PRESCRIPTION DRUGS: HMOs MOVE TO FURTHER LIMIT CHOICE

      HMOs "and other managed care plans are redoubling efforts to
 cut medical costs" and prescription medications "are their
 primary target," AP/MIAMI HERALD reports.  In 1996, many HMOs saw
 their drug costs increase by as much as 10% to 20%.  According to
 AP/HERALD, "HMOs have been in a profit squeeze because their
 costs for drugs, doctors fees and other care continue to rise
 while corporate employers are resisting higher insurance
 premiums."  Christine Bennis, an analyst with UBS Securities,
 estimated that HMOs' pre-tax profit margins "fell to 4.3% in 1996
 from 5.6% the year before."  One reason for the drug cost
 increase, Bennis said, is that people are "using more
 prescriptions and each prescription the patient was using was
 more expensive, on average."  In response, HMOs are "imposing
 additional hurdles for consumers and doctors to jump if they want
 to get the broadest choices among today's top medicines."  Peter
 Lee of the Center for Health Care Rights, a patient advocacy
 group, said, "If you want choice, you're going to have to pay for
 it."
      DRUG REACTION:  One way that HMOs are seeking to reduce
 their prescription drug costs is through stricter enforcement of
 their drug formularies.  For example, California-based PacifiCare
 Health Systems "is now offering employers who want to keep their
 premium increases low a new drug benefits program with a 'managed
 formulary.'"  Physicians who wish to prescribe a drug not on the
 formulary must first receive permission from PacifiCare.  Alex
 Gilderman, who manages the formulary for PacifiCare, said that
 the physician requests are ruled on with 48 hours.  He added that
 70% "are approved because they are medically justified."  He
 said, "It's not intended to be a restrictive process.  It's a way
 for doctors to request non-formulary medicines when they feel
 it's appropriate."  Other HMOs such as Healthsource and United
 HealthCare allow non-formulary drugs, "but charge new fees for
 them."    
      BUYER BEWARE:  Critics contend that the more restrictive
 formularies, such as PacifiCare's, are "leaving off important new
 drugs" and "potentially depriving patients of the best medicine." 
 They note that PacifiCare's formulary does not include Risperdal
 and Zyprexa, two new schizophrenia drugs "that work better than
 previous drugs but cost many times the price."  Patient rights
 advocates "say people need to be vigilant to ensure they aren't
 deprived of breakthrough medicines" (Sakson, 3/9).