Rx-to-OTC switch products reimbursed by 30% of HMOs -- Novartis report.

Rx-TO-OTC SWITCH PRODUCT PURCHASES REIMBURSED BY 30% OF HMOs, according to the "Novartis Pharmacy Benefit Report: 1997 Trends & Forecasts." The report notes that while "almost 30% of the HMOs in this sample said they have continued to cover an Rx-to-OTC switch product after it changed status," 66% discontinue coverage for switched drugs.

"In many cases, plans that continue coverage reimburse use of the product in its prescription strength, but not in the OTC strength," the report notes. "HMOs seem to have come to clear decisions on this issue because they predict no change in their position during 1997 or 1998."

The report is based on year-end 1996 data collected in six surveys conducted by Totowa, N.J.-based Emron, a managed healthcare research and communications company. The surveys were sent to HMO pharmacy and medical directors, employers and employer coalitions, pharmacy benefit management companies (PBMs) and consumers. Emron also writes and produces the report. "The publication sponsor, Novartis Pharmaceuticals, maintains an arm's length relationship during analysis and preparation," the document notes, "with the intention that information herein reported be completely independent and objective."

Plans that were queried also reported that they intend to "increase the selective reimbursement of OTC products." Half expect to reimburse "some" OTCs by 1998, whereas in 1995, only 31.3% did. Those that report they will not reimburse any OTCs in 1998 have decreased to 50%, down from 68.8% in 1995. Plans that currently provide coverage for "some" OTCs are, "for the most part, referring to diabetic supplies," the report states, noting that 50% reimbursed diabetes supplies in 1996 and plan to continue. Eight percent of plans currently reimburse antifungals, and 10% reimburse antihistamines.

Eighteen percent of plans intend to reimburse H2 antagonists in 1998, compared to 8% in 1996. Ten percent of those plans surveyed say they will cover nonsteroidal anti-inflammatory drugs by 1998.

Under current point-of-sale processes, the booklet notes, "medications are difficult to track and effectively manage or reimburse without an originating prescription," which is why, the report states, over-the-counter drugs often are not covered. "If plans begin to require a prescription for an OTC in order to trigger the POS system, the cost savings realized from self-treatment would diminish," the report explains.

Thirty-four percent of survey respondents indicated that they track OTC purchases through submitted claims; "56% gave no response to the question, either because they do not know or, more probably, because they do not capture OTC information," the report states.

"Respondents who said that they are now reimbursing and intend to increase reimbursements of OTCs are primarily staff/group plans, environments in which an in-house pharmacy may make it easier to track OTC use," the report suggests.

Almost 42% of staff/group plans cover "some" OTCs, the report states, whereas 39.1% of IPA/network plans cover "some" OTCs. Furthermore, 54.5% of staff/group plans cover "some Rx-to-OTC" switch products, whereas only 21.7% of IPA/network plans do. However, no staff/group covers "all Rx-to-OTCs," and 8.7% of IPA/network plans cover "all" switches, according to the report.

Seventy-eight percent of those plans surveyed indicate that they will promote the use of OTCs through "step-care protocols" by 1998; in 1995, 40% did so. OTC products are often included in a plan's step-care protocols, the booklet says, because lower dosage OTCs are often less expensive than prescription drugs or use of them may forestall physician office visits. Plans also encourage self-treatment to their members in member education materials. The objective of this may be to "reduce the number of unnecessary provider encounters, or it may be to reduce the incidence and severity of the illness by prompt self-treatment," the report suggests.

"Direct-to-consumer advertising for over-the-counter...medications prompted 26.3% [of those surveyed] to purchase the drugs," the report states. The Emron survey, sent to members of the A.C. Nielsen Homescan panel, a national consumer panel of 40,000 U.S. households, revealed that "the majority of the overall sample (54.9%) spend $10 or less per month" on nonprescription medicines, while 28.7% spend between $11 and $20 per month. "These responses are...consistent across managed care and indemnity patients, as well as across age categories," the report points out.