Florida officials have renewed an innovative disease management experiment offered through the state’s Medicaid program by four of the country’s leading pharmaceutical manufacturers. The two-year program would have expired on June 30.
Officials say the program–offered by Pfizer, Bristol-Myers Squibb Co., GlaxoSmithKline PLC, and AstraZeneca PLC–has improved patients’ overall health. The four companies have guaranteed a combined total savings to Florida of $64.7 million over the two years … or they’ll pay the difference. Pfizer alone has guaranteed the state will see at least $33 million in savings.
An analysis conducted by researchers at Medical Scientists, released on July 8, concluded Pfizer’s program had saved the state’s Medicaid programs $15.9 million between December 1, 2001 and June 30, 2002.
Researchers found the program reduced hospital stays among the state’s target group of Medicaid beneficiaries by 12.6 percent. The state was able to reduce expenditures for 4,810 high-risk Medicaid beneficiaries.
The policy review office of the state legislature, which opposed the program’s renewal, estimated the state could save $64 million in the next fiscal year alone by eliminating the patient-centered program and forcing companies to offer drug discounts for Medicaid’s poor, elderly, and disabled recipients.
Alternative to Drug Discounts
Pfizer first pitched the disease management approach to Governor Jeb Bush (R) in 2000, as he sought ways to reduce Medicaid drug costs. New York, Texas, and other states are currently considering similar programs.
A well-run disease management system, proponents say, can dramatically improve patient outcomes and reduce medical costs by emphasizing the health of the patient as a whole, not simply focusing on the specific disease being treated.
With a serious condition–diabetes, for example–medication alone can do only so much. Better health outcomes can be achieved if the patient is also managed into a better diet, regular exercise, and a weight loss program; if the patient quits smoking and avoids excessive drinking; and if the patient is dedicated to monitoring his or her blood sugar levels. Patients who do not make such lifestyle changes often end up in emergency rooms for stabilization and require more visits to the doctor.
In the case of chronic diseases, experts say, poor patient management also can lead to the onset of additional health care problems requiring even more medications and hospital stays, all of which diminish the patient’s quality of life and add to the total cost of health care.
Pharmaceutical companies are promoting disease management programs as a better way to cut costs than the drug price discounts more than a dozen states demand from them. By partnering with the states on disease management, the firms also get their medicines onto the state formulary of drugs preferred and approved for use by Medicaid patients.
Critics say disease management programs achieve less in Medicaid spending cuts than is achieved through mandated drug discounts. They also contend disease management programs may increase drug company sales and escalate Medicaid spending.
Proponents of the approach disagree, saying overall medical costs fall with disease management programs because patients spend less on doctor and hospital visits.
Bob Sharpe, director of Florida’s Medicaid program, is a proponent of the disease management approach. While drug discount programs do save money, he said, such programs “do nothing to invest in people.” As a result, Sharpe said, drug discount programs achieve savings only in the short term, while disease management programs have a more lasting effect.
Addressing Health Problems Early
Pfizer’s Florida program–the most extensive of the four firms’ offerings–was launched in July 2001. Roughly 60 Pfizer case managers work with 13,000 Medicaid recipients in the state. Pfizer’s arrangement with the state allows the company to sell drugs to Medicaid patients without discounting their prices.
John Sory, vice president of Pfizer Health Solutions, insists the disease management approach makes sense because it can prevent patients from running up medical bills by addressing health issues before they become major problems. “We want to talk to people before they get sick,” Sory said. He said the company’s pricing policy in Florida is “well-reasoned and responsible,” noting it strives to keep medications affordable for the poor.
Claiming he supports the preventive doctrine of disease management, Senator Walter Campbell (D-Fort Lauderdale) nevertheless opposed the pharmaceutical firms’ program because it “forces” the state to give up millions of dollars in drug discounts. “All we’re doing is giving big corporations the right not to pay us what they owe us,” he asserted.
Others worry disease management programs raise a potential conflict of interest issue, because participating firms might favor their own drugs in the disease management programs they run. Pfizer’s Sory insisted that “just does not happen.”
Merrill Matthews Jr., Ph.D., director of the Council for Affordable Health Insurance, told Health Care News, “Florida has been a leader–on the one hand, in creating restrictive prescription drug lists and imposing supplemental rebates and, on the other hand, in creating innovative drug company alliances that implement disease management programs for people with chronic health problems.
“While both approaches were undertaken to save money,” he continued, “the latter approach has the added benefit of likely improving health outcomes.”
Conrad F. Meier is managing editor of Health Care News. His email address is [email protected].