Prilosec OTC Switchback: Plans Should Look To OTCs For Savings, Study Says

Health plan administrators should consider coverage of OTCs to reduce pharmacy benefit costs, authors of an Arkansas study on the cost impact of covering Prilosec OTC (omeprazole magnesium) say.

A policy decision at the Arkansas State Employee Benefit Division (EBD) to cover the OTC proton pump inhibitor with a $5 copay led to annualized savings for the state of more than $3 mil., according to Brittany Harris, University of Arkansas for Medical Sciences College of Pharmacy, Little Rock.

The change in the EBD plan "produced savings to the state of as much as 50% of the total cost of PPI drugs," Harris et al. report in the September/October issue of the Journal of Managed Care Pharmacy.

The savings accrued despite "an apparent small increase in utilization of PPIs and an increase in reimbursement to pharmacies of more than 100%," the authors note.

EBD covers over 129,000 members with prescription benefits and had a budget of $74.6 mil. to cover prescriptions in 2003. The division consulted the University of Arkansas College of Pharmacy to improve its formulary's cost effectiveness.

PPIs were selected because they accounted for $8.9 mil., or 12%, of the EBD's drug costs in 2003. Furthermore, "there appears to be no clinical evidence that the PPIs are not therapeutically interchangeable in the commercially available dose forms."

Beginning in March, Prilosec OTC was placed in a newly created $5 copayment tier. The study compared the two-month period prior to the new policy to the two months following the change.

Copays for generic prescription omeprazole increased from $10 to $25 (second tier) with the policy change, while branded omeprazole lost coverage altogether. Other Rx PPIs that had carried a $25 copay moved to a $50 copay (third tier). The copay increases for all the Rx products were implemented March 15.

The policy change also established a $13 dispensing fee per OTC prescription for pharmacies. In contrast, dispensing fees for all prescription PPIs remained at $2.50 per prescription.

The $13 dispensing fee was intended to "ensure that the new program (intervention) would be a relatively income-neutral decision per prescription for the pharmacy provider," Harris et al. say.

The amount was based on a sample survey of pharmacists to determine the gross margin for prescription PPIs based on the reimbursement formula in place at the time. "With the $13 dispensing fee, the gross margin for OTC omeprazole should be similar to the other PPIs," the authors claim.

The plan allowed an appeals process for physicians to request an Rx PPI for a beneficiary at a tier two copay, but only with verification of a diagnosis of Zollinger-Ellison syndrome "or other hypersecretory conditions."

The authors employed EBD's prescription claims database to collect use and cost data on prescribed PPIs for the two-month periods before and after the change.

After March 1, "a majority of PPI prescriptions were filled with OTC omeprazole." From the third week through the end of the period studied, Prilosec OTC accounted for roughly 60% of claims, averaging out to 54.8% for the two-month post-implementation period.

The state saved $40.86 per PPI claim in the first two months after the change. The amount paid by the plan "decreased by approximately $270,440 per month."

Harris et al. say a "conservative estimate" of annual savings from coverage of OTC omeprazole would be $3.3 mil. However, anticipating a continued increase in OTC omeprazole use, the authors project annual savings of closer to $4 mil.

Beneficiaries saved $4.20 per claim, or 43.7% per day compared to the period before OTC coverage.

The results "demonstrate the need for third-party payers to be flexible and consider all options when attempting to control drug costs," Harris et al. state.

However, the authors note the decision in this case was "based on the recommendation that the drug was clinically interchangeable with prescription products."

Acknowledging that the study examined a brief time period, the researchers concede a longer-term evaluation may be needed.

Furthermore, the report is a cost-outcome analysis and did not evaluate clinical outcomes or beneficiary/ pharmacist satisfaction with the results.