Insurers Pay Doctors To Push Generic Drugs


Two New York health insurance companies are rewarding doctors with cash incentives for prescribing generic drugs.

The companies, Excellus Blue Cross Blue Shield of Rochester, N.Y., and Independent Health, based in Buffalo, are offering higher compensation to doctors who increase their rates of prescribing generics instead of more expensive brand-name medications. The companies say the programs were designed to control the escalating cost of pharmaceuticals and to pass on savings to the patients.

Doctors say that generics sometimes can be safely substituted for brand-name drugs. But some of them also are skeptical of the payments from insurers, saying they could raise ethical questions and even jeopardize the safety of some patients.

“By offering incentives to prescribe generics, there’s at least the appearance for an ethical conflict, steering toward the cheaper medication,” an Albany cardiologist, Dr. Mikhail Torosoff, said. “That’s upsetting.”

Insurers defend the practice as a way to rein in costs.

“What we’re focusing on here is how do we make health insurance more affordable, and one way of doing that is to promote more cost-effective health care treatments,” the senior vice president of the New York Health Plan Association, Leslie Moran, said.

She dismissed the notion that physicians are being coerced. “Everyone likes to talk about the availability and accessibility of health care,” she said, “but you can’t expand access if its not affordable. A key component of affordability are costs like prescription costs.”

Similar programs elsewhere in the country have come under fire. In Michigan, lawmakers and physician groups opposed an incentive program launched by a subsidiary of Blue Cross Blue Shield of Michigan, Blue Care Network, which ran a three-month program that paid doctors $100 for each patient who switched to a generic cholesterol-lowering medication from a brand-name drug.

In response to the backlash, the American Medical Association posted a position statement on its Web site that reads: “A physician accepting payment from an insurer in exchange for moving a patient from a brand name to a generic drug could potentially face both criminal and civil liability exposure under the federal antikickback statute.”

Generic drugs that are approved by the Food and Drug Administration must be the “bioequivalent” to their brand-name counterparts, meaning their active ingredients must be the same, drug experts said.

But some doctors said they are wary about switching the drug regimens of patients who are doing well. Prescribing a different drug within the same class could harm a patient, some said.

“The more serious the drug, the more concerned I am about forced substitution,” an associate professor at NYU School of Medicine, Dr. Marc Siegel, said.

In New York, the incentive programs offer doctors increased reimbursement if they change their prescribing habits. Under Independent Health’s program, doctors who increase the rate at which they prescribe generics receive a cash reward based on their patient base. A physician who increases their rate to 70% from 40%, for example, would receive fifty cents each month for each Independent Health member whom they treat.

Under the Excellus plan, doctors who increase their ratio of generic drug prescriptions to brand-name ones by 5% receive higher reimbursement for patient office visits. The company declined to provide further details on how much doctors are paid, citing proprietary reasons, but officials said the overall goal of the program is to encourage patients and physicians to consider generics.

Officials from Independent Health said their program seeks to educate patients, but they are also rewarding doctors for doing the “extra work” associated with discussing generics with their patients. “Like it or not, physicians are in a business,” the company’s vice president of pharmacy services, John Rodgers, said.

Other health insurance companies denied plans to launch similar programs. But doctors said a number of companies issue “report cards” that include a tally of the prescriptions that physicians write.

At least one company, Cigna, said it issues quarterly reports to physicians as part of a “Save with Generics” program, which seeks to promote the use of generics by informing patients and doctors how much money they could have saved by avoiding costly brand-name drugs.

“The only purpose is to inform physicians of opportunities to help their patients save money on their prescription medications,” the director of public relations for Cigna, Lindsay Shearer, wrote in an e-mail message.

Physicians said the letters and faxes they routinely receive from insurers, which inform them when they could have saved their patients money, amount to unwanted pressure to choose generics. Other tactics used by insurance companies to reduce costs include requiring patients to obtain prior authorization for more expensive drugs, drawing up “preferred” lists of medications, and placing medicines in tiers based on cost and requiring patients to pay more for certain drugs.

“This clearly puts the burden on the doctors to ‘fall in line’ with the prescribing wishes of the companies,” a Manhattan cardiologist, Dr. Adam Deutsch, said.

Dr. Deutsch said most of the time there is no medical reason why a generic cannot be substituted for a brand-name drug. “In all honesty, there’s like seven cholesterol drugs on the market. Does it matter? No, it doesn’t,” he said. “The key is interference. Why is this multi-billion dollar company writing me a letter about my relationship with my patient? To me, it’s an ethical issue, not a clinical one.”

In recent years, doctors have been scrutinized for accepting drug samples and free lunches from pharmaceutical companies. Both practices are common, and doctors interviewed for this article said they have accepted such gifts. But they distinguished accepting drug samples and lunches from cash incentives by describing the cash incentives as bribes.

Dr. Torosoff, the Albany cardiologist, said he has been paid to speak at events sponsored by drug companies. He declined to say how much he was compensated, but he said the practice is different from accepting a cash incentive from an insurance company because as a lecturer he is performing a service and because he only lectures on FDA-approved drugs and their intended uses.

Dr. Torosoff said pharmaceutical companies have also funded research at the hospital where he works, Albany Medical Center, but he defended such grants by saying he did not personally benefit from them. Regarding the free lunches he has accepted from drug companies in the past, he described the meals as an “advertising” opportunity for pharmaceutical companies. “It’s laughable to think I will prescribe something that is harmful to my patients because I got a five-dollar lunch,” he said.

Officials from the state’s medical society said their position is clear regarding financial incentives given to doctors who prescribe generics: A doctor’s primary focus should be on their patient’s welfare. “I don’t criticize the insurance companies for wanting to contain costs, that’s a laudable goal,” the executive vice president of the Medical Society of the State of New York, Rick Abrams, said. But he said when conversion is done solely for purposes of cost and not quality, “then we have a severe problem with a program like that.”

At least one New York lawmaker, a state senator of the Bronx, Jeff Klein, is proposing legislation that would require all medically necessary prescriptions to be covered by insurance companies. In May, Mr. Klein’s office published a report that identified widespread restrictions placed on drug coverage by 19 health maintenance organizations in New York. Of the drugs surveyed, Lipitor, which is used to lower cholesterol, and Singulair, a medication for asthmatics, were the most restricted. Eight companies restricted Lipitor’s use, and 11 companies limited Singulair’s use.

Mr. Klein said restrictions do not benefit consumers, particularly those who take “single-source” medications, or drugs without a generic equivalent. “They’re making it difficult for people to get the drugs they need,” Mr. Klein said.

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