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Transcript of Pharmaceutical Marketing and Information Exchange in Managed Care Environments - Panel 2

Department of Health and Human Services
Public Health Services
Food and Drug Administration

FDA Public Hearing

Thursday, October 19, 1995

1:30 p.m.

Quality Hotel
3727 Colesville Road
Silver Spring, Maryland





MR. ZIMMERMAN:  Yes, thank you. My name is Allan Zimmerman, Randolph, New Jersey. I am representing the Academy of Managed Care Pharmacy and will be representing their views. The Academy of Managed Care Pharmacy did pay for my transportation here and there are no other financial constraints or issues that need to be disclosed.
MS. PEDERSEN: Thank you.
MR. ZIMMERMAN: Again, thank you for inviting me here. My name is Allan Zimmerman. I am representing the Academy of Managed Care Pharmacy, also known as AMCP, headquartered in Alexandria, Virginia. AMCP is a national professional society whose members promote the development and advancement of pharmaceutical care in managed care settings.
Currently, we have more than 2,800 members nationally who combined represent roughly 200 health care organizations and provide comprehensive coverage to more than 60 million Americans. Our members include pharmacists and other health professionals who work in managed care plans such as health maintenance organizations, prescription benefit firms, also known as PBMs, and other entities. Our membership in recent years has been growing steadily.
The Academy's mission is to promote the development and application of pharmaceutical care in order to ensure appropriate health care outcomes for all individuals. Other goals and objectives of the Academy include, number one, promoting programs that advance the practice of pharmaceutical care as an integral part of managed health care; number two, representing and advancing the interest of managed care pharmacists to selected audiences; and three, acting as a liaison between Managed Care Pharmacy and other health care professionals, academics, government, and the pharmaceutical industry and other managed health care organizations.
Please note that I have submitted, along with my written comments, two articles that were just recently published from our AMCP, Academy of Managed Care Pharmacy, textbook and definitions of key terms used in Managed Care Pharmacy. It is certainly my hope that the FDA Panel and other interest parties will find this information helpful in better understanding Managed Care Pharmacy.
We would like to briefly address some of the concerns the FDA has expressed regarding the marketing and promotion of prescription drug products within managed care settings. I will do this by briefly providing an overview of how managed care pharmacies operate in general, including how they make decisions about which prescription drug products are used within a given health care organization.
Individuals enrolled in a managed care plan, such as health maintenance organizations, often receive prescription drug coverage as a benefit of enrollment. Under such programs, patients generally pay a full copayment, such as a $5 or $10 copay for each new prescription or refill dispensed. In some HMOs, especially in many staff and group model plans, prescription drugs are provided to patients via in-house pharmacies, those located within the confines of a medical group.
In other plans, such as independent practice associations or IPA environments, prescription drugs are provided to members through an outside network of contracted independent pharmacies and retail drug stores. Still other plans and some employer purchasers often contract with outside entities, such as pharmacy benefit managers, to administer their prescription drug program.
In managed care plans, enrollees generally receive reimbursement for medical services if they go to any other providers listed as "preferred" in the plan. A similar concept applies to managed care pharmacy. A majority of HMOs, PBMs, and other entities have implemented drug formularies. Drug formularies simply is a list of prescription medications that are preferred for use within the plan or PBM and are dispensed to participating pharmacies to cover individuals. Some plans allow coverage only for those drugs listed on the formulary. Other plans allow coverage for both formulary and non-formulary drugs. All formularies are subject to periodic review and modification by the health plan.
Most HMOs and PBMs make decisions about which drugs to include in the formularies based on the advice of a pharmacy and therapeutics committee, or P&T committee. A P&T committee is an organized panel of health care professionals from different practice specialties who advise the plan regarding safe and effective use of prescription medications.
Such committees not only develop, manage, and administer the formularies but also serve as the main communication channels between the plans, pharmacists, and physicians. P&T committees also are responsible for advising plans about which new drugs to include in the formularies. This allows plans to keep their formularies updated as new pharmaceutical products become available on the market.
P&T committees make formulary decisions based on the drug product's efficacy, safety, and cost. Other important but less influential factors are obviously such things as ease of use by patients, patient compliance rates, dosage forms, taste, flavor, storage, and stability requirements.
What I would like to stress is that in managed care settings, decisions about which drug agents to prescribe are based on numerous factors. Cost, although an important factor, is not the sole driving force. Those making decisions also carefully consider which therapy will result in the best outcome for patients.
P&T committee members often review the most current data from medical journals to determine which therapies are most effective and have the fewest adverse side effects compared with other agents. Many consult with outside experts, as well, for advice. Some committees may also review patient and other clinical data captured within the plan to evaluate one product's efficacy and safety versus another. That point will be reiterated later.
What is clear, however, is the need for additional pharmaco-economic and outcomes analysis and monitoring. This information is absolutely critical to managed care's ability to provide the most effective pharmaceutical care. Scientifically rigorous clinical trials, such as those required by the FDA, are useful in the initial evaluation of drug products and form a fundamental basis from which we can make key formulary decisions, but those are not enough.
Pharmaco-economic and outcomes analysis and modeling provide us with essential real-world information through the identification of alternative drug therapies and allows us to evaluate the cost and consequences of those therapies.
These efforts are best accomplished through the dove-tailing of pharmacy and medical data within managed care settings. For example, at Prudential Pharmacy Management, where I am employed, we are able to capture pharmacy data, medical data, combined pharmacy and medical data, and combined pharmacy and medical and ancillary data. These last two groupings or categories provide significant information about the effectiveness of drug therapy in the treatment of disease.
By examining such data, we at Prudential can determine how many patients we admitted to the emergency room for asthma in a given period of time and what their age and genders were. And, more importantly, we can determine what medications those patients were taking prior to their hospitalization, allowing us to tell whether certain clinical pathways and medications are resulting in a higher rate of emergency room visits.
Similarly, we are able to determine variances in intensity of services, such as number of outpatient physician encounters for certain diseases sorted by drug therapy. We can determine that product A has four to five times, for instance, the frequency of outpatient physician encounters compared with, for instance, product B.
Although this information is not scientifically rigorous, it is extremely valuable to use in the development of pharmaco-economic and outcomes models and analyses and ultimately in the decision making process of how to treat certain diseases within our managed care environments.
We need more of these studies and we need those now. The utility of this information in the hands of managed care organizations and decision makers is obvious. Such information in the hands of pharmaceutical companies pose no particular threat, if monitored. However, pharmaceutical companies with their own PBMs must be careful to promote and influence prescribing and treatment behaviors based on integrated pharmacy medical data and sound pharmaco-economic modeling.
Those companies that perform analytical studies as described above can become part of the pharmaceutical care solution, but those that choose to promote drug products based on nothing more than simply who manufactures the product become part of the pharmaceutical care problem.
