Magazine article Drug Topics

Hey, Big Spender!: Managed Care Now Top Source of Prescription Reimbursement

Magazine article Drug Topics

Hey, Big Spender!: Managed Care Now Top Source of Prescription Reimbursement

Article excerpt

Managed care now top source of prescription reimbursement

Managed care organizations (MCOs) may gripe about the rising cost of providing prescription drug coverage, but they continue to provide a growing percentage of all pharmacy benefits paid in the United States-and will continue to do so through at least 2003, according to a new study.

"Managed care has become the most important source of drug reimbursement [in the United States], accounting for $24.8 billion of the $48.1 billion reimbursed in 1997," reported Issues and Trends in U.S. Outpatient Prescription Drug Reimbursement, a strategic research report by the Frost & Sullivan marketing consulting company. The report compared drug reimbursements among managed care, government, and traditional indemnity insurers.

It revealed that in 1993, half of all commercially insured individuals belonged to an indemnity plan. By 1997, however, that segment of the population was down to approximately 12%. As a result, Frost & Sullivan research analyst Marina Ulmishek concluded that acceptance of products into managed care plans has become "the most important issue facing the pharmaceutical manufacturers.

"It's a continuation of the evolution [of managed care]," she explained, adding that the jump in pharmacy reimbursements "has been not a gradual but a really quick shift from the traditional indemnity plans into the managed care."

Obviously, the growth is linked to the steady flow of patients from indemnity plans to MCOs in recent years. But the research report also points to the indirect influence of managed care on prescription trends-from the use of formularies in general to the growth of mailorder pharmacies and increasing emphasis on regulatory issues.

While prescription coverage is acknowledged to be one of the key advantages of a managed care plan for the insured, Ulmishek said MCOs may be doing themselves a disservice by not using that selling point to its full advantage. "The public is really poorly aware of how the pharmacy benefits are covered under different plans," she said. "The [MCOs] haven't really, in my view, exploited the pharmacy [benefit] as a selling point because there's so much controversy and so much bad publicity about formularies and substitution of generic drugs. I think the issue-that at least they cover it while other plans don't-really gets lost somewhere."

While a few indemnity plans have added the Rx benefit in an effort to stay somewhat competitive, Ulmishek said the industry is woefully behind managed care in that area. …

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