Illinois Governor's Petition Misses Viable Alternatives to Lower Drug Costs; Healthcare...

Business Editors

GREENWOOD VILLAGE, Colo.--(BUSINESS WIRE)--Oct. 16, 2003

HealthTrans, a provider of web-enabled applications designed to optimize pharmacy benefit administration (PBA), today applauded Illinois Governor Rod Blagojevich for his work to lower drug costs, but said

On Tuesday, Illinois Governor Rod Blagojevich unveiled an online petition to pressure the Food and Drug Administration (FDA) to allow the importation of drugs from Canada. But HealthTrans believes the well-intentioned governor is missing domestic alternatives that could provide equally reduced drug costs. In particular, HealthTrans says the problem "isn't necessarily the drug manufacturer, it could be the companies charged with managing the state's drug programs. There already have been a host of lawsuits over PBMs overcharging state government clients on dispensed drugs."

"Rather than looking to Canada, Illinois and many other states should look at easy ways to optimize existing drug programs, without time consuming and costly lobbying to change legislation," said HealthTrans CEO Jack McClurg. "HealthTrans understands that pharmacy costs are skyrocketing and alternative channels must be sought in order to achieve cost-containment measures. We encourage Governor Blagojevich to take a closer look at his drug programs and the practices of the companies managing them."

HealthTrans outlined several areas in which states could reduce drug costs simply by improving the way their drug programs are administered:

-- PBM contracts are major contributors to costly drug programs.

The business model of PBMs dictate that they frequently

advocate more costly drug formulary choices to put negotiated

manufacturer rebates back into their own pockets. The true

value of this spread is hidden from the state, but it can be

as much as 20-50 percent of the savings.

-- Therapeutic switch fees also drive up the cost of drugs.

Essentially the PBM is motivated by the manufacturer to keep

brand name or more costly drugs on the formulary, and

therefore incent physicians to switch their prescribed drug to

a more costly one.

-- State Medicaid and Medicare facilities also may not be taking

full advantage of negotiated federal drug prices. There are a

number of federally regulated drug purchase programs that have

been proven to save state programs approximately 25-30

percent. Illinois retirees could see dramatic savings on their

drug programs by implementing better negotiated drug discount

programs.

-- Greater overall control of pharmacy benefit plans also would

lower the cost of drug programs. By better-managing

formularies, utilizing generics where appropriate and

providing enhanced patient education, the state could save

millions in drug costs. If a state is currently spending $300+

million on drug programs, it could reduce that spend by 20-40

percent simply by working with an administrator that lets the

state have total control over its benefits.

About HealthTrans

Greenwood Village, Colo.-based HealthTrans empowers Managed Care Organizations (MCOs), retail pharmacy groups, and specialty companies with tools to more efficiently manage pharmacy benefit programs. The HealthTrans' solutions optimize benefits administration, providing web-enabled applications, coupled with clinical expertise and services, to manage the onerous tasks of pharmacy network administration, claims processing, financial reporting, as well as manufacturers' rebate processing and reporting. Unlike PBMs, HealthTrans optimizes all aspects of pharmacy benefit administration and focuses on full-disclosure best practices, giving benefit payers strategic business advantages, such as lower pharmacy costs and increased flexibility to respond to changing market requirements. HealthTrans' services complement existing medical claims and pharmacy systems, and other legacy systems. For more information about HealthTrans, please visit http://www.healthtrans.com.