To summarize, by relying on the objective analyses and advice of experts who serve on P&T committees, by performing peer review analyses of medical literature, and by performing peer review analyses of medical literature and by performing proactive pharmaco-economic analyses and modeling, managed care organizations can assure that their patients receive the most appropriate and effective pharmaceutical care available.
Managed care systems across the country are making other efforts to assure the quality of the pharmaceutical care that they provide. Managed care pharmacists, physicians, and other practitioners are actively adopting new state-of-the-art methodologies, including quality improvement and disease management programs. Such methods enable care givers to better monitor patients, track the progression of their illnesses, and prescribe the most appropriate treatments, all with the goal of improving patient outcomes. Extensive patient and provider education, which is also provided in many managed care settings, also is a key to ensuring the most appropriate and effective use of prescription drugs.
As more individuals enroll in managed care programs, those programs will become among the biggest purchasers of prescription drug products. Therefore, we can't afford to let our decisions be determined by limited clinical studies, by haphazard promotional claims, or simply by those who manufacture the product. Rather, we must work together to implement a system which encourages the use of pharmaco-economic and outcomes analyses and modeling available through integrated systems. We must then combine this information with available clinical trials and manufacturer information to allow our managed care processes to work to determine the most appropriate and effective treatment protocols.
That concludes my remarks. I would be happy to address any questions after the rest of the panel speaks. Thank you.
MS. PEDERSEN: Thank you, Mr. Zimmerman.


Mr. Zellmer?

MR. ZELLMER : Thank you. I am William Zellmer, Vice President for Professional and Government Affairs at the American Society of Health System Pharmacists. I am a full-time employee of the Society. I live in Bethesda, Maryland, and paid for my own way here today. Is there anything else you need in that regard?
MS. PEDERSEN: Are you speaking on their behalf?
MR. ZELLMER: I am speaking on behalf of ASHP, yes.
MS. PEDERSEN: Thank you.
MR. ZELLMER: The American Society of Health System Pharmacists is a 30,000-member professional society that represents pharmacists who practice in hospitals, health maintenance organizations, long-term care facilities, home care organizations, and other components of integrated health care systems. While historically our members have served mainly acute care patients, that is rapidly changing, with sizeable numbers now in home care and ambulatory care, often within a managed care provider organization.
To help set the stage for my remarks, I want to comment briefly on the formulary system. Over the years, our members have pioneered the formulary system in acute care settings. Through ASHP, pharmacists have developed consensus practice standards on an array of related subjects, including formulary system management, the Pharmacy and Therapeutics Committee, drug use evaluations, use of medications for unlabeled indications, selecting pharmaceutical manufacturers and suppliers, and evaluation of drugs for formularies. Throughout these efforts in support of the formulary system, our goal has been improved patient care.
Now, although the formulary system was invented, so to speak, in hospitals, we have always believed that it can be applied to other organized patient care settings, including, for example, ambulatory care through an HMO. Indeed, many health maintenance organizations are successfully using the formulary system in ways that are true to the concept's original principles, but some others are not.
This led the ASHP House of Delegates this year to adopt the following policy position, and it reads like this: "To support the concept that management of drug formularies must be based first and foremost on achieving optimal patient outcomes through drug therapy and must include the active and direct involvement of physicians, pharmacists, and other appropriate health care professionals." Now, implicit in this policy position is opposition to the management of formularies by administrative edict driven solely by economic considerations.
In the limited time remaining, I will focus on the use of pharmaco-economic information by health systems in making formulary decisions and by pharmaceutical manufacturers in marketing products. Our members have told us that this is a big issue for them.
For example, here are some of the findings from a survey of managed care pharmacists conducted last year by the ASHP Center on Managed Care Pharmacy. When asked about the types of information that were important to the job responsibilities of managed care pharmacists, pharmaco-economic information was cited by 85 percent of the respondents. However, only 29 percent indicated that this type of information was readily available. That is a 56-point information gap.
When asked to rate the major work setting issues in managed care, 96 percent of the respondents cited cost-benefit analysis of drug therapies and 85 listed pharmaco-economics. When asked about the top priorities in terms of educational programming in managed care organizations, 79 percent of clinical pharmacy specialists and 87 percent of pharmacy service managers indicated pharmaco-economics as a priority educational need.
We believe that a growing number of our members will hold positions as applied pharmaco-economists for health systems. This is a desirable trend and we are taking steps to promote this specialty activity of pharmacists.
In preparation for this hearing today, the ASHP Center on Managed Care Pharmacy conducted a brief survey of ASHP members who practice in managed care organizations. It was a one-page, eight-item questionnaire and it was mailed in mid-September to about 400 pharmacists. By the cut-off date in early October, we had 157 responses from pharmacists who said that they were involved in drug product purchasing or formulary system management for a managed care organization, and I would like to share those results with you using some overhead graphic displays.
MR. ZELLMER: All of the questions were on a six-point Likert scale where one meant strongly disagree and six meant strongly agree. The respondent could choose any number between one and six. For the sake of simplicity, we have collapsed the responses into two figures for each question, the percent that agreed and the percent that disagreed. The number that you will see on the right of each of these graphics is the mean score for all respondents.
If you could show the top to everyone for a moment.
MR. ZELLMER: So we had these respondents react to these statements. The first one was, pharmaceutical manufacturers have increased their use of comparative pharmaco-economic claims in marketing to my managed care organization. That is a consistent part of these questions. We wanted people to reflect their actual experience in their organizations, not what they thought was happening in the field at large.
So this particular statement, you see that over 81 percent of the pharmacists agreed with this statement. Eighteen-point five disagreed.
Let's take a look at the next one.
MR. ZELLMER: The statement was, my managed care organization plans to increase its use of pharmaco-economic studies in making formulary decisions. Again, very strong agreement with this. Nearly 94 percent of the pharmacists said this was the case, and you will see a 4.8 mean response score, also indicating very strong agreement.
MR. ZELLMER: The next statement, contract arrangements with drug manufacturers are making it more difficult for my managed care organization to be independent in formulary decisions. Very interesting response, nearly evenly divided. In fact, if you look at the mean response, 3.5, that is exactly in the middle. I think it will be interesting to monitor responses to a statement of this nature over time to see how this possibly might be changing.
Let's take a look at the next one.
MR. ZELLMER: The statement was, my managed care organization is well-equipped to critically analyze the comparative pharmaco-economic claims of drug manufacturers. You see, about 60 percent agreed; around 40 percent disagreed with this statement.
MR. ZELLMER: Looking at the next one, the comparative pharmaco-economic claims made by drug manufacturers generally meet high standards for reliability. Well, you see from the graph strong disagreement with that statement, 82 percent, and that's also reflected in the mean score of 2.6.
