Health insurers strike back against marketers of expensive remedies

[Guest guest]

> Feature story from the Chicago Tribune

>

> TV ads key front in drug price war

> Health insurers strike back against marketers of expensive remedies

>

> http://www.chicagotribune.com/business/chi-0411270321nov28,1,5244884.story

>

> By Bruce Japsen

> Tribune staff reporter

> Published November 28, 2004

>

> Not even NFL Hall of Fame quarterback John Elway can win against the

> powers of managed care.

>

> Known for his clock-chasing touchdown drives to win football games,

> Elway this year became a television pitchman for the heartburn pill of a

> Lake Forest drugmaker trying to gain more ground in the market.

>

> Yet despite a $100 million-plus TV ad campaign with a spot featuring the

> former Denver Broncos great, TAP Pharmaceutical Products Inc.'s

> prescription Prevacid is rapidly losing sales to an over-the-counter

> competitor.

>

> Prevacid's slip is a rare victory for cost-conscious health insurance

> companies and employers fighting the pervasive and persuasive television

> advertising that has flourished since late 1997, when the U.S. Food and

> Drug Administration eased restrictions on TV ads for prescription drugs.

>

> Overall, the drug industry spends more than $3 billion a year--triple

> what it did just seven years ago--encouraging consumers to seek certain

> companies' remedies if they are feeling tired, anxious, gassy, in need

> of more " confidence " or maybe just a purple pill.

>

> Health plans say the TV spots are a key driver in the dramatic increase

> in prescription drug costs because they prompt more people to demand the

> latest, and often most expensive, brand-name prescriptions.

>

> Health plan and employer spending on prescription drugs has risen at an

> annual rate of 15 percent each of the last four years, far exceeding

> inflation.

>

> Experts attribute much of the rise to TV and other direct-to-consumer

> advertising that end-runs doctor advice.

>

> Still, sales of Prevacid, and others in its class of drugs known as

> proton pump inhibitors, are either flat or falling, in contrast to

> double-digit growth of other top-selling prescription drugs promoted on

> TV in the United States.

>

> Because Prevacid is therapeutically equivalent to other proton pump

> inhibitors, the company's own studies show, health insurance plans are

> removing it from preferred positions on their drug lists. Health plans

> are encouraging the use of over-the-counter Prilosec, which sells for

> less than 80 cents a pill, instead of prescription competitors Prevacid

> or AstraZeneca PLC's Nexium, which sell for about $4 a pill.

>

> " Managed care has had an impact when we have had extraordinarily similar

> drugs, " said Dr. Allan Korn, chief medical officer for the Chicago-based

> Blue Cross and Blue Shield Association, a trade group representing some

> of the nation's largest health plans. " Managed-care plans have a tiered

> structure to get people to think about this. People then sort of just

> move on. "

>

> Through use of up to four tiers, health insurers work with employers to

> place more expensive drugs in a more expensive tier so health plan

> enrollees think twice before paying a higher co-payment, especially when

> a cheaper option is available.

>

> HMO giant Humana Inc., for example, worked with interested employers to

> raise health plan enrollees' monthly co-payments on Prevacid, Nexium and

> other brand-name proton pump inhibitors to between $40 and $50 after

> Prilosec became available over-the-counter last fall.

>

> Humana and other health plans have also bombarded enrollees with

> marketing blitzes, using direct mail and automated phone calls that

> describe cost and price differences between over-the-counter Prilosec,

> which is not covered, and the brand names.

>

> Since last fall Humana has twice sent coupons for a free two-week supply

> of over-the-counter Prilosec to its members who take prescription

> heartburn drugs. And members appear to be using them. Humana said the

> coupons, which may be sent again early next year, have had a 19-percent

> redemption rate--sharply higher than those in the grocery store industry.

>

> William Fleming, vice president of pharmacy benefit management for

> Humana, said Humana is not reluctant to engage in direct-to-consumer

> advertising of its own.

>

> " We believe the consumer needs to be engaged in knowing what things cost

> as well as what are the needs to the diseases they have, " Fleming said.

>

> The strategy is working and saving health plans and employers tens of

> millions of dollars.

>

> Although Humana will not disclose specific savings, the Louisville-based

> health plan has seen a 3.4 percent decline in prescriptions filled for

> proton pump inhibitors from January through September of this year--in

> sharp contrast to the 35 percent increase the year before.

>

> For TAP and other makers of widely advertised brand-name heartburn

> drugs, even additional spending on TV advertising cannot counter such

> moves by health plans. TAP's Prevacid sales were down nearly 8 percent,

> to $711 million, in the third quarter--a surprise to the company that

> said in July 2002 that it did not " anticipate a significant impact on

> Prevacid with the introduction of generic or over-the-counter Prilosec. "

>

> TAP would not comment on its TV strategy for Prevacid, which is one of

> the nation's most expensive pharmaceutical advertising campaigns,

> industry analysts say.

>

> Rival affected

>

> TAP is not alone. Prevacid's even more frequently promoted rival,

> Nexium, saw its U.S. sales plummet 17 percent to $651 million in the

> third quarter.

