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How Quiet Moves Sway Billions in Drug Spending

Discussion in 'Fred's House of Pancakes' started by MarinJohn, Oct 6, 2006.

  1. MarinJohn

    MarinJohn Senior Member

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    For years, a little-known unit of publishing giant Hearst Corp. called First DataBank has played a powerful role in determining what Americans pay for prescription drugs. First DataBank doesn't buy or sell drugs -- it publishes lists of drug prices. Health plans and state Medicaid programs use those prices as a benchmark in determining what they pay pharmacies.

    If the benchmark goes up, so do costs for these payers. That's what happened in 2002, when First DataBank suddenly made broad revisions to its key published list. The new prices had the effect of fattening the profits of pharmacies, out of the view of patients and companies who pay for the soaring cost of health care.


    A 2002 email by a manager at one of the nation's largest drug wholesalers, San Francisco-based McKesson Corp., describes how pharmacies would be able to more than double their profit for dispensing the cholesterol drug Lipitor and adds, "that is awesome!!"

    Now a tentative legal settlement, reached quietly this week in a Boston court, could reduce annual U.S. drug costs by billions of dollars. An economist hired by the plaintiffs puts the savings in 2007 alone at $4 billion. The actual amount could be lower if pharmacies negotiate higher fees to make up for what they are losing.

    In the settlement, which is awaiting approval by a judge, First DataBank, of San Bruno, Calif., agrees to reduce many of the prices on its published list by five percentage points. It denies any wrongdoing and isn't paying any damages to the plaintiffs.


    http://online.wsj.com/article/SB1160092540...e_whats_news_us
     
  2. jared2

    jared2 New Member

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