HEALTH NET: Negotiating Restrictive Drug Formulary With Bristol-Myers
In an agreement critics say amounts to an "outright purchase of coveted shelf space in an HMO's medicine chest" and "swaps cold cash for medical judgement," Foundation Health Systems' Health Net HMO is negotiating a deal with drug giant Bristol-Myers Squibb to exclusively use their "drugs for certain illnesses in exchange for multimillion-dollar payments." Under the proposed arrangement, a draft of which was obtained by the San Francisco Chronicle, Bristol Myers will pay Health Net, through the HMO's Integrated Pharmaceutical Services subsidiary, $1 million per month for a period of up to three years. The total value of the deal could be $36 million. In exchange, the 2.1 million member HMO will "launch a program to make Bristol-Myers medicines the 'preferred' drugs in five separate categories of illness." Patients who wanted non-preferred drugs would have to go through "a time-consuming appeals process."
The "proposal has alarmed medical groups around the state," who caution that in addition to undermining physicians' decision-making ability regarding drug choices, it could result in an increase in prices for consumers because Bristol-Myers' drugs in the five categories are not the cheapest options. The cost of the drugs could also swamp the prescription drug budgets that doctors are given under capitated payment arrangements. In addition, the Chronicle reports, "rebating" in such a way strikes many as unethical. Jeff McCombs, a health economist at the University of Southern California School of Pharmacy added, "It sounds a lot like a kickback to me."
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Neil Massoud, a pharmacist for Catholic Healthcare West who submitted a copy of the proposal to the state Department of Corporations in hopes of halting it, said, "This is blatant. They get $6 million out front. ... This has nothing to do with health care. It has everything to do with money. That's got to stop." However, DOC spokesperson Julie Stewart said the agency had "no authority over the make-up of drug formularies." Health Net had no comment on the proposal. However, Health Net CMO Dr. Alan Zwerner portrayed the deal as one which is necessary in a cost-conscious age. "The price one pays to keep health care affordable is a degree of aggravation," he said (Russell, San Francisco Chronicle, 9/25).