Using A Civil War Law to Intimidate Physicians

I thought I would post this latest iteration of how managed care organizations (MCOs) and their proxies in the pharmacy benefit manager (PBM) industry are intimidating physicians into not prescribing a specific medication for you.  At some point these companies started to attach a reference to the False Claims Act, along with the usual forms they expect doctors to fill out so that you can get your prescription filled.  Intimidating physicians has always been a tactic to try to slow doctors down or stop them in their tracks.  Delaying and stopping doctors from writing prescriptions is money in the pocket of any PBM or MCO.  Intimidating physicians is also useful because it has a demonstrated effect on their behavior.  It causes them to undercode or bill for less service than they actually provided and it dates back to the 1990s when the FBI was used change the billing behavior of an entire generation of teaching physicians under the threat of large scale paybacks for "fraud" or RICO actions and the threat of imprisonment.  I have never seen an estimate of the total amount of money "saved" (as in removed from physicians) and time wasted based on these political ideas, but it would not surprise me if it was hundreds of billions of dollars.  I know it forced me not to teach residents for over a decade.  I could see no point in needing to generate a daily note that was identical to my residents' notes and they logically found it offensive.

So we have the issue of "prior authorization".  You used to get a prescription from your doctor, take it to the pharmacy, and get it filled.  In the 1990s HMOs and MCOs decided they knew more than doctors and they would adopt some sweeping measures to "reform" prescribing practices.  In some of the areas it made sense at the level of clinic or hospital based Pharmacy and Therapeutics (P&T) Committees.  Certain drugs are so specialized (eg. chemotherapy agents) that only certain physicians should prescribe them.  There has been a two decades long problem with antibiotic over prescribing and there are typically ongoing initiatives to deal with that problem.  I have not been on a P&T Committee for over three years, but I can't imagine there is nothing currently being done to curb opioid painkiller overprescribing.  There are definite reasons for intervening with prescribers on a scientific basis.  But at some point prior authorization became much more than that and some of the assumptions (like all SSRIs are alike) are not valid.  To make matters worse, the pharmacy arm of managed care companies (the PBMs) were now asking for prior authorizations on generic drugs.  Or they were asking for repeat authorizations if the prescriber changed or the patient was hospitalized and the prescription stayed the same.  These same PBMS found that the same rules did not apply to themselves.  They could frequently make deals with hospital that would involve the bundling of one medication with the same medication form the same company and they could make money off that.  PBMs had become a multibillion dollar business.

The hassle of filling out forms and making many phone calls in order to assure that a prescription is completed is more than an annoyance.  It removes billions of dollars of resources from the provision of medical care.  One study estimated that the cost for American physicians to deal with insurance  companies was $82,975 per physician or about four times higher than their Canadian counterparts.  That amounts to $27.6 billion nationwide.  That is a lot of medical care and the time jumping through hoops is never reimbursed by MCOs or PBMs.  An estimate of the losses to the treatment side for billing practices alone is about $7 billion.

The political aspects of this intrusion of business into medical practice is instructive.  Physicians are notoriously inept when it comes to politics and there is no clearer example than drug prior authorization.  What other business in the United States has to provide that level of free work in addition to the primary work in order to be reimbursed.  Do other professionals like lawyers need to waste this amount of time?  I sat through a meeting at one point where the debate was whether we could influence the length of a drug prior authorization form and get it down to two pages instead of five.  The consensus at the time was that there were probably federal rules that would not allow the form to be "streamlined" to two pages!

So now we have the streamlined form with a 14 page federal statute affixed to it.  Reading through the statute and figuring out what it means takes an attorney.  But every doctor who sees this knows what it means.  Don't rock the boat.  Don't question this government backed, big business policy that is guaranteed to waste your time and put more money into the pocket of the insurance industry.  And by the way, there is no guarantee that your patient will get the medication that you think they need, even if you jump through all of these hoops.

That is the state of health care in America today and it may be why you are standing in a pharmacy waiting to get your prescription filled.  It also may be why your doctor looks exhausted.