MR. ZELLMER: Then the statement is, my managed care organization is in a position to put pressure on manufacturers to conduct scientifically rigorous pharmaco-economic studies on their products. Again, it's pretty evenly split, 51 to 49, a mean score of 3.5.
MR. ZELLMER: And the final statement that we asked pharmacists involved in purchasing or formulary system management to respond to, the FDA should apply the same degree of rigor in assessing a manufacturer's pharmaco-economic claims as it does in assessing clinical claims. Very strong agreement with this statement, nearly 90 percent, and the mean score, 5.1, was the highest for any of these statements.
Thank you. That's the last overhead.
Let me just summarize and conclude. Point number one, I think our little survey shows that pharmacists on the front lines of drug product purchasing and formulary system management in managed care organizations agree strongly that manufacturers have increased their use of comparative pharmaco-economic claims in marketing.
Point number two, these pharmacists also say that their managed care organizations plan to make more use of pharmaco-economic studies in making formulary decisions in the future.
Point number three, these pharmacists are evenly divided on the question of whether contract arrangements with manufacturers are making it more difficult for their health systems to make independent formulary decisions. It will be important to gauge any changes in response to this question over time.
Point number four, only about three-fifths of these pharmacists say that their managed care organizations are well equipped to critically analyze comparative pharmaco-economic claims. Our impression, based on extensive talks with our members, is that more managed care organizations will be adding this expertise to their staffs in the future.
Point number five, more than four-fifths of these pharmacists think that the pharmaco-economic claims made in the marketing of pharmaceuticals do not--do not--generally meet high standards for reliability. Obviously, this finding presents a big challenge for those interests that do not wish this matter to be regulated.
And then finally, these pharmacists are evenly split as to whether or not their managed care organizations are in a position to put pressure on manufacturers to conduct good pharmaco-economic studies on their products.
I guess actually this is my final point, number seven. There is very strong support among these pharmacists for rigorous review of pharmaco-economic claims by the FDA.
We hope that this modest survey will be of some value to the agency and others in the important subject of pharmaceutical marketing and information exchange in managed care environments.
I know I have a little time left, and if I may, please, make a comment about an ASHP research awards program that was raised in the earlier panel, and Dr. Temple, I believe, asked a question about that. I think it may have been implied that the Society has a research awards program for the best pharmaco-economic research. That is not correct.
Our foundation has an awards program recognizing, among papers nominated to it, the best pharmacy research published in a particular year. This could be on various subjects, such as how to prevent medication errors, IV compatibility studies, operational efficiency, et cetera. It just happens that among the papers nominated this past year, they were pharmaco-economic studies, but you cannot infer from this that those particular studies were the best such studies published.
MS. PEDERSEN: Thank you, Mr. Zellmer.


Our next speaker will be Calvin Knowlton on behalf of the American Pharmaceutical Association.

MR. KNOWLTON: Thank you. My name is Calvin Knowlton. I reside in Lumberton, New Jersey. The views that I am going to express are the views of the American Pharmaceutical Association. I think they are going to reimburse me for my travel expenses today.
MR. KNOWLTON: My employer is two employers and one really important third hat. My employer is--I'm a community pharmacist from Lumberton. I've been a community pharmacist for about 23 years and have my own practice with about 30 employees, and I am one of the 30. I also have another hat which is I am Associate Professor and Chairman of the Department of Pharmacy Practice and Pharmacy Administration at the Philadelphia College of Pharmacy and Science in Philadelphia. And then in my volunteer role, I am on the Board of Trustees for the American Pharmaceutical Association and am this year serving as President.
MS. PEDERSEN: Thank you.
MR. KNOWLTON: We would like to discuss three areas, spend a lot of time on the first and somewhat less time on the next two. The first area would be the manufacturer switch programs. In recent years, the pharmaceutical benefits management firms, or PBMs, have begun to perfect the so-called switch programs which seek to persuade physicians to switch either to a generic or to branded products available at lower negotiated prices than alternative products.
We believe a greater measure of accountability is needed for these programs because they are often an integral part of a manufacturer's marketing strategy and because they reinforce a market trend toward increasingly restrictive formularies that may interfere with the judgment of the patient, the physician, and the pharmacist.
Attached to the statement that we are making this afternoon are some documents for your consideration. First is the American Pharmaceutical Association's guidelines for medication incentive programs. I am not going to spend time on that, but it is there for you. This document has been developed by APHA in consultation with industry over a two to two-and-a-half-year period and it provides a set of voluntary guidelines for safe and ethical management of switch programs.
Second, I am submitting two communications sent by PBMs to patients or consumers that reflect the state of the art today of the switch programs. These are two of many. Pharmacists have several concerns about these programs, described in these communications which I will refer to and mark as PBM(a) and PBM(b).
APHA's first caution to the FDA is not to confuse these switch programs with pharmaceutical care. These are marketing programs, not pharmaceutical care. It is not pharmaceutical care when a pharmacist gets on the telephone or sits down at a computer terminal in some distant spot to switch a patient to an alternative drug product which was chosen by someone who doesn't know the patient and who made their choice primarily on the basis of cost or manufacturer.
Pharmaceutical care, on the other hand, is a pharmacist working with the patient and that patient's other care givers to ensure that an optimal health outcome is achieved. This evolving practice of pharmaceutical care is based on the establishment and nurturing of what might be called face time or an individual one-on-one relationship with a patient, exactly analogous to that between a patient and a physician.
Although these switch sales programs represent a recognition by health care payers that it is worth paying pharmacists for more than just dispensing drug products, and all pharmacists would agree with that, many of these product switch programs intrude upon and probably actually subvert the patient's relationship with his pharmacist or her pharmacist.
For example, the people behind the letter from PBM(a), possibly pharmacists--no one is identified--do not clearly acknowledge to the patient--and this happens to be one of the patients from my practice and I was there that afternoon a couple of months ago when she brought it into me. We sat down and went over it together, one-on-one. The letters do not acknowledge that the person that sent it has no care giving role in the office of the patient's pharmacist or the patient's physician.
For perspective, imagine a managed care organization physician, a complete stranger to the patient, writing or calling that patient, seeking to alter their course of therapy while asserting that their doctor has individually considered and approved of this change. This would not be tolerated by the attending physician and it is intolerable to attending pharmacists.
These intrusive arrangements, euphemistically sometimes referred to as population-based pharmaceutical care, only seem--a little bit of an oxymoron--only seem permissible to PBMs because they still cannot conceive of a pharmacist actually having a confidential care giving relationship with a patient.
Here is the irony. Yet, as pharmaceutical benefits managers, perhaps it is their job to foster true pharmaceutical care relationships which demonstrate and will reduce health care costs while improving quality.
One reason for this therapeutic blind spot may be the fact that PBM(a) is a subsidiary of the drug manufacturer that markets the product being pushed in this communication. The PBM is focused on moving product, not on managing care.
