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Study Finds OTC Switch Windfall for HMOs; Consumers to Pay Dearly for OTC Convenience

Study Finds OTC Switch Windfall for HMOs; Consumers to Pay Dearly for OTC Convenience -- Posted by Lenny Moss on 07-10-03 06:48

Found this interesting and revealing study online, figured it was of
interest to all. Follow the link to read the release and study
online:

http://www.centerforindividualfreedom.org/legislative/otc.htm

STUDY: OTC Switch Windfall for Insurers:
Consumers to Pay Dearly for OTC Convenience

Alexandria, Va. — The direct costs to patients for allergy
medications Allegra and Zyrtec will rise precipitously if the Food and
Drug Administration (FDA) approves the change from prescription to
over-the-counter status requested by WellPoint Health Networks, a
major managed healthcare company. Health insurers would be granted an
annual windfall that could exceed three-quarters of a billion dollars
from the change.

These are the findings of a new study conducted by one of the
nation’s leading health care economists, Dr. Frank R.
Lichtenberg. Dr. Lichtenberg is the Courtney C. Brown Professor of
Business at the Columbia University Graduate School of Business and a
Research Associate of the National Bureau of Economic Research.

Based on separate sets of calculations using the two most reliable
data bases for drug use and cost statistics (according to year 2000
data), the major findings of Dr. Lichtenberg’s study are:

Allegra

** Americans reported that they obtained between 13.6 million and
17.6 million Allegra prescriptions a year.

** Insurance companies will save between $427.5 million and $558
million a year.

** The direct cost to consumers will be increased by between $38.8
million and $149.5 million, depending on over-the-counter pricing.

Zyrtec

** Americans reported that they obtained between 7.3 million and 9.5
million Zyrtec prescriptions a year.

** Insurance companies will save between $219.3 million and $283
million a year.

** The direct cost to consumers will be increased by between $9.8
million and $75 million, depending on over-the-counter pricing.

While it is common for the actual price of drugs to decrease
significantly upon over-the-counter release, it is the shift of
payment from insurance companies (which, for Allegra and Zyrtec, have
covered between 75 and 80 percent of prescription costs) to consumers
that produces the increased cost impact on those who need the
medications.

Recent news emphasizes projected insurer savings due to
over-the-counter switching in the allergy drug category. According to
a March 24, 2003, Centers for Medicare and Medicaid Services (CMS)
report on managed care, "Medco Health Solutions [a major pharmacy
benefits manager]…alone expects to achieve $500 million in
savings in 2003 [on non-sedating antihistamines]."

Dr. Lichtenberg’s complete study, including methodology and
calculations, is attached. While the study is straightforward and
transparent, Dr. Lichtenberg is available to discuss it, subject to
his academic and research schedule. His bio is also attached.

The study, completed in June 2003, was commissioned by the Center for
Individual Freedom Foundation.

###

The Center for Individual Freedom Foundation is a nonpartisan
constitutional advocacy group that fights to protect individual
freedoms and rights in the legal, legislative and educational arenas.

--------------------------------------------------------------------------------
[Posted July 9, 2003]

Re: Study Finds OTC Switch Windfall for HMOs; Consumers to Pay Dearly for OTC Convenience -- Posted by DDB on 07-10-03 08:11

"Lenny Moss" wrote in message
news:c9ca52f9.0307100548.5a58a860@posting.google.com...
> Found this interesting and revealing study online, figured it was of
> interest to all. Follow the link to read the release and study
> online:
>

Lenny you make some really good points but the battle you are fighting is at
the wrong end of the situation e.g. health insurers. The real problem is
Pharmaceutical companies rely on the US to make 40% of their global profit,
largely achieve by over charging Americans and as long as the US citizens
accept this treatment the price of pharma in the US will continue to rise.
My experience from working with Pharma companies is that they don't care
about the bottom line because they know they can simply increase prices to
the US consumer. You should take a look at their campuses Pfizer in New
London CT has a multiple acre facility sitting right on the bay with huge
building of glass polished metal and granite. The same is true of German
based Boehringer & Ingelheim. These folks have no incentive to control cost
and you and I are paying for their lavish corporate lifestyles and
facilities. The fight has to be against out of control Pharma companies
and their product pricing, sure insurance companies save whenever they can
get the FDA to allow product to be sold over the counter but the bloated
price of the product needs to be addressed also.

> http://www.centerforindividualfreedom.org/legislative/otc.htm
>
>
> STUDY: OTC Switch Windfall for Insurers:
> Consumers to Pay Dearly for OTC Convenience
>
> Alexandria, Va. — The direct costs to patients for allergy
> medications Allegra and Zyrtec will rise precipitously if the Food and
> Drug Administration (FDA) approves the change from prescription to
> over-the-counter status requested by WellPoint Health Networks, a
> major managed healthcare company. Health insurers would be granted an
> annual windfall that could exceed three-quarters of a billion dollars
> from the change.
>
> These are the findings of a new study conducted by one of the
> nation’s leading health care economists, Dr. Frank R.
> Lichtenberg. Dr. Lichtenberg is the Courtney C. Brown Professor of
> Business at the Columbia University Graduate School of Business and a
> Research Associate of the National Bureau of Economic Research.
>
> Based on separate sets of calculations using the two most reliable
> data bases for drug use and cost statistics (according to year 2000
> data), the major findings of Dr. Lichtenberg’s study are:
>
> Allegra
>
> ** Americans reported that they obtained between 13.6 million and
> 17.6 million Allegra prescriptions a year.
>
> ** Insurance companies will save between $427.5 million and $558
> million a year.
>
> ** The direct cost to consumers will be increased by between $38.8
> million and $149.5 million, depending on over-the-counter pricing.
>
> Zyrtec
>
> ** Americans reported that they obtained between 7.3 million and 9.5
> million Zyrtec prescriptions a year.
>
> ** Insurance companies will save between $219.3 million and $283
> million a year.
>
> ** The direct cost to consumers will be increased by between $9.8
> million and $75 million, depending on over-the-counter pricing.
>
> While it is common for the actual price of drugs to decrease
> significantly upon over-the-counter release, it is the shift of
> payment from insurance companies (which, for Allegra and Zyrtec, have
> covered between 75 and 80 percent of prescription costs) to consumers
> that produces the increased cost impact on those who need the
> medications.
>
> Recent news emphasizes projected insurer savings due to
> over-the-counter switching in the allergy drug category. According to
> a March 24, 2003, Centers for Medicare and Medicaid Services (CMS)
> report on managed care, "Medco Health Solutions [a major pharmacy
> benefits manager]…alone expects to achieve $500 million in
> savings in 2003 [on non-sedating antihistamines]."
>
> Dr. Lichtenberg’s complete study, including methodology and
> calculations, is attached. While the study is straightforward and
> transparent, Dr. Lichtenberg is available to discuss it, subject to
> his academic and research schedule. His bio is also attached.
>
> The study, completed in June 2003, was commissioned by the Center for
> Individual Freedom Foundation.
>
> ###
>
> The Center for Individual Freedom Foundation is a nonpartisan
> constitutional advocacy group that fights to protect individual
> freedoms and rights in the legal, legislative and educational arenas.
>
> --------------------------------------------------------------------------
------
> [Posted July 9, 2003]

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