a two-tiered co-pay system to make buying brand-name drugs more expensive for employees. …

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