In the letter from PBM(a), the patient is informed under the misleading and coercive heading--in fact, I wish I would have brought you the colorful paper, it's just in black and white in your reprint--headed, "Required Action". You can imagine opening this up out of your mailbox. Your pharmacist will confirm and dispense preferred medication as authorized by your physician.
This language is defective in the following ways. First, PBM(a) conveys a gestapo sense that the patient is obligated to follow these instructions. More responsible advice would suggest the patient call their pharmacist or physician to ask about the proposed switch, such as PBM(b) has done.
PBM(a) characterizes the pharmacist as having a merely ministerial function, that is, executing the physician's authorization, and this reflects an uninformed and anachronistic view of the role and value of the professional pharmacist, who may be aware of a reason why this particular patient ought not to be taking the medication preferred by the PBM for fiscal reasons.
Third, PBM(a) has not informed the patient that the reason for the proposed switch is to buy a cheaper drug product. Vague statements about keeping "health and prescription drug benefits affordable" cannot substitute for an open acknowledgement that product cost is the reason for the switch. The patient has a right to know if cost or clinical concerns are motivating a proposed change in therapy.
In this particular example, when the patient came in and I frankly sat down with her in front of the computer and she looked at it and she said to me, well, what is the savings, and we looked in the computer and drug A and drug B were the exact same price for average wholesale and she said, well, perhaps I'll have a different copay if I switch. So we looked at that and said, no, that's not the case, either. Her question to me was, well, who's getting the savings here?
Our concerns about the communication from PBM(b) are as follows. First, PBM(b) has failed to inform the patient that the person writing the letter is paid to achieve switches, and just as important, that the PBM is a subsidiary of the manufacturer of the drug they are being pressured to switch to. Now, PBM(a) does disclose this in fine print, as you'll see there.
Back to PBM(b). Consumers must clearly understand these financial relationships in the marketplace in which managed care organizations, including PBMs, can exert pressure on the patient's traditional advocates, such as the physician and pharmacist, through various means, such as practice profiling, financial capitation, and exclusion from provider networks.
Our second concern about PBM(b) is as follows. While PBM(b) is straightforward in other respects to the patient, for example, they clearly explain that cost is the motivation for switching to Cimetidine and they urge a call by the patient to the doctor or pharmacist where clinical issues could be discussed, the FDA should note, however, that the PBM's marketing agenda on behalf of the manufacturer is explicit by PBM(b)'s promise to reward the patient for calling with "money saving coupons for various over-the-counter products". This manufacturer makes over-the-counter Cimetidine, as well as numerous other over-the-counters.
These examples reveal clearly the function of these PMBs in product marketing to doctors, pharmacists, and patients. APHA strongly recommends that marketing to doctors and pharmacists by PBMs under either a contractual or ownership relationship with the manufacturer should be subjected to the same standards as direct manufacturer communications to doctors and pharmacists. Manufacturers' agents, PBMs, should not be permitted to assert claims that the manufacturers themselves cannot legally assert.
In addition, FDA, we hope, its concerns should include the content and the context of the PBM communication with prescribers that precedes these letters to consumers. Specifically, FDA should investigate whether profiling capitation and network affiliation practices are employed by the manufacturer's PBMs to implement their marketing and sales strategies with respect to the physicians and pharmacists.
Additional safeguards, we believe, are needed as well where the PBM communicates directly with the consumer. For example, such marketing communication ought to include disclosure of the fact that the author is an individual with whom neither the doctor nor the pharmacist nor the patient has an ongoing clinical relationship, and that their employer is owned or under contract with a drug company of the product proposed for the patient's use, and that such an individual is being paid to advocate a switch to a purportedly less-expensive drug.
I guess the bottom line is, APHA believes that it's time to assert the FDA in these sales ploys.
The second topic we would like to cover for just a minute is regulation of the manufacturer's information on off-label uses. While APHA seeks FDA's oversight on the first point we just made, pharmacists also see areas in which these companies and their agents should be permitted to communicate more freely with clinicians and managed care organizations. Off-label drug use is one of the biggest headaches for the drug benefit managers, in part because clinicians and payers can't agree on objective information on which to base their off-labeling payment policies.
One drawback to FDA's current rules is that the principal source of drug information, that is, the manufacturer, is precluded from legally passing on even objective information on off-label uses of their products, and this is unfortunate, we believe, because it leaves clinicians relying upon product labeling, which is often outdated with respect to practice. An alternative solution is to conform FDA marketing rules to Medicare and Medicaid statutes enacted by Congress which provide payment for off-label use of drugs if these uses are recognized as accepted medical practice under the authoritative compendia listed in the Federal Medicare and Medicaid statutes.
The third point that we would like to bring up just for a second is this notion of regulation of manufacturers' information and pharmaco-economic data. I guess we will just add one more perspective to this. APHA believes that the FDA, as a few others have said, should tread lightly on regulation of information on pharmaco-economic research.
FDA has proposed regulating manufacturers' claims related to pharmaco-economic research to rid the market of misleading information, and this may be based on your success in bringing about a rapid evolution in the quality of clinical trials after the Kefauver Amendments in 1962. But there is neither the requisite scientific agreement nor perhaps the political will needed to support an extension of FDA regulatory powers to pharmaco-economic research and related claims.
Years may go by as this proposal is debated and almost certainly beaten down, while a solution is needed today. APHA believes that a private not-for-profit entity without even the potential for the exercise of police power may be in a better position to quickly advance the state of the art than any governmental effort.
I will conclude my remarks there and thank you very much. I appreciate the opportunity to address these compelling questions and to give you the views of the APHA. Thank you.
MS. PEDERSEN: Thank you, Dr. Knowlton.

Our final speaker for this panel is Juliet Goodfriend.

MS. GOODFRIEND : Thank you very much.I am Juliet Goodfriend, President of Strategic Marketing Corporation, which is a large pharmaceutical marketing research firm in Bala Cynwyd, Pennsylvania. I have no financial association with any managed care organization, although our company does represent the pharmaceutical industry and does most of our research for it. However, today, I am not speaking for them. I am speaking for myself as a 30-year veteran of the pharmaceutical industry and all of its associated digits and phalanges. I am really here as a citizen.
MS. PEDERSEN: Thank you.
MS. GOODFRIEND: I will speak today to the question number three that was listed on the Federal Register regarding the changing audience for pharmaceutical industry information.
I have conducted opinion research in the area of third-party payers since the mid-1970s, with the greatest amount of it focused on managed care, a total of easily 50 studies interviewing several thousand managed care executives over the years. These studies have been aimed largely at determining the following three things, although there were other topics, as well.
First of all, what managed care formulary decision makers need and want to know about drugs. Second, what types of constraints they can or want to place in prescribing. And third, to determine how consumers and physicians react to those constraints.
