Health insurance prescription drugs

OTA reviewed recent trends in payment methods for prescription drugs in five countries Australia, Canada, France, Japan, and the United Kingdom. To a greater or lesser extent in each of these countries, drug payment policy is governed by two potentially conflicting objectives to minimize health insurance prescription drug costs and to help the country s domestic pharmaceutical industry. Payment policies represent a blend between these objectives. 

Needless to say, the economic consequences of poor compliance will sooner or later attract serious attention from insurers and other payers for health care. Prescription drugs, after all, are a principal interventional arm of modern medicine, and their actions are invariably dose-dependent. Ineffective or suboptimal dosing represents an inefficiency in medical care that is potentially remediable. Stefan Norell, a pioneer in this field, wrote in 1980 ... 

A. Does your health insurance have full coverage, partial coverage or no coverage for prescription drugs (DO NOT READ LIST) ... 

High prices for prescription drugs. Americans are now convinced that they are pa)dng more for drugs than residents in Canada and elsewhere. Moreover, those not covered by health insurance purportedly have to choose between food and their medicines. 

Excessive total costs for prescription drugs. Insurers and other third party payers see drugs as the fastest-rising component in total health... 

A more in-depth discussion of reference pricing lies beyond the compass of this essay (in this regard, see Kanavos and Reinhardt 2003). Suffice it to say, it is a powerful method of introducing market power on the demand side of prescription drugs covered by health insurance, and one likely to be embraced, sooner or later, by private health insurers, as they seek to cope with the ever-rising cost of health care. 

The expense of drugs can be a major disincentive in patients receiving marginal retirement incomes who are not covered or inadequately covered by health insurance. The prescriber must be aware of the cost of the prescription and of cheaper alternative therapies. For example, the monthly cost of arthritis therapy with newer NSAIDs may exceed 100, whereas that for generic aspirin is about 5 and for ibuprofen, an older NSAID, about 20. 

Congress creates Medicare, a public health insurance program for elderly persons that covers hospital stays and clinical services but not prescription drugs. 

Medicaid A federal and state partnership to provide health insurance to the needy (or those with low income and assets) that has become the only source of prescription drugs for many. 

Medicare A federal health insurance program for people age 65 and older and younger people with disabilities that partially covers hospital, medical, and prescription drug costs. 

The cost of prescriptions has risen dramatically in the last several decades. The average price for a single prescription in the USA in 2003 was more than 50.00. This rise is occasioned by new technology, marketing costs, and stockholder expectations. The pharmaceutical industry typically posts double-digit profits annually while the retail business sector shows a 3% profit. The cost to the patient for many new drugs like "statins" exceeds 1000 per year. Pharmaceuticals are the highest out-of-pocket health-related cost for the health sector because many other health care services are covered by health insurance whereas prescriptions are often not. 

About the Author Dr. Urmie is an Assistant Professor in the Clinical and Administrative Pharmacy Division at the University of Iowa College of Pharmacy. She received a B.S. in pharmacy from the University of Wisconsin and worked as a community pharmacist prior to returning to the University of Wisconsin for graduate school, where she received an M.S. in pharmacy administration and a Ph.D. in social and administrative sciences in pharmacy. Her teaching interests include insurance and reimbursement in pharmacy, health insurance, the U.S. health care system, and pharmacy management. Her main areas of research are prescription drug insurance and consumer preferences related to health care use. 

Pharmacies have third-party patients and private-pay patients. Private-pay patients, sometimes referred to as cash patients, are people who do not have any health insurance coverage or people who have health insurance that does not cover prescription drugs. From the pharmacy s perspective, patients who pay the pharmacy directly for their prescriptions and later are reimbursed by their insurance company often are indistinguishable from private-pay patients. This type of prescription drug insurance, called indemnity insurance, used to be common, but it now has been replaced largely by service benefit plans. Under a service benefit plan, the patient may pay the pharmacy a predetermined portion of the prescription cost, but the pharmacy is reimbursed directly by the third party for most of the prescription cost. 

For a while, from the spring of 1999 until the summer of 2001, Merck s Vioxx looked like another perfect drug. A chronic and widespread condition (osteoarthritis). A condition that tends to worsen with age (think of all those Baby Boomers hitting their fifties). A condition suffered by middle-class Americans with health insurance. A condition without any other prescription treatment (there were plenty of inex-... 

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