Study: For HMOs, limiting
drug choices can be costly

March 20, 1996
Web posted at: 12:50 a.m. EST

From Correspondent Jeff Levine

WASHINGTON (CNN) -- A common HMO tactic aimed at cutting health costs by restricting drug choices may be having the opposite effect, according to a study released Tuesday.

Many HMOs keep formularies, limited lists of drugs their doctors are allowed to prescribe to patients, as a way to keep health care costs down. The year-long study, funded in part by the pharmaceutical industry, charted the cost of treating patients at several HMOs, comparing the cost of treating a patient with a particular illness at HMOs with and without formularies.

Nearly a quarter of a million prescriptions were written for the group, and conditions from asthma to high blood pressure were included in the study.

According to Susan Horn of the University of Utah, the group found that patients whose drug choice was limited wound up making more visits over the course of a year -- including emergency room visits and hospitalizations. Those patients also had higher yearly drug costs and numbers of prescriptions.

The study concluded patient cost was higher in some HMOs because the patients didn't always get the drug they needed.

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"It means that you either need to use a combination of different drugs to try to get them well, or that they may have more side effects and hence not get better as quickly as they could otherwise," Horn said. Her group's research concluded that the cost of treatment could be cut in half by using the right therapy.

The Academy of Managed Care Pharmacy, however, stood by formularies.

"When formularies are developed, the first premise is, what's going to maximize patient outcomes?" said Carol Sardinha, who works at the Academy. "Which drugs in this category, for, say, asthma, are proven to be most effective, or proven to have the least side effects?"

The pharmacists dispute the study, and point out that it was partly funded by the pharmaceutical industry, which sells many similar products, known in the industry as "me too" drugs. She says that without a formulary, there are very few cost controls, and doctors wind up choosing from a "plethora of drugs, not all of which may be equally safe and effective."

The pharmacists say it's not just the quantity of the formulary, but the quality that counts. Meanwhile, Horn says, many HMOs are taking a hard look at their formularies to make sure that a penny saved on a prescription doesn't turn into a pound spent on patient care.

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