HEALTH NET: Legislators Call On Dept. Of Corporations To Probe Bristol-Myers Deal

      State legislators are pressuring the Department of Corporations to investigate a proposed deal between Health Net HMO and Bristol-Myers Squibb. Under the proposal, Bristol-Myers would pay Health Net's parent company, Foundation Health Systems, $1 million per month to give five Bristol-Myers drugs "preferred status" on Health Net's drug formulary. State Assemblywoman Liz Figueroa (D-Fremont) sent a letter to DOC Commissioner Dale Bonner to express her anger at the "department's contention that it had limited authority over the makeup of drug formularies." She wrote, "(I) urge you to exercise the authority you have to make ceratin that neither this deal, nor any like it, comes into existence." She further assailed the secretive nature of the agreement, asking, "Why would anyone think they could do this behind closed doors? I think the rules are fairly obvious. It makes me wonder what else is going on." State Sen. Herschel Rosenthal (D-San Fernando Valley), chair of the Senate Insurance Committee, also sent a letter to Bonner, calling a failure to oversee the agreement "an abdication of the (Department's) responsibly to protect HMO patients." Both legislators stressed that existing laws, as well as new laws taking effect Jan. 1, "require disclosure" of any financial incentives to limit drug choices. U.S. Rep. Pete Stark (D-Hayward) also had unkind words for the companies involved. He said, "This is beyond kickbacks. To me, this is obscene. It's a medical provider and an insurance company conspiring to literally steal money that belongs to the beneficiaries. It denies independent professional choice of the best treatments." He indicated that federal legislation is pending which would mandate disclosure of drug formularies.

Much Ado About Nothing?
      DOC spokesperson Julie Stewart said the department does in fact plan to review the deal. "This agreement cannot become effective unless the Department of Corporations approves it," she said. Health Net spokesperson Ron Yukelson said that the terms of the agreement are still being negotiated. "There is no deal to halt," he said, adding, "We do acknowledge that the Department of Corporations has authority over pharmacy programs and we will be working with them" (Russell, San Francisco Chronicle, 10/3).