George Dawson, MD, DFAPA


Morra D, Nicholson S, Levinson W, Gans DN, Hammons T, Casalino LP. US physician practices versus Canadians: spending nearly four times as much money interacting with payers. Health Aff (Millwood). 2011 Aug;30(8):1443-50. doi: 10.1377/hlthaff.2010.0893. Epub 2011 Aug 3. PubMed PMID: 21813866.

Who Runs My Drug Plan?

The real issue in pharmaceuticals used to treat mental illness is the business practices that looms as an obstacle between the psychiatrist prescribing the medication and the patient who wants to receive the medication.  I have posted about the managed care practices - specifically pharmacy benefit managers (PBMs) that get in between physicians and patients. That previous post shows a diagram from an internal memo that reveals some perspective on the PBM attitude.  The goal for them is to come up with a business argument that will either improve profits for the managed care company or justify the billions of dollars in costs that PBMs add to the health care system every year.

The National Community Pharmacists Association fights back against PBMs from this web site.  A lot of what you find is relevant for pharmacists also applies to physicians - especially wasting physician time, indirectly affecting reimbursement, and disrupting the patient-physician relationship by dictating medications that need to be prescribed that are financially advantageous to the PBM.

Some of the details provided on this site are very interesting.  One example is a $10 price spread on up to 4 billion prescriptions per year.  I once read that PBMs made up an $80 billion per year industry and it is easy to see how they can get there.  In fact, the volume strategies that they use are very similar to the financial services industry.  In both cases, political advantage has added businesses that levy another tax on consumers and do not provide any added efficiency.  It is easy to see how managed care strategies fail to contain health care inflation when the intermediaries with government advantages are set up to maximize profits and waste the time of physicians and pharmacists.  

If you are a physician, watch the "Fed Up With Phil" video and ask yourself if it isn't time to get rid of health care middlemen that are increasing costs and in many cases detracting from the quality of health care?  If you are a physician, isn't it time that you or your professional organization starting putting up web sites like this one to educate the public about managed care and all of its problems?  Isn't it time that we stopped wasting our time and money with politicians?

George Dawson, MD, DFAPA

Politics and Prescribing: The Case of Atomoxetine

Prior authorizations for medications have been a huge waste of physician time and they are a now classic strategy used by PBMs and managed care companies to force physicians to prescribe the cheapest possible medication. The politics for the past 20 years is that all of the medications in a particular class (like all selective serotonin reuptake inhibitors) are equivalent and therefore the cheapest member of that class could be substituted for any other drug. The managed care rhetoric ignores the fact that the members of that class do not necessarily have the same FDA approved indications. It also ignores basic science that clearly shows some members of the class may have unique receptor characteristics that are not shared by all the members in that class. Most of all it ignores the relationship between the physician and the patient especially when both have special knowledge about the patient's drug response and are basing their decision-making on that and not the way to optimize profits for the managed care industry.

The latest best example is atomoxetine ( brand name Strattera.).  Atomoxetine is indicated by the FDA for the treatment of attention deficit hyperactivity disorder. It is unique in that it is not a stimulant and that it is not potentially addicting. Many people with attention deficit hyperactivity disorder prefer not to take stimulants because they feel like they are medicated and it dulls their personality. In that case, they may benefit from taking atomoxetine. The problem at this time is there are no generic forms of atomoxetine in spite of the fact that there are many good reasons for taking it rather than a stimulant. As a result physicians are getting faxes from pharmacies requesting a "substitute" medication for the atomoxetine. Stimulants are clearly not a substitute. Some people respond to bupropion or venlafaxine but they are not FDA indicated medications for attention deficit hyperactivity disorder. Guanfacine in the extended release form is indicated for ADHD in children, but it is also not a generic and is probably at least as expensive.  There is no equivalent medication that can be substituted especially after the patient has been out of the office for a week or two and a discussion of a different strategy is not possible.

