KAISER PERMANENTE REQUESTS FOR "NO GENERIC SUBSTITUTION" INCREASE TO 2% OF Rxs -- A THREEFOLD INCREASE; PHARMACISTS, MDs CITE EROSION OF CONFIDENCE

Nearly 2% of Kaiser Permanente prescriptions currently stipulate no generic substitution, up from about 1/2% at the end of 1988, Kaiser Permanente Material Services Director Dale Kramer told the National Association of Pharmaceutical Manufacturers annual meeting Jan. 23 in Palm Beach, Florida. Commenting on the impact of the generic scandal on prescribing practices, Kramer noted that the California HMO's "best estimates" are that "about 1/2% of patients or physicians" specifically requested no generic substitution prior to 1989. The HMO's current estimate is that roughly 1-1/2% to 2% of prescriptions stipulate no generic substitution. "Depending on your point of view," Kramer pointed out, "one might say this is only a 1% increase or a three-fold increase." Kaiser Permanente is currently spending about $300 mil. per year on drug purchases, Kramer said. He explained that each 1% change in prescribing patterns could equal "as much as $3 mil. to $4 mil." Kaiser owns and operates nearly 200 pharmacies dispensing about 25 mil. prescriptions a year. The HMO has 6.5 mil. enrollees with total expenditures currently running about $6.5 bil., or $1,000 per patient. Kramer noted that overall pharmacy costs have doubled as a percentage of total outlays at the HMO, from 4% to 8% over the past five years. Based on these figures, pharmacy costs per enrollee for Kaiser are running about $80, of which $50 is going directly to drug purchases. Kaiser "has aggressively used generics for over two decades" under a program with an "overriding philosophy [that] has been conservative," Kramer said. Unlike many other structured health care groups, he explained, Kaiser does not operate with closed formularies, restrictions or incentives on prescription drugs. Kramer maintained that the predominant use of generics reflects their "credibility based on a well developed and publicized selection and quality assurance program and an education process directed at members, physicians, and pharmacists -- the positive perception of those folks and the good image of generic drugs being key factors." In order to maintain the overall credibility of generics in the face of adverse publicity, Kaiser has been forced to significantly expand its information efforts concerning generic drugs, Kramer reported. "Heightened awareness, interest and concerns by physicians, pharmacists and patients," the Kaiser exec said, "have compelled us to publish a variety of special information pieces to explain, clarify and inform people of what was happening including cause and effects." Kramer noted that Kaiser's efforts in behalf of generic drug credibility did not receive much help "in the way of supportive material or positive statements in the media from the generic industry as a whole." In light of current events, Kramer suggested that the generic industry broaden its marketing efforts beyond sales and marketing at the distributor and wholesaler level by paying more attention to the "end-user segment" of their product chain. Ignoring the end-user, he maintained, "has worked well to the advantage of branded competitors both on a therapeutic as well as a generic basis." The erosion of confidence downstream among generic end-users and the lack of generic industry attention to restoring confidence among prescribers, dispensers and users was a theme echoed by several other speakers during the week-long NAPM meeting. Commenting on the generic crises from the physician's point of view, Melvin Van Woert, MD, Mount Sinai School of Medicine, pointed to a "conspicuous absence" of the generic industry from direct communication with physicians. With a general lack of training in clinical pharmacology, Van Woert maintained that prescribing physicians are not in a position to understand and evaluate issues related to formulation and bioequivalence. Without more objective information and actual data, he asserted, they are highly susceptible to brandname promotional efforts and biased anti-generic publicity. Suggesting that the generic industry follow the brandname lead and make better use of informational channels such as education seminars and journals, Van Woert cited several specific examples of gaps in physician awareness. Doctors are not generally aware, for instance, that brandname firms distribute products manufactured by generic firms under their own name, that brandname manufacturers distributed 70% to 80% of all generic drug products, and that recalls are also a problem among the branded products, he asserted. Citing the American Academy of Family Physicians position paper issued this fall as an example ("The Pink Sheet" Sept. 25, p. 6), Van Woert emphasized that doctors have "false impressions derived from limited knowledge," in particular, about formulations and their effect on clinical course. For instance, "there is no mention [in the AAFP "White Paper"] about the fact that brandname companies frequently change their formulations and that these changes require the same bioequivalency testing and standards applied to generic drugs." Medical College of Virginia professor William Barr, PhD, a member of Virginia's voluntary formulary committee, pointed to a growing "perception" at the state level that FDA's system for assuring generic bioequivalence "is not working." FDA assertions about a lack of actual documented bioequivalence problems or therapeutic failures among products, Barr maintained, is only heightening doubts about the sensitivity of the detection system. What is needed to restore confidence at the state, third-party payer, and practitioner levels, Barr asserted, is: (1) a systematic evaluation of product-to-product as well as lot-to-lot variability in the brand and generic drug marketplace; and (2) a better way of reporting, evaluating and providing information on acute episodic events or other bioequivalence-related problems. As an example of the ability of states to impact the system, Barr noted that Virginia is taking steps to remove all "BX" (inequivalent) rated drugs from the market. Bass & Ullman attorney Scott Bass also pointed to the need for the generic industry to help fill an information gap at the formulary level. He maintained that generic bioequivalence "is no longer accepted as a general principle" among State Boards of Pharmacy and Medicaid formularies. Potentially affected, Bass cautioned, are formulary decisions about new off-patent drugs, narrow therapeutic range drugs, "any drugs that become a part of the Dingell hearings," and non-systemically absorbed drugs. Bass advocated the need for generic manufacturers to help FDA in "instilling and rebuilding confidence" by collecting and providing additional information and hard data on bioequivalence issues. "I am not suggesting that we have to reinvent the wheel," Bass maintained, "but we have to show that the wheel still rolls." The lesson from the generics crises at the chain puchasing level, NACDS VP Leonard DeMino maintained, is "that generic manufacturers must have an information communicator within their organization with a professional background, preferably a pharmacist" who can knowledgably address issues relevant to the quality of products. Having somebody other than the sales rep or marketing manager involved in this communication process, he maintained, is very important "to your credibility with pharmacists." Because of poor communications, Demino asserted, several generic companies that did not respond to inquiries from the trade were hurt when information about the quality of products and companies from less reliable sources "filled the gap." DeMino maintained that pharmacy buyers are giving increased attention to differentiating between generic companies. The assumption was formerly made in pharmacy, DeMino maintained, that "all generic products are of good quality and all manufacturers are beyond reproach." However, he said, "the chain pharmacy buyer is now concerned with the quality of the company in addition to the quality of the product." As a hospital pharmacy purchaser, Williams also highlighted a growing emphasis being placed on product and company quality in addition to price in making purchasing decisions. Hospital pharmacists are now looking closely at FDA inspection records, recall data, and technical product information on bioequivalence and formulation, he said. They are also looking at supply information, and are tending to view supply interruptions as an indication of quality control problems at the supplier level. The problem of distinguishing product manufacturers from repackers and the lack of information in this regard on labeling is now getting attention at the pharmacy level, Williams said, and "needs to get straightened out."