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Health Care Costs and Financing

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Cost does not appear to be the main factor in insurers' drug coverage decisions

Contrary to popular belief, cost does not appear to be the primary factor influencing managed care organizations' (MCOs') decisions regarding coverage for pharmaceuticals, and drug coverage decisions are made by clinical professionals rather than accountants or chief financial officers. According to a study of four relatively new drugs approved by the Food and Drug Administration within the past 3 years, value judgments, rather than cost, seem to play a central though largely unspoken role in drug coverage decisions.

The study was conducted by the Clinical Bioethics Department at the National Institutes of Health's Clinical Center and the Agency for Healthcare Research and Quality. For the study, researchers queried either chief medical officers or internal pharmacy benefits managers of 53 managed care organizations (a 63-percent response rate among the 84 MCOs initially contacted) about their coverage decisions regarding four new, expensive, and controversial drugs: Enbrel and Celebrex, used to treat arthritis, Zyban for smoking cessation, and Viagra for erectile dysfunction.

More than 90 percent of the responding MCOs surveyed offer coverage for Enbrel and Celebrex. In contrast, MCOs covered Viagra and Zyban much less frequently, although not-for-profit MCOs were twice as likely as for-profit MCOs to cover Zyban. The respondents often attributed this to the decisionmakers' belief that Viagra and Zyban are "lifestyle improvement" drugs and not necessary for the treatment of disease.

The researchers suggest that while benefit decisionmakers, usually a committee of health professionals, may see a clear distinction between diseases and lifestyle, such distinctions tend to be value-laden and controversial. These distinctions and the values they embody may need to be examined as pharmacy coverage decisions become increasingly complex and contentious, the authors conclude.

Details are in "Drug coverage decisions: The role of dollars and values," by Karen Titlow, M.A, Lauren Randel, M.D., Carolyn M. Clancy, M.D., and Ezekiel J. Emanuel, M.D., Ph.D., in the March/April 2000 Health Affairs 19(2), pp. 240-247. Reprints (AHRQ Publication No. 00-R022) are available from the AHRQ Publications Clearinghouse.

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