Through this research, I have learned a lot about the motives and operations of managed care operators. Today, I would like to share some of those insights, but only as their attitudes pertain to drug promotion.
Formulary decision makers is a term that we use to refer to those MCO managers, and MCO is our abbreviation for managed care organizations, those managers who sit on the P&T committees of their organization or the same individuals who sit on the Pharmacy Benefit Management Organization P&T committee. These are usually pharmacists, administrators, and medical directors. It is important to note they are usually not prescribers.
First, let's consider what information managed care organizations need. Our research shows that managed care organizations with closed formularies need the information contained in the package label plus the clinical trial literature and the cost, that is, the actual price of the drug, as well as some information on its impact on medical resource utilization, health benefits, and risks. That's what they need. They need this information in order to make rational decisions about their drug formularies and they need that information, I feel best, before the drug is launched.
Why do they want it before launch? They want it before launch in order to establish the formulary restrictions before physicians start using a product that the managers may eventually want to restrict, and they want to start in motion the ordering and organizational process they will use to make the most economic use of their inventory or contract negotiation opportunities.
In my view, this information that they want and need is not advertising and it is not promotion except insofar as you may view every word stated about a drug as promotion. And giving it to them before the MDA approval is without risk, since no one can prescribe or dispense the drug. These are information-only customers anyway. They are managers. They are bureaucrats, if you will.
So I recommend to the FDA that it authorize a three- to six-month pre-approval packet exclusively for the P&T committee to use and that it be devoid of what neither the FDA nor the P&T committees of managed care organizations want, that is, that it be devoid of detailing or print advertising or promotional material.
The second point I would like to make deals with the issue of drug sampling. Managed care organization managers hate drug samples and would like to eliminate their distribution. They feel much the same way, as I mentioned earlier this morning, about direct-to-consumer advertising. Their adamant views on these issues should make you, the FDA, reconsider your own position.
Our research shows that samples are the favorite information tool of physicians and patients alike. From samples, physicians learn about drug appearance, taste, actions, and with samples they reduce the costs of therapy to their patients. Samples help good will and good medicine.
But managed care organizations use samples as a crowbar about to pry apart their policies. It is almost as if they believe that censorship will change the behavior of thinking professionals. Sampling increases the costs of running an MCO, a managed care organization, because it increases the likelihood that a physician or a consumer may disagree with a formulary restriction.
And, most of all, managed care organizations fear direct-to-consumer promotion. They want to see it die because the informed consumer is their great enemy. The informed consumer may ask that a specific treatment may be considered, may object to delays in obtaining a drug that must go through prior authorization, and may feel that her best interests are not served by the least-cost therapeutic substitute.
Indeed, managed care executives are interested in reducing premiums to employers, even if that means reducing services to member patients. Competition among managed care companies means reduced benefits to patients. Thus, you can see that I do not favor the managed competition form of health care reform but rather, perhaps, the single payer.
Now, one can ask to what extent managed care organizations do interfere with or dictate, correctly or not, physician prescribing. Our most recent research indicates that managed care organizations would much rather control costs than control physician prescribing, so they are choosing the device of capitating providers for all services, including drugs, under one inclusive fee, the so-called per member per month fee.
The doctor in those plans will now pay for the drugs as well as all other medical services under this scheme, and the result of that in terms of promotion is to return the manufacturer's promotional emphasis to the physician, for now the doctor is once again the specifier and prescriber and, indeed, the payer for the drugs. No need for the managed care organization to use treatment algorithms or formularies to control the doctors' use of health care resources. They have found a much more effective device, the pocketbook.
And so, ladies and gentlemen, if the FDA is to protect citizens' health, it must facilitate or even encourage direct-to-consumer information and direct-to-physician sample distribution even in the managed care setting.
MS. PEDERSEN: Thank you, Ms. Goodfriend.
Are there questions from the FDA Panel? Ms. Baylor-Henry?



MS. BAYLOR-HENRY: This is for Mr. Knowlton. In your opinion, is PBM(b) a promotional piece?
MS. BAYLOR-HENRY: As such, then, do you believe that this is a piece that FDA should perhaps regulate?
MR. KNOWLTON: This could be a problem, and let's just make up an example of how this could apply. If you have a patient that's been on a particular H2 antagonist and there's a reason why they're on that one as opposed to Cimetidine that may be more historic than current in the physician's mind when the call comes over the telephone, do you mind if we switch this one over--and we've seen examples like this--there are reasons why the person may be on this particular H2 antagonist and not on Cimetidine, and they may be from side effects from the central nervous system, they may be drug interactions, maybe some historical stuff that had happened, a therapeutic failure almost and they said, let's get them off this and go on to the other one.
When you get this letter from the company, and then when it says to you, thanks for calling us, and if you have any information, call us and then we will send you some coupons for over-the-counter medicine and this is the company that makes that same drug over-the-counter, I don't think it's a leap of faith here to think that, personally, to think that it's blatant advertising.
MS. BAYLOR-HENRY: So, therefore, you would believe that this is a piece that, given the relationship--
MR. KNOWLTON: Yes, yes, absolutely.
MS. BAYLOR-HENRY: Thank you.
MS. PEDERSEN: Mr. Drezin?
MR. DREZIN: This is for Mr. Zimmerman and Mr. Zellmer. Both of you addressed the issue of formularies in managed care organizations, and I was wondering if you could just describe and take us through some of the steps that are under consideration as a formulary committee decision when you're going to consider, say, a class of drugs in which there are numerous members, for example, ace inhibitors or calcium channel blockers or NSAIDs or something of that nature. What type of information do you look at? Where do you get the information? What kind of information do you want?
MR. ZIMMERMAN: Sure. I'd be happy to address that. Within most managed care organizations who operate P&T committees, aggressive P&T committees with a battery of experts, some prescribing, by the way, not all, but some of these members of the P&T committees are, indeed, prescribers, as well. We look at several things.
The first is we do a thorough literature search of the medical literature to determine what is currently published about that particular drug and others in that same therapeutic class, which becomes the problem many times in making a determination because there aren't good head-to-head trials and published information about whether or not non-steroidal anti-inflammatory agent A, how that compares to non-steroidal anti-inflammatory agent B. It may be compared to aspirin, but it may not be compared to the one that you would like it compared to.
In any event, that thorough evaluation does occur. A monograph typically is put together with that information. In addition to that, managed care organizations, because they are probably in a unique position to have this information, are now importing other types of information and data sets into this evaluation.
As I had mentioned in my testimony, within the Prudential, for instance, we know certain things about the use of certain drugs relative to the medical component. Has product A caused a significant increase in medical encounters over some of the other products? Now, clearly, that becomes problematic when you're talking about a new agent, but that is something that is now being imported into the equation, as well.
