I just signed up for a new drug plan offered by my health insurance company, and they tell me I need to change some of my medicines to other drugs which do the same thing. Why?

The simple answer is "profit." The drug plan can purchase the alternative medicines at a lower cost than the drugs you are taking and, therefore, wants to supply you the cheaper substitutes. A more complete answer requires an explanation of economic issues associated with drug plans.

Drug plans, also known as prescription benefit plans, work like a pharmaceutical HMO in the health care industry. The pharmaceutical HMO's client, however, is your health insurance company, not you. Health insurance companies cannot control the medical service and drug needs of their insurance subscribers, but they can control what they spend on services and drugs. Health insurance companies want to keep the amount of money they spend on drugs to be a fixed, predictable amount each year dependent on the number of people who buy their insurance. They accomplish this goal by creating a "pharmaceutical set aside" by paying a fixed amount of the premium dollars they collect to a prescription benefit plan to manage the drug needs of the insurance company's subscribers. The health insurance companies put out for bid a contract to several prescription drug management companies to provide prescription drugs at a defined dollar amount per person per month. For example, the winning bidder may say that its company can provide all prescription services to the insurance company for $200 per person per month. The insurance company pays this amount and tells the prescription management company that this amount will be all the money the prescription management company will get for prescription services; the health insurance company informs the prescription benefit company that it does not expect requests from the prescription benefit company for additional funds to pay for drugs during the term of the contract. If the prescription management company can provide the insurance company's defined patient population its drug needs for less money, the prescription management company gets to keep the excess. By the same token, if the prescription management company spends more to provide the contracted medications than the contracted amount, the prescription management company must eat the loss.

Faced with a fixed budget from the insurance company and an unpredictable variable prescription demand from the patients, the first thing the prescription benefit plan does is peel off up front its profit, approximately 18%. The prescription benefit plan then sets out to manage the needs of the plan subscribers with the remaining funds and whatever additional monies it can get from the patients. The plan, in turn, puts out bids to pharmaceutical manufacturers with the statement that the prescription benefit company will utilize in each drug category the lowest price medication as its "preferred drug". For the drug manufacturer, a price concession on its part may mean a large volume of sales if its drug is selected as the preferred drug in its category for a prescription management company's plan. Sometimes, when the bids from several drug manufacturers are similar, a prescription benefit plan may offer two or three drugs as its preferred drugs in that category. The prescription plan may also set up for patients multiple "tiers" of drugs in each category with different copayment charges to patients. Drug X may cost the patient nothing as a copayment each month while drug Y might cost the patient $10 per month and a prescription for drug Z might cost the patient $30 per month. Prescription benefit plans often send "educational" brochures to doctors which purport to tell the doctor how to prescribe for a particular condition based on the prevailing medical literature; these educational materials are highly biased by the prescription plan's intent to get the physician to prescribe the cheapest drug for the shortest possible period of time. Sometimes, these brochures contain outright misinformation.

Prescription benefit plans sometimes send a fax to the patient or the patient's doctor suggesting that the doctor's prescription of another category of drug or the prescription of a generic drug will cost the patient less money. Some of the prescription plans attempt to manipulate the prescriptions written by doctors by requiring the doctor or a member of the doctor's office staff to telephone the prescription plan in order to obtain pre-authorization for insurance coverage of a particular drug. The doctor or his designate usually is kept waiting on-hold on the telephone for a long time as a method of harassment to discourage the doctor from writing future prescriptions for that drug. Some of the less scrupulous plans will change prescriptions without the doctor's consent or knowledge in order to shorten the term of the prescription (changing a 3 month supply to a 1 month supply or reducing the numbers of refills on the prescription) in the hope that the doctor will be too lazy to rewrite the prescription or too preoccupied with other patients to notice. Some of these plans will send the patient a note stating that the doctor changed the prescription when that change never happened.

Prescription benefit plans hope that the use of most medications will be self-limited. They require the doctor to write most prescriptions for no more than 30, 31, or 34 days at a time. In that way, the prescription plan gets to collect a monthly copayment from the patient each time the patient goes to the local pharmacy for a prescription refill. If it is obvious that a medication will be a long term maintenance drug for a chronic condition, the prescription benefit plan may allow the patient to get a 90 day supply at a time with refills for up to 1 year. Since there will be fewer co-payments in the course of a year for a patient with a 90 day drug prescription, the prescription plans often require the patient to send their 90 day prescriptions to an out of town wholesale drug warehouse rather than utilizing a local pharmacy. That way, the plan eliminates the pharmacy's middle man charges to the plan.

As a physician, I try to select the drug that will best treat the individual patient for that person's particular problem. Often, that goal conflicts with patient's prescription benefit plan's choice of drug because the plan's choice will always be for the drug which maximizes the plan's bottom line. In aggregate, my office staff spends about 2 hours per day on the phone with different drug plans debating prescription choices and arguing for what the patient needs. I might spend as much as 30 minutes each day writing and rewriting prescriptions depending on the outcome of these debates and the patient's decision to purchase either the drug which works best or the drug which costs less.