Kickbacks: Doctors, Pharma, Insurance and Surprise! Patients Caught in the Middle

See if you can get your arms around the following conundrum, which is typical of our dysfunctional American Healthcare System — only this time with a twist. We’ll begin with point-of-view:

Consumers (that’s us patients!): When we need a prescription drug to improve our health, we want the best drug for what ails us, at the lowest price possible. We also want affordable health insurance, with fair co-pays for those drugs.

Physicians: When it comes time to prescribing a drug for a patient, the doctor wants to be sure it’s the right drug with the best chance of improving the patient’s health. Further, the physician is also on the constant lookout for ways to increase his/her income. They are offered money, support and/or other incentives from pharma manufacturers on a constant basis, but this practice has become a real point of contention because it creates a conflict of interest. Now, for many, a possible new income stream has been offered by insurance companies (see below.)

Pharma companies: Are interested in maximizing income. Period. And they will do whatever they can to protect that interest. Their real allegiance is to their stockholders who may also be any of the players mentioned here. The great majority of their income is derived from branded/innovator drugs and they take a huge hit when their patents run out and they begin to compete against generics. They look for ways to reward doctors for prescribing and using their drugs.

Insurance companies: Are interested in maximizing income. Period. And they will do whatever they can to protect that interest. Even the not-for-profits want to maximize their income so they can pay out bigger bonuses to their top people. They are constantly on the lookout for ways to reduce their costs so their profits are larger. When they can get doctors to switch patients to generic drugs, (or when they can get patients to ask their doctors about the possibility) then they can save costs.

Some background:

Section 1128B(b) of the Social Security Act (42 U.S.C. 1320a-7b(b)) (gotta love those citations) is a federal law called the anti-kickback statute. The statute states that violations of this law are punishable by up to five years in prison, criminal fines of up to $25,000, civil monetary penalties up to $50,000, and exclusion from participation in federal health care programs like Medicare.

So here’s the situation:

It seems that earlier this year, Blue Cross/Blue Shield of Michigan began paying doctors $100 for each patient they switched from Lipitor, a branded/innovator drug to its generic equivalent. In other states, like Massachusetts, doctors receive a financial reward at the end of the year for making branded-to-generic switches to qualify.

Now these doctors are being told that, from the point of view of the federal government, they are violating the anti-kickback statute and could be fined and banned from working with the programs like Medicare that often become their bread and butter.

And here’s the conundrum:

As usual, patients are caught in the middle. Let’s return to our patient point of view. We want the best drug at the best price. The best drug may be the innovator drug OR it may be the generic — since they are bio-equivalent, then they are presumably the same. But the cost is not the same — the cost of the generic may be far less — even hundreds or thousands of dollars less in the course of a year. So often, the “better” drug for us is the generic.

Now, doctors in the states where insurance companies are offering the kickbacks are caught in the middle — should they switch their patients to generic drugs, which is better for the insurance companies, and may be better for their wallets, too? Or should they continue to prescribe the innovator drug, which is more costly, but may reap benefits provided to them by pharma companies, too?

Clearly, now, there is a law with some teeth against kickbacks — but why is only one of these scenarios considered a kickback?

And once more from the patient’s point of view — when the doctor prescribes a drug for us — should we be asking whether the doctor benefits one way or the other? We know now that even the American Medical Association has developed a policy against insurance company control of which drug is prescribed. That’s as it should be.

But I’ll ask the question again — why should payments from an insurance company be considered a kickback, but support from the pharma companies not be considered the same thing?

And why should either the insurance company OR the pharma company be dictating which drug is prescribed for us, which is what they do when they offer incentives to the physician? With no incentives, then the recommendation will be made more objectively.

So there’s your conundrum for today — with a twist. What do you think?

Begin with this statement: “when patients step up to take charge of their own medical decision-making….”

(And don’t forget — we don’t have to be victims!)

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1 comment

    • Jim Larson on January 20, 2008 at 8:43 am

    Hi, I often wondered about kickbacks from insurance and drug companies because of the way certain doctors act about different examinations. The funny part obout getting an exam is at times they tell you that it is only necessary once every year etc. even if you tell them that you will pay for it. The biggest problem I see is you can’t get a price for a certain procedure no matter who you ask so you can’t shop it. BAD!!!!

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