Generally, a recommendation is made by a lead expert on the P&T committee and that lead expert will take the clinical information, take any other imported information out of a managed care health plan that has both medical and pharmacy information, and make a recommendation to the particular clinical pharmacy and therapeutics committee. In addition to that, in many cases, depending on the class of drugs or the information that's needed, we will also import experts in the field. If it's a GI drug, a gastroenterologist, for instance, will be brought into the equation, as well, to get their expert opinion.
Generally, what happens through the process is then a fairly good evaluation based on efficacy, based on side effects. Cost enters the equation as well, and this other imported information on health plan medical pharmacy information becomes dove-tailed, melded together, and a recommendation is made and generally there is a vote on whether or not a drug is added or not added to the formulary, or if there are additional clinical guidelines or criteria that need to be established commensurate with the use of that drug.
For instance, a preauthorization program, in some cases we preauthorize drugs or require a preauthorization. For instance, on some drugs, we might require that an endocrinologist be the only one that can prescribe that particular drug as opposed to a family practitioner or a pediatrician. Those types of elements are also interjected into the equation at that point in time, as well. Once the vote occurs, then it generally gets added or not added to the formulary.
MR. DREZIN: Would it make a difference if there were some members of a class of drug that were generically available?
MR. ZIMMERMAN: Generally, what we add or delete to the formulary are the chemical entities and evaluate the chemical entities. Once we get through that pass, then we look at the benefit design issues to see what drives whether or not a generic might be added to the formulary or not added to the formulary.
In addition to that, we also maintain an exempt drug list. An exempt drug list is a list of medications which are determined by the P&T committee of a managed health care plan to be determined to be not therapeutically equivalent to their branded trade name products and therefore are not substitutable throughout the health care plan.
So that particular exempt drug list is maintained on an ongoing basis and updated on a regular basis and the decision of--if it's not on the exempt drug list, some health plans within managed care organizations do have generic substitution policies which say that coverage is limited to the generic as opposed to the branded unless there are extenuating circumstances that the physician can identify for the health plan to justify coverage of the branded product.
MR. DREZIN: One of the things you didn't mention is information provided by manufacturers. What type of information, if any, would you request of the manufacturer or look to the manufacturer to supply you with?
MR. ZIMMERMAN: In general, most of the evaluation of the products for the P&T committee are done through a literature review. The only thing that we require of the manufacturer typically is notification of where a particular product is in the pipeline so that we have some pre-warning that the product is coming out. If there is any information that they can share, then we ask them for it at that point, as well.
It's fairly limited, but the requirements coming from the pharmaceutical companies at this point in time are limited really to where products are in the pipeline. Anything that they can share with us, we then do fairly rigorous literature searches. What would be nice, however, is for there to be some pharmaco-economic outcome studies that could be shared, published or not. If there was some criteria and protocol established that would establish some integrity for those particular initiatives, we would certainly welcome that information.
MS. PEDERSEN: Dr. Temple, did you have a question?
DR. TEMPLE: Yes. Mr. Zimmerman, in your comments, you referred to a couple of specific evaluations. It sounded like they might reflect specific studies that you have carried out. One was an association between medications and emergency room visits and another was an increased frequency of outpatient encounters for one drug compared with another.
If those actually do represent specific studies, would it be possible for you to show them to us, or perhaps they may just have been things you could look at.
MR. ZIMMERMAN: I refer to them as analytical observations more than studies. The scientific rigor is not there. What we have done is in the case of the asthma example, it's been determined within our health plan, and in this particular case, it was a 510,000 member IPA plan, it was determined that the patients who had the highest frequency in emergency rooms that had asthma were between the ages of 10 and 19 years of age. Now, there may be a number of reasons why that would occur.
But one of the reasons or one of the issues we looked at is, what were those patients taking in terms of their drug therapy, and we found that the patients that had the highest frequency of emergency room visits were patients taking Theophylline only. The second highest were Theophylline plus inhalers, and it seemed like a certain class of inhalers had the lowest frequency of emergency room visits associated with their usage.
Now there again, you can make all kinds of assumptions based on that, and therefore I don't qualify them or want to portray them as studies, per se, but they are, I think, relevant analytical observations that can be imported into the equation of whether or not drug A or drug B or class A or class B is used extensively, promoted extensively within our organizations, and we have many other examples of that.
DR. TEMPLE: I understand the limitations of that kind of data, but we do the same thing in looking at Medicaid data bases for side effects, so it is a kind of analysis that people use. Nonetheless, as part of getting us some flavor for what managed care people are asking for and find useful, it still would be helpful if you would be willing to do that. We know what it is and what it isn't, just as you do, and don't have higher expectations than would be fair or anything, but I think it would help us to see them, if you can do that.
MR. ZIMMERMAN: If you have taken my Academy of Managed Care Pharmacy hat off and put my Prudential Pharmacy Management cap on me, issues like that, we will have to work internally. But if we can do that, we would be more than happy to do so.
DR. TEMPLE: If you can, and then I have a second question for you and Mr. Zellmer.
Are the kinds of analyses that you are most interested in, ask people to do, find most useful generally within a pharmacologic class or between pharmacologic classes? In other words, is it a question of which of two drugs that are basically similar to list or are we talking about whether a whole member of a class gets into the formulary? If it is mostly within class, how much beyond the, "I'm cheaper and I'm just as good" formulation would one ordinarily try to go? That's a relatively unsophisticated, albeit straightforward, analysis. "I'm basically the same and I cost less." That's sort of easy.
I'm just trying to get some flavor of the kinds of things that are most often tried or sought.
MR. ZIMMERMAN: Is that directed to me?
DR. TEMPLE: Yes, you and Mr. Zellmer, and anyone else on the panel.
MR. ZIMMERMAN: At the risk of sounding predictable on the answer to this question, I guess I'll do it anyway, and that is both. I mean, we would use the information both within therapeutic class as well as look outside therapeutic classes and compare therapeutic class A to therapeutic class B and C and so forth.
When we look at the information, I think that you have several types of information that we have access to within managed care organizations and the utility of such is a little different, based on the type of information you're looking at. If you look at pharmacy-only data, you can get a good idea of the prescribing patterns and the cost information of a particular prescription and so forth.
If you look at medical information, the medical data base that we can pull from within managed care organizations will give you the level of intensity of service, for instance, the demographics of disease, as you well know. The power of the information is both combined pharmacy and medical information, including laboratory data and so forth. In that particular case, I wouldn't limit the observations purely to cost. I think that that's certainly part of the equation, that we would look at the total cost of medical resource utilization for the treatment of disease and see how much pharmacy is relative to emergency room, outpatient physician visits, and so forth.
