FDA Must Not Muddle Its Mission to Cure Insurers’ Woes

Kerri Houston

The nation’s health insurers need to beware – Maryland just raised the bar for companies looking to do business in new states. Hiding anti-consumer behavior and sliding in under the radar won’t be as easy as it used to be.

WellPoint Health Networks– the nation’s 4th largest HMO - recently placed a bid to purchase Maryland’s largest insurance provider, CareFirst, that state’s insurer of last resort. Last March, its acquisition plan was effectively terminated by Maryland Insurance Commissioner Steven Larson who found the plan not just flawed, but in violation of Maryland law. In rejecting WellPoint’s bid, Mr. Larson pointed to the insurer’s unwillingness to produce documents that would satisfy state concerns that the acquisition might have a negative impact on Maryland’s healthcare consumers – particularly those in the low income community.

This unprecedented rejection in Maryland is a warning shot across the bow for other insurance companies who might consider putting profits above patients, as it may be WellPoint’s reputation for manipulating the FDA that dogged them in Maryland.

Recently, WellPoint pressured the FDA to move the non-sedating antihistamine (“NSA”), Claritin, to over-the-counter status (“OTC”) - no co-pay, no deductible – the full cost is paid by the allergy sufferer. Rather than endure a costly battle with the FDA, the manufacturer chose to voluntarily switch. According to WellPoint’s CEO, this cost shift to patients will increase his company’s bottom line by about $90M annually. The insurer is now asking the FDA to switch other NSA’s, namely Zyrtec, Allegra and the newest, Clarinex, to OTC status.

FDA Commissioner Mark McClellan recently received letters from The National Consumers League, the Seniors Coalition, the National Organizations of African Americans in Housing, and the Congress of Racial Equality (CORE) expressing their concerns about WellPoint’s interference and influence over FDA policy. The National Consumers League has asked Congress to hold hearings to ensure that the FDA adhere to its long standing practice of waiting an average of five years or so before “delisting” prescription drugs. (Clarinex has been on the market for under a year.)

CORE spokesman Niger Innis expressed his concern that switching these medications out of insurance coverage will “limit the opportunity (disadvantaged populations) have to obtain quality healthcare services.” Mr. Innis further calls WellPoint’s FDA petitions “shameless political shenanigans.”

The dangers of this practice include not just “self-medicating” – but also “un-medicating” due to an inability to afford medications once they are removed from an insurance plan.

Switching some medications to OTC could remove the physician from the prescribing, monitoring and diagnostic process. Respiratory patients may have drug interactions or other complications, in particular seniors, who also take medication for heart disease, diabetes, and hypertension that must be carefully monitored for harmful interactions. Children are also at risk, as dosages have to be adjusted not only because of growth, but because guidelines for pediatric use are not as clear as they are for adults.

The cost of Claritin at my local drugstore is now over one dollar per pill, versus the co-pay of $10 I previously paid for a month’s supply for my son. This tripling in cost may be prohibitive for many patients – especially lower income parents in urban areas whose children suffer from a high rate of serious allergy-based asthma. Delisting these meds may also prompt state Medicaid plans to drop the drugs from their formularies as well.

Over-the-counter switches may also hurt American entrepreneurs. The American Journal of Managed Care has estimated that allergy sufferers cost 3.4 million lost workdays and over $150 million in lost wages per year. Many employees may no longer be able to afford their effective allergy medicines. “Penny wise and pound foolish” remains true today – except in this case the HMO keeps the penny and the employer and employee pay the pound.

WellPoint and other HMOs probably won’t stop with allergy meds. Plans are already considering de-listing a prescription medication for acid reflux disease. What’s next? Asthma and cholesterol treatments, or even birth control pills may already be on the target list.

Ironically, as WellPoint continues to shift costs to its premium payers, it seems to be in good fiscal health. Despite projecting double-digit premium hikes over the next few years, its net income catapulted from $414.7M in 2001 to $703M in 2002. Membership has nearly doubled to over 13 million over the past two years due to its aggressive acquisition strategy, and its CEO enjoys at $16.3 million salary after a 29\% raise in early 2002. Its operating cash flow increased 53\% in 2002, and now that it isn’t paying for most allergy prescriptions, it should do even better in 2003.

The bottom line is that no insurer should be lobbying the FDA because of its bottom line. State regulators and legislators should adopt Maryland’s practice of confirming an insurer’s commitment to premium payers when it explores business options in their state.

Chopping down ragweed and investing in Kleenex should not be an acceptable alternative to prescription antihistamines for the estimated 50 million runny noses in the U.S. today.

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Kerri Houston is a public policy analyst and expert in media, marketing and external relations for public policy institutes. Her areas of expertise include tax, social security reform, and healthcare. Prior to joining Frontiers of Freedom, Ms. Houston served as National Field Director for the American Conservative Union. She was also executive director of State Policy Network and director of external affairs for Dallas' Institute for Policy Innovation. A strong proponent of individual and economic liberty, Ms. Houston is a Brain Trust columnist for Investor's Business Daily, and her opeds have appeared in The Wall Street Journal, The Washington Times, The Dallas Morning News, Forbes magazine, Intellectual Ammunition, and numerous other print, internet and institutional publications. She has appeared on Fox News and MSNBC, and was a frequent guest on Politically Incorrect with Bill Maher. Ms. Houston is a member of the National Paycheck Protection Working Group and an advisor to the Texas Conservative Coalition’s Health and Human Services Task Force. She serves on the Board of Directors for GOPUSA.com and the Board of Advisors for The Project for California’s Future. She was also nominated to serve on the President’s Commission to Strengthen Social Security. Well known for her dedication to presenting public policy in a way that will “pass the dinner table test,” Ms. Houston brings a sharp wit and a practical spin to her areas of expertise.
khouston@ff.org