By WADE DANIELS

Staff Reporter

In an effort to contain costs, many health maintenance organizations require their members to accept generic versions of drugs, or they deny payment for certain drugs altogether generating increasing complaints from consumer advocates and medical professionals.

"I've had many congestive heart patients who were switched from a brand-name drug to a generic version," said Dr. Deborah Judelson, a cardiologist with the Cardiovascular Medical Group in Beverly Hills. "Most have been switched at their pharmacy, and many required hospitalization within a week because they were given the wrong drug."

Critics say HMOs often choose drugs based on financially advantageous deals with pharmaceutical companies, and not on medical science.

In some cases, a drug maker will offer rebates to HMOs and medical insurance companies for including their products on the list of drugs covered, which is called a formulary. Drug makers also offer incentives to individual doctors and pharmacists to get them to favor prescribing or selling certain drugs.

"The basic premise is that some of these companies would like to think that drugs are like toasters and are interchangeable," said Scott Syphax, associate director of the California Medical Association. "We contend that that is not necessarily true because there are drugs that treat the same condition but can only be used to treat it in certain people."

Myra Snyder, president and chief executive of the California Association of Health Plans, said cost is indeed a factor as to whether a drug is added to or taken off a formulary, but is hardly the sole or dominant factor.

"If one drug costs $2 a pill and a similar drug is 30 cents a pill, they will probably choose the one for 30 cents if its therapeutic value is adequate," Snyder said. "Overall, most HMOs have a fairly sophisticated way of considering changes in their formularies, with physicians and pharmacists involved in looking at the issue."

Lisa Haines, a spokeswoman for Woodland Hills-based Foundation Health Systems Inc., said cost is not a primary consideration in adding and subtracting drugs in the company's formulary.

"Each quarter, we review new drugs to see if they are safe, effective and cost efficient compared to drugs on our formulary," said Haines.

She noted that decisions on formulary changes are examined by a panel of Foundation officials and physicians from areas the company serves, and that only non-Foundation employees on the panel can vote on adding or removing a drug.

Syphax and others say there are no composite figures to show how often drug-switching occurs.

But companies that manage drug prescription programs for HMOs and health insurance companies, like Arizona-based Prescription Card Services Inc., are in a position to shift patients to drugs they prefer by simply denying payment for rival brands.

Prescription Card Services, for example, is a subsidiary of pharmaceutical giant Eli Lilly & Co. In a filing with the federal Health Care Financing Administration, PCS acknowledged switching about 30 percent of member prescriptions to drugs it preferred, principally Lilly products, according to the New York City Public Advocate's Office.

In response to medical complications attributed to drug-switching, California state Assemblyman Martin Gallegos, D-Baldwin Park, has authored a bill to ensure that when doctors prescribe a specific drug, their patients will continue to get it even if the drug is dropped from a formulary.

Gallegos said he authored AB 974 after hearing a wealth of stories about people with chronic illnesses like diabetes and arthritis whose drugs were dropped from an approved list. In many cases, he said, the person had a "traumatic" time adjusting to the new drug they received.

A proposal similar to AB 974 was endorsed this month by the California Managed Health Care Improvement Task Force appointed by Gov. Pete Wilson and state legislators.

And in early January, the Food and Drug Administration announced a proposal to regulate the advertising and promotions of pharmaceutical benefits managers, or PBMs. These are companies that administer prescription drug programs on behalf of HMOs and insurers for about 115 million Americans.

The FDA wants to ensure that the PBMs provide accurate information to doctors and pharmacists in their efforts to persuade these groups to switch from one drug to another.

"PBMs have been known to say that one drug is as good or the same as a similar one when that was not true," Syphax said.

In announcing the proposal, FDA officials said the agency had caught PBMs giving false information on reported cases of side effects from drug switching. However, companies were not cited because there was no regulation in place.

Under the FDA proposal, which is expected to become policy later this year, PBMs owned by drug manufacturers would have to submit their advertising and promotional materials to the FDA for review before publication which would allow the agency to eliminate unfounded claims. Drug makers already must submit these materials to the FDA before using them.

"We think these laws can help the situation, but more may be needed because this is a big industry and does not have much regulation," said Jamie Court, director of the Santa Monica-based advocacy group Consumers for Quality Care.

For reprint and licensing requests for this article, CLICK HERE.