In many cases, in my pharmaceutical company, friends are always happy to hear me say that, that increased pharmacy costs sometimes and in many cases result in overall lower health care costs. When you look at product A to product B, many times the higher-priced product does result in the lower overall health care cost, and that's within a truly integrated managed health care environment what occurs. I've heard a lot of things here talking about switching programs and so forth, but within a truly integrated managed care environment, cost is only one component that's looked at, and in many cases, higher pharmaceutical costs are certainly welcomed if the overall health care dollar is managed better.
MS. PEDERSEN: Mr. Zellmer?
MR. ZELLMER: Yes, perhaps I can just take both recent questions and comment from my perspective a little bit on the formulary system. I certainly don't disagree with anything Dr. Zimmerman has said.
One of the things that we are seeing in the hospital environment and in the integrated health care system environment is increasingly what might be characterized as authoritative technology assessment reports developed on a centralized basis by various organizations are carrying a lot of weight. The University Hospital Consortium, for example, may develop such a report on a certain therapy for all of its member hospitals. People are looking with great interest to what the Veterans Administration is doing, for example. So I think that is going to be something we will see more of, particularly as integrated health care systems flourish.
I made reference to ASHP practice standards in my comments that deal with the formulary system and related developments. If it would be of any interest to the FDA Panel, I did bring a copy of those practice standards with me and I would be happy to leave it with you. This sort of describes the ideal, the optimal way in which the formulary system as pioneered in hospitals should operate, and perhaps that will be of some value to you.
DR. TEMPLE: Let me just add one more clarification to my question. It was my assumption, and maybe this is wrong, that it would be unusual for a formulary not to include any member of a drug class. That is, my assumption is that you have every kind of anti-hypertensive but you don't necessarily have all ten ace inhibitors. So I guess I assume that with respect to listing, that the bulk of the questions would be to which of a group of fairly similar but not necessarily identical drugs you would list, and it wouldn't be so much whether to have an alpha blocker or not, because you sort of have to, but maybe I'm wrong about that.
MR. ZELLMER: No, I agree with that in terms of the bulk of the decisions that a formulary committee or a P&T committee would make would be along those lines. I agree with that.
DR. TEMPLE: So that was what led to my question, whether most of what you are doing is choosing--if you are mostly choosing among pharmacologically closely-related compounds, do you actually often find differences within a class that are plausible bases for listing one rather than the other, other than price, and is that a fair amount of what goes on? I gather the answer is yes.
MR. ZELLMER: Yes, I think the answer is yes. I mean, I am not a practitioner. I can only reflect what I hear from ASHP members, and clearly, quite often multiple entities in a class will be listed for good clinical reasons.
MR. KNOWLTON: Let me take off my APHA hat just for a second. Personally, I sit on four formulary committees in nursing homes and we will, within--your question was the between and amongst type thing and stuff. One of the criterion that we use frequently has to do with indications, where they're off-label or--so there are certain ace inhibitors that you can use for X, Y, and Z, but these three over here still haven't received that indication, even though we all know they probably will do the same thing.
So that's, at least on our radar screen, one of the top ones that we use, and then, as Allan said, after going through all that, we usually come down to cost.
DR. TEMPLE: I think we thought nobody paid attention to that. That's interesting.
MS. PEDERSEN: I think Dr. Morris has a question.
DR. MORRIS: I have a question for the panel. I hope you'll all comment. One of the themes in several of the presentations was the distinction between what is helpful information, the information that is part of the solution, and information that is promotional and perhaps part of the problem.
We have always tried to make that distinction between promotional versus scientific exchange somewhat on the basis of how it's communicated, the distribution channel, if it's asked for versus whether it's provided affirmatively. Are we on the wrong track? How do you discriminate and how might we think about discriminating between what is helpful pharmaceutical information versus what is promotional? If you can answer in terms of the kinds of messages and the way this information is distributed, that would be very helpful.
MS. GOODFRIEND: That's a hard question. I think that the way it's distributed is not a good index of whether it's promotional or educational. Clearly, many things are supplied in so-called formulary packets that are promotional in nature and most formulary committees ignore them. I don't think that they even need to send them. I think they probably do more harm--the manufacturers do themselves more harm than good in sending them.
But I don't think the root of distribution would be an index of whether that information is intended to promote or intended to educate. In fact, I'm not even sure you can make such a distinction. I want to hear what the other folks say and possibly reprise on it.
I just wanted to make one other comment about the previous question regarding formulary content, which alluded to therapeutic substitution. I think Dr. Temple's question was alluding to that.
We did a study about six or seven or eight years ago now, I can't remember, with consumers in which we tested how likely they would be to switch managed care providers if they knew that managed care providers did or did not allow therapeutic substitution and generic substitution among other kinds of pharmacy restrictions which we were testing. We used conjoint analysis. It was an experimental approach; it was not real world.
But what we found, both qualitatively and quantitatively, was that to the extent the consumer understands and is told about and explains what therapeutic substitution is and even what generic substitution is, they would aggressively switch or request their employers to switch managed care organizations. The fact is, they don't know that it's going on. No one tells them that it's going on. But when they learn that it's going on, they are adamantly opposed to it because it interferes with the wisdom of their physician, I feel.
So I just wanted to inject that and I'll continue to think about your question.
MS. PEDERSEN: Thank you. Do other members of the panel want to respond to Dr. Morris's question?
MR. ZIMMERMAN: I have just one follow-up comment from one previous question and that is that while we do look at drugs within therapeutic classes and therapeutic class to therapeutic class, we typically look at drugs within therapeutic classes for purposes of inclusion or exclusion to the formulary. We look at drugs within one therapeutic class versus a drug within another therapeutic class for purposes of establishing the clinical guidelines that are used to treat disease. So I just wanted to make some clarification of that point.
In regard to the promotionals, I think there is a relevant range on a continuum from what I would consider highly promotional, that's kind of the detergent advertisement test that goes through in my mind, the advertisement that says that my detergent gets your clothes whiter, and that's way over here on perhaps the left side of the continuum.
On the right side of the continuum in terms of promotionals is that you can only talk about highly scientifically rigorous studies that have been published, and I would propose that there is a relevant range on that continuum that is somewhere in between that that would incorporate other types of information, some pharmaco-economic modeling and analyses that I think is very relevant to be used in a promotional state.
However, having said that, I think that there are parameters by which those particular--and criteria by which those particular studies and analyses should adhere to. They must be from certain environments, whether they're managed care or not. I particularly like managed care, but a managed care environment where medical and pharmacy information is integrated.
We can't just talk about, as I mentioned before, just pharmacy-only data or medical-only data. I think it's the integration of ancillary data, medical data, pharmacy data, and all of those other elements that are available in a managed care setting that I think can result in some promotional-type information that are pharmaco-economic in nature that would be useful, as opposed to the two extremes that we have.