>

> What's more, Nexium's maker was hit last month with a consumer group's

> lawsuit over some of the company's earlier ads promoting Nexium.

>

> Members of the Prescription Access Litigation Project, a national

> coalition of unions and consumer groups, sued AstraZeneca PLC, accusing

> the company of a misleading ad campaign that claimed Nexium was

> significantly better than Prilosec.

>

> AstraZeneca makes both drugs, known in the older Prilosec ads and the

> newer Nexium ads as the " purple pill. "

>

> The consumer group says the two drugs are " nearly identical " and that

> the drugmaker was trying to reap a higher price for essentially the same

> drug. The suit alleges AstraZeneca sought to preserve its market share

> and profits as the patent on its blockbuster drug Prilosec was set to

> expire in 2002, by " initiating a massive and misleading advertising and

> promotional campaign to deceive consumers into purchasing Nexium, a

> nearly identical new drug, " the group said in a release.

>

> For its part, AstraZeneca rejected the claims made in the suit and said

> its U.S.-approved information for Nexium shows advantages over Prilosec

> in " healing damage to the lining of the esophagus and heartburn control

> in a larger percentage of patients, " company spokeswoman Rachel

> Bloom-Baglin said.

>

> AstraZeneca would not comment on its TV ad strategy for Nexium, but the

> company stands by the need for direct-to-consumer advertising.

>

> " It drives patients to go see their doctor for conditions that they

> might not otherwise seek treatment for, and that is a good thing, "

> Bloom-Baglin added.

>

> But some doctors and insurers say Nexium is not a significant

> improvement over Prilosec. Even AstraZeneca's own head-to-head

> comparison shows Nexium is only about 3 percent better at controlling

> and healing damage.

>

> Meanwhile, Abbott Laboratories, which owns half of TAP, touted

> head-to-head studies showing " Nexium offers no clinical benefit over

> Prevacid. "

>

> Other insurers have tried to combat sales of brand names advertised on

> TV with similar strategies.

>

> When the popular allergy drug Claritin began selling over-the-counter in

> 2002, rival brand-name drugs in the same therapeutic class, such as

> Clarinex, Zyrtec and Allegra, became more expensive on insurers' lists

> of medications.

>

> In January 2003, health insurance giant Aetna Inc., for example, began

> to require health plan members to " precertify " and obtain the insurer's

> approval before members could take the more expensive non-sedating

> antihistamines.

>

> Brand-name sales hurt

>

> Drugmakers have since bemoaned the deterioration of sales of their more

> expensive brand names.

>

> Schering-Plough Corp. said in its third-quarter earnings report that

> U.S. Clarinex sales declined 8 percent to $118 million " due to the

> continued contraction in the prescription antihistamine market, stemming

> from the late-2002 introduction of over-the-counter Claritin and other .

> . . non-sedating antihistamines, coupled with a decline in market share. "

>

> Drug benefit managers and health plans say their direct-mail marketing

> and preferred drug lists can be effective, especially when prescription

> drugs come off patent protection and either a generic or an

> over-the-counter version becomes available.

>

> Insurers say they will continue to pursue ways to combat rising costs

> when drugmakers market higher-cost products that work only equally as

> well as less expensive medicines.

>

> " We have the unique responsibility of managing the resources of families

> and companies who are trying to keep health insurance affordable, " said

> Korn, of Blue Cross.

>

> - - -

>

> COMPARABLE HEARTBURN DRUGS

>

> Over-the-counter

>

> Prilosec

>

> Below 80 cents per pill

>

> Total sales (2004): $304.2 million

>

> Prescription only

>

> Prevacid

>

> $4 per pill

>

> Total sales (2004): $2.19 billion

>

> Prescription only

>

> Nexium

>

> $4 per pill

>

> Total sales (2004): $2.10 billion

>

> Note: Total U.S. sales Jan. to July, 2004

>

> Chicago Tribune

>

> - - -

>

> Spending millions to gain billions

>

> Drugmakers are spending millions to market their more expensive brands

> of prescriptions.

>

> The leading medicines listed are based on total media advertising for

> 2003.

>

> DRUG COMPANY HEALTH PROBLEM U.S. SALES

> ADVERTISING

> IN MILLIONS

> Nexium AstraZeneca PLC Heartburn $3.1 billion $257.2

> Clarinex Schering-Plough Corp. Allergy $685 million $129.2

> Allegra Aventis Pharmaceuticals Inc. Allergy $1.6 billion $125.5

> Viagra Pfizer Inc. Impotency $1.1 billion $112.5

> Lipitor Pfizer Inc. Cholesterol $6.8 billion $109.2

> Advair GlaxoSmithKline PLC Asthma $2.3 billion $101.7

> Celebrex Pfizer Inc. Arthritis $2.6 billion $95.9

> Prevacid TAP Pharmaceutical Products Inc. Heartburn $4.0 billion $95.3

> Zocor Merck & Co. Cholesterol $4.4 billion $95.2

> Zyrtec Pfizer Inc. Allergy $1.2 billion $95.1

> Note: Sales figures are for 2003

> Sources: IMS Health, Nielsen Monitor-Plus

> Chicago Tribune

>

>

> 2004, Chicago Tribune

>