Dr. Alan Goldstein provided some statistics on why pharmaceuticals are useful and actually lower costs of healthcare. He cited that between $6 to $30 dollars are saved for every dollar expended on vaccines. The flu-pneumonia vaccine alone saves a lot of money.

Dr. Goldstein also reminded Legislators that asthma sufferers have grown dramatically in the United States. There are approximately 17 million with the disease in the United States, one-third of whom are children. Asthma has doubled in the last 20 years. While suffers have increased, emergency room visits have dropped by 80% due to persons using inhaled steroids. Additionally, other states have seen remarkable differences with the uses of steroids, such as North Carolina. In North Carolina surgicenters alone, there has been a 26% reduction in outpatient-surgicenter visits.

Diabetes is still a significant problem as the numbers of persons tend to increase. While this is true, diet and work habits continue to vary between populations. Additionally, diabetics have other health issues such as stroke, hypertension, and heart disease. Thus, if persons control their blood sugar, these people tend to be healthier. Using insulin and other diabetes-related medications can prolong and save lives. It can also be less expensive. It costs between $50,000 and $60,000 each year for a person to undergo dialysis.

Stroke is the third leading cause of death in the United States. A number of drugs now treat or can be used to prevent strokes from occurring. For instance, it was cited that the drug Warfarin could be used to save lives (if patients can tolerate the drug). Further, using the drug is much cheaper than treating a stroke patient in the hospital.

Dr. Goldstein also provided information on depression, which impacts approximately 10% of the United States’ population. Treatment rates, with medications, show success in between 80 and 90% of cases.

Dr. Goldstein stated that 17% of all prescriptions written are never filled. There are a number of reasons for this. Some include the lack of ability to pay and the fear that the drug may not do what it is supposed to do. There have been studies on medical compliance conducted. For patients to comply with their physician’s recommendations and instructions, they must be educated first.

Dr. Goldstein also mentioned the impact that pharmaceuticals have had on migraine headache sufferers. Without the development of drugs, many persons would not be able to continue to work.

For 40 years, the costs of drugs have been between eight and ten percent of the costs of healthcare. The increases of between fifteen and seventeen percent are actual expenditures for drugs or increases in utilization. Dr. Goldstein proposed that more dollars should be expended on pharmaceuticals so that there would be fewer numbers of emergency room visits and hospitalizations.

Ellie Joseph, a lawyer with Pharma, also spoke to the Committee. She spoke about the value of medicines and how the pharmaceutical industry wants to be able to overcome diseases, treat diseases, or allow persons to live longer or better lives with diseases. Thus, the pharmaceutical industry supports access to drugs.

Ms. Joseph stated that Pharma supports a Medicare drug benefit, preferably one with open access. One big problem is dual-eligible persons, those persons who qualify for both Medicare and Medicaid. Thus, a person can get the drugs under his or her Medicaid qualification, but if a hospitalization is required, then Medicare ends up paying the freight. She cited that 23% of the State’s prescription drug costs will be moved as persons become Medicare-eligible.

In the late 1980s, states put in prior authorization and drug rebate programs. They also worked on open access for patients. They also implemented some restrictive drug lists.

States have looked at access differently. In Florida, there is a class action concerning patients’ access to prescription drugs. In Michigan, a court ruled that prior authorization is not done in a timely manner.

There are problems which Pharma has noticed when medications are switched for patients. In some instances, prior authorization causes bad outcomes due to step therapy requirements. Many decisions are, thus, based on cost reasons. There are also issues relating to brand versus generic drugs, especially when drugs are not equivalent.

Ms. Joseph also mentioned the Pharmaceutical Assistance Programs ("PAP"), which have been in place for a number of years. Each company has its own PAP, which is used for helping persons get access to medicines who could not otherwise afford the drugs. These are free drugs which usually have time limitations, depending on the PAP. In 2001, $1.4 billion worth of prescription medications were given away in the United States. In Georgia alone, there were $85 million free drugs distributed. Additionally, there were $235 million in free samples provided.

GeorgiaCares, a project undertaken by the State to help coordinate the low cost drug card programs, was also mentioned. The program is being coordinated through the Department of Human Resources and its Division on Aging. Pharma’s members have been participating along with other business partners. GeorgiaCares will be a clearing house to help the elderly apply for these drug benefits. There will be assistance in local grocery stores, drug stores, churches, etc. The discount cards offer actual discounts to persons otherwise eligible for Medicare or persons with low incomes. Many of the persons helping to staff this initiative will be trained volunteers.

Rep. Sistie Hudson remarked that the closest Area Agency on Aging Office to her was 70 miles away – this was difficult for some of her constituents. Thus, she appeared to be concerned about how the GeorgiaCares project would work.

Dual eligibility is an issue. Legislators raised issues relating to whether the total cost savings could be tracked. Dr. Goldstein expressed that there were no real incentives in place for physicians and hospitals to be efficient. Thus, there will be continued reimbursement "trimmings."

The Committee also raised some concern relating to what costs were reimbursed by insurance companies for drugs which were used for purposes other than their intended uses. Two cited were Botox and Prilocec. Per Dr. Goldstein, doctors do not typically get letters from insurance companies about coverage issues. Rather, they get letters about the need to try certain categories of drugs prior to using the next pharmaceutical – this is an even bigger issue with persons with no insurance. "Preferred" per Dr. Goldstein is not necessarily "better." Off-label use was raised – from Dr. Goldstein’s viewpoint, some in the medical community are not concerned by such use.

There were also questions raised about the fair price of a drug. Ms. Joseph stated that would depend on how the drug is used and what its intended purpose was. There is no price on some per Ms. Joseph. How can one place a value on life when looking at long term care for an Alzheimer’s patient?

Dr. Goldstein said that on average it takes 5,000 chemicals to produce one drug. Thus, it is expensive and time consuming. Further, doctors have a difficult time taking patients off medications due to many factors (hospitalizations, duplicate providers, etc.). It is also not uncommon for a patient to be taking eight medications at one time.

Dr. Goldstein also cited an example of treating a patient in an office setting versus sending the patient to a hospital. Reimbursement for the emergency room is much costlier to an insurance company but payment to a physician may be much less – the problem is that the reimbursement does not really adequately reimburse the physician’s time and skill. He gave the example of reimbursement for flu shots - $6.50 for actual costs of vaccine but the physician gets a total of $7.50.

According to Dr. Goldstein, insurers need to work with physicians to deal with costs of healthcare. When asked if he advocated for use of a "gatekeeper," Dr. Goldstein stated he was not in favor of such, even though he previously served as a Medical Director of an HMO. Dr. Goldstein stated that managed care is a business and therefore a problem. He reminded the Committee that the patients need to be thought of first.

The Committee will meet next on November 20, 2002 and will hear from managed care entities, insurance underwriters, and HMOs.