As I See It

Will “Pay for Performance” Apply to Drugs as Well as Doctors?

When prices outpace outcomes, something's gotta give.

By Paul S. Koch, MD, Editor Emeritus

I should begin by saying that I am thoroughly in favor of new medicines. I like new medicines, I use new medicines, and I want more new medicines to be discovered. When I was younger, I preached that there was little difference between generics and brands, but once my heart started pooping out and I needed a fistful of pills, I quickly learned that when I bought the cheap stuff I didn't feel as good as when I had to mortgage the farm. I have also expressed the opinion that certain generic eye drops are as effective as the liquid excrement of an Australian marsupial.

But, sometimes I get a shocking dose of “What the …?” when reviewing trends in the drug industry. Let's consider the three mainstays of an anterior segment practice: steroids, antibiotics and non-steroidals.

Hyperinflation

When I opened my surgery center in 1985 I could buy a common steroid eye drop in bulk, one gross count, for 85 cents a bottle. That same bottle today at my local pharmacy costs 75 dollars. With no new development costs, no new regulatory, and barely any marketing effort, the price has gone up almost 100 times.

I like to use the newest antibiotics, because I want to give my patients the best chance of avoiding a blinding infection. The one I prescribe today costs $96 without a drug plan, and between $50 and $85 with one. The previous generation antibiotic is a Tier One generic costing about 10 bucks. That's about one-tenth as much, and I have to ask, “Is it only one-tenth as good?” Have we seen a significant reduction in surgical infections since the newer antibiotics were released?

I like the newest non-steroidals. They only have to be used twice a day and our retinal colleagues tell me they work better in treating CME. But using the older ones for a few days prior to surgery dramatically reduced CME in my practice, so I don't need to use the drops for therapeutic reasons very often. Still, they're stronger and better and they — what? — they cost $200? The previous generation NSAID is a Tier Two generic costing about $45. It may have to be used four times a day, but I mean, really!

Copays and Consequences

I did the math using the co-payments of a common Rhode Island health plan. We used to think of tiered co-payments as $10, $30 and $50, but this year we're seeing plans with tiered co-payments of $15, $45 and $85. When I prescribe the newest brandname medicines for my patients, the antibiotic, steroid and non-steroidal would cost them $371 if they had no insurance; between $150 and $255 if they are using their co-payments only, depending on the policy; and between $40 and $115 for the generics, again depending on the policy.

Let's round off some numbers, and call it about $350 for brand self-pay, $200 for brand co-payments, and $75 for generics. Maybe the numbers are different in your neck of the woods, but the differences are pretty impressive. So are their consequences.

I admit I have difficulty explaining why I'm prescribing medicines costing three to five times as much that work about the same as, or maybe slightly better than, older generics. My recent report from Blue Cross says physicians across the board prescribe generics 69% of the time, but ophthalmologists only do so 30% of the time, so I guess a lot of readers are like me.

At an extra $100 per procedure, and three million cataract operations a year, we're talking serious money. I suspect it won't be long before those who pay the bills exert some pressure on us to think a little more about costs and whether we can accept higher rates of avoidable complications.

“ You can bet just as sure as you live,” goes the old song, “something's gotta give.” Even if we too “fight, fight, fight it with all of our might.” OM

Paul S. Koch, MD is editor emeritus of Ophthalmology Management and the medical director of Koch Eye Associates in Warwick, RI. His e-mail is: paulkoch@kocheye.com.