MR. KNOWLTON: I think that what APHA is trying to do with its thrust on pharmaceutical care is to help persons optimize the use of their therapy. We've got a lot of information out there that shows misadventuring in drugs and how much it's costing society and so forth.
I think that one of the ways we're going to do that--I think you've teased this out nicely--is this notion of helpful information or what we've been calling patient empowerment. I believe that that is the solution and is part of the solution and we strongly profess that.
Where we are having a problem is in what you call promotional information, or we've called it coercive information at times, which is not empowerment but it's almost, it seems to us, to be pecuniary-based paternalism, that I am in the know dollars and sense wise and I can tell you what you're going to do.
So I think the answer to it from one perspective might be who creates the information, number one. Number two--when I mean that, I mean who in the NCO or the PBM--are there some consumers there? Are there some patients involved in this whole process? Is there some framework where the field is leveled a bit?
Number two, who sends it, and then thirdly, how is it packaged? Is it packaged like we've seen in example A and B, which is kind of frightening stuff? And then, most importantly for the patient, what are my options? What are the options available? I don't see options available in these packaging materials we've given you in these switch programs.
To get back just to foreshadow, I would agree with the previous questioner who was talking about is it just intra-class, between class switches, or could it be among classes, and I would say that right now, we've just seen in the tons of examples we have, and I was only giving you two, we have seen only intra-class switches, but I don't think it's a long shot to wait for the rest to come down the pike.
MS. PEDERSEN: We have two more questions coming, so if we can maybe get to the other two questions. Ms. Stifano, first.
MS. STIFANO: This question is for Mr. Zellmer. I can't help it, I'm curious. You have a bar chart up there about the comparative pharmaco-economic claims made by drug manufacturers and the fact that the group that you polled felt that they lacked the high standards of reliability. Did you go back and question them as to why they felt that way?
MR. ZELLMER: No, we did not. I think the little survey we did in just a few weeks' time raises all kinds of intriguing questions like that, that time permitting, we do intend to go back through our Center on Managed Care Pharmacy and probe a little deeper. But no, we didn't ask that.
MS. STIFANO: Thank you.
MS. PEDERSEN: Ms. Bernstein?
DR. BERNSTEIN: I have a question for Mr. Zimmerman and Mr. Zellmer, and Dr. Knowlton, if you want to comment, you can, as well.
You all represent users of this type of information, the pharmaco-economic claims, and I find it interesting, and can you help me kind of understand a little bit why I'm hearing different degrees of the type of scientific rigor that your users of information look for in terms of the information that is being provided in these pharmaco-economic claim studies. Can you help me understand that a little bit? It seems like you are describing the same type of users of information in the same type of settings, unless I'm hearing it differently.
MR. ZELLMER: I think it is important to reflect on, for example, in the information I presented, who the respondents were. These were pharmacists practicing in a managed care organization who had a significant part of their responsibilities involved either drug purchasing or formulary system management. Now, again, this was a very brief, quick survey.
We didn't determine what type of managed care organization they're working in, but we know from other data that we've collected on our membership, the vast majority of our members who say they practice in a managed care organization really work in a staff or group model HMO. That's where the majority of them are.
So perhaps, then, you have to look at the findings that I presented in that light, as representing the views of that type of pharmacist, and that may not necessarily be the perspectives reflected in other cases.
MR. ZIMMERMAN: At the risk of making Bill mad about members of associations and so forth, I think that perhaps--well, I don't know the answer specifically. I might want to suggest that the members that attend ASHP perhaps may have more of a hospital background perhaps, and along with that there might be a tendency to have a more traditional role of how P&T committees operate and formulary committees operate, which typically has been more in line with more clinical and scientifically-rigorous information, perhaps, as opposed to managed care organizations, such as those members of which the Academy of Managed Care Pharmacy represents, which are typically the staff group model HMOs, IPA model HMOs around the country.
Some of the PBMs are clearly represented, the pharmacy benefit management entities, and so forth in more pure ambulatory settings as opposed to a more traditional hospital setting. So in those more pure ambulatory settings, we would have more information about outpatient encounters and other types of things that we would find a significant utility to use.
MS. PEDERSEN: Mr. Zellmer?
MR. ZELLMER: Yes, if I could just add one thing. I want to reiterate that the survey we did and the data I shared with the Panel are reflective of pharmacists who work in managed care organizations. We didn't ask these questions of acute care pharmacists. Furthermore, we had sort of a screen, if you will. We only counted the responses from pharmacists in managed care organizations who spent at least five percent of their time in drug purchasing or formulary system management.
MS. GOODFRIEND: I think there is an explanation to the difference in sophistication that you're referring to in terms of the utilization of pharmaco-economic information and that has to do with the perspective of the pharmacist or the perspective of the organization for which the pharmacist works. In some truly integrated health care systems, the pharmacists have a much broader perspective and the organization has a much broader interest in the subsequent utilization of other health care resources as a result of this drug or that drug being on the formulary. In other words, it profits them to know what the effect of a formulary change will be on the inpatient service.
Just to give you an example, in other managed care organizations, the pharmacist's view is primarily that of a retailer, not only who really can look at other costs, who has very little contact with other kinds of cost elements, so that they can't make very sophisticated, if you want to use that word, use of pharmaco-economics information.
In fact, in many of the managed care organizations we have interviewed, the perspective on the value of pharmaco-economic is highly questioned because the membership churns every 18 months. So the thought is, why do we care, except they should realize that it churns from one managed care organization to the other so you can benefit each other by prudent judgment. But in some cases, their perspective is so narrow to that time frame that they can't make much use of the data.
MS. PEDERSEN: Any final questions from the Panel?
[No response.]
MS. PEDERSEN: Mr. Zellmer, do you have a final comment?
MR. ZELLMER: I just thought my fellow panelist here just made an excellent point that I wanted to pick up on a little bit. Looking at our hospital pharmacist members, one of the things about managing formulary systems that is making their life more complicated is this phenomenon of the creation of integrated health care systems, integrated health care networks.
And while in the past many hospital-based formulary committees could make decisions based strictly on their acute care setting, that increasingly is no longer possible. They have to consider the perspective of the entire integrated system that they are involved with, including as the patient then moves from the acute care to the home care to the ambulatory care setting. So members are talking a lot about this and it really is making formulary decisions, even in hospitals, much more complex than it used to be.
MS. PEDERSEN: Thank you, and I would like to thank all of the presenters this afternoon for a very interesting, informative, and provocative session.
Before we recess until tomorrow morning, I did want to say that we will have a public comment period, time permitting, at the end of tomorrow's session. If there are people in the audience who would like to request time to speak, please try and contact Lee Zwanziger so that we can put you on a list.
We will be in recess until 8:30 tomorrow morning.
[Whereupon, at 5:05 p.m., the hearing was adjourned, to reconvene at 8:30 a.m. on Friday, October 20, 1995.]   

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