I am sure that in many cases the substitutions are made and what was previously a unique decision becomes a decision that is financially favoring the managed care industry. I would like to encourage anyone in that situation to complain about this to the insurance commissioner of your state.  It is one of the best current examples I can think of to demonstrate the inappropriate intrusion of managed care into the practice of medicine and psychiatry.

George Dawson, MD, DFAPA

Managed Care 101 – The Prior Authorization Hoax

As managed care organizations worked on how they could prioritize pricing over medical decisions they came up with various plans to “manage” how physicians prescribed medications.  I was a member of two Pharmacy and Therapeutics Committees (P & T) that  both had this as a goal.  One of those committees had a much stricter mandate in terms of saving money.  The basic strategy used by that committee was to place a drug “on formulary” or “off formulary”.  If it was “off formulary” it was not available to any doctors within the HMO to prescribe.

The idea that all drugs within a class that had the same purported mechanism of action ruled the day.  As an example, all of the selective serotonin reuptake inhibitors (fluoxetine, paroxetine, sertraline, citalopram, escitalopram, fluvoxamine) would be considered equivalent medications and the committee would decide to place the least expensive ones on the formulary.  At the time, the major controversy was fluoxetine because there was no generic brand available and the company that produced it was notorious for not negotiating prices with hospitals and health care systems.  There was an eventual appeal by psychiatrists who presented to the committee on the unique qualities of fluoxetine.  At the time it was the only medication studied in adolescent depression for example.  Eventually a rule was passed that it was nonformulary for any physician who was not a psychiatrist.

The total cost of the drug was more of a consideration than the absolute price.  Very expensive drugs were approved that had questionable endpoints based on the fact that utilization would be low and that advocates for a particular untreatable illness would want it.  So the decision of the committee and their mandate was to reduce the use of relatively more expensive drugs that would be used fairly frequently.  In some cases, the off formulary drugs were available by “prior authorization” meaning that the prescribing physician needed to usually write up an appeal and fax it to the pharmacy or health plan and in some cases make additional calls.

The health care business has a long history of introducing layers and layers of management driven largely by the amount of money involved.  If you can successfully insert more management for even a small percentage of the available health care dollars you will potentially have a multi billion dollar business.   The management of pharmaceuticals is no exception and the Pharmacy Benefit Manager or PBM was born.  The task of the PBM like the task of a P & T Committee is to control the prescribing physician and force them to choose a medication based on the lowest cost.  Individual variation between patients and all of the other variables that physicians have to take into account do not matter.  If the physician or the patient thinks that they do – it will take a prior authorization for the alternate medication.  

The PBM model was designed from the outset to take a central role in the management of prescription drugs by replacing the relationship that the patient has with their health plan, their pharmacist, and even their physician.  How do I know this?  Take a look at their game plan from an internal memo in the diagram below.  This diagram was taken from an internal memo from over 15 years ago.  The structure depicted in the diagram is the system of care that exists today and the one that 95% of patient have their benefits managed through 

The prior authorization fallacy is essentially the same as the utilization review fallacy.  The most charitable interpretation is that it assumes that a person who is not necessarily a physician and who has no personal responsibility for your care can substitute their judgment based on a cost consideration.    

The diagram is also instructive in the way that the prescribing decision (and the dispensing decision) is trivialized as a "habit" rather than a decision that takes into account the evaluation and personal knowledge of the individual patient.

Today all physicians are routinely subjected to prior authorization procedures that waste significant amounts of their time and the time of their staff in order to make seem like the PBM decision has some degree of medical legitimacy.  The cost to medical practices is huge and completely unnecessary.  If PBMs are really businesses there is really no legitimate reason that they need to include physicians in their decisions of what medication should be covered.  They just need to plainly state that to their patients and deal with the public relations problems instead of wasting about one million hours of physician time per week.  In the weeks that follow I will demonstrate just how far this business plan has infiltrated medicine and psychiatry and what the response has been to date.

George Dawson, MD