All HMO consumers need to know about this interesting new study posted
online today...it seems that HMO cost-shifting might have more impact
on consumers than
originally thought.  The link takes you to the release and a
link there to the study itself...

http://www.centerforindividualfreedom.org/legislative/otc.htm

STUDY: OTC Switch Windfall for Insurers:
Consumers to Pay Dearly for OTC Convenience

Alexandria, Va.: The direct costs to patients for allergy
medications Allegra and Zyrtec will rise precipitously if the Food and
Drug Administration (FDA) approves the change from prescription to
over-the-counter status requested by WellPoint Health Networks, a
major managed healthcare company. Health insurers would be granted an
annual windfall that could exceed three-quarters of a billion dollars
from the change.

These are the findings of a new study conducted by one of the
nation's leading health care economists, Dr. Frank R.
Lichtenberg. Dr. Lichtenberg is the Courtney C. Brown Professor of
Business at the Columbia University Graduate School of Business and a
Research Associate of the National Bureau of Economic Research.

Based on separate sets of calculations using the two most reliable
data bases for drug use and cost statistics (according to year 2000
data), the major findings of Dr. Lichtenberg's study are:

Allegra

**  Americans reported that they obtained between 13.6 million and
17.6 million Allegra prescriptions a year.

**  Insurance companies will save between $427.5 million and $558
million a year.

**  The direct cost to consumers will be increased by between $38.8
million and $149.5 million, depending on over-the-counter pricing.

Zyrtec

**  Americans reported that they obtained between 7.3 million and 9.5
million Zyrtec prescriptions a year.

**  Insurance companies will save between $219.3 million and $283
million a year.

**  The direct cost to consumers will be increased by between $9.8
million and $75 million, depending on over-the-counter pricing.

While it is common for the actual price of drugs to decrease
significantly upon over-the-counter release, it is the shift of
payment from insurance companies (which, for Allegra and Zyrtec, have
covered between 75 and 80 percent of prescription costs) to consumers
that produces the increased cost impact on those who need the
medications.

Recent news emphasizes projected insurer savings due to
over-the-counter switching in the allergy drug category. According to
a March 24, 2003, Centers for Medicare and Medicaid Services (CMS)
report on managed care, "Medco Health Solutions [a major pharmacy
benefits manager] alone expects to achieve $500 million in
savings in 2003 [on non-sedating antihistamines]."

Dr. Lichtenberg's complete study, including methodology and
calculation, is attached. While the study is straightforward and
transparent, Dr. Lichtenberg is available to discuss it, subject to
his academic and research schedule. His bio is also attached.

The study, completed in June 2003, was commissioned by the Center for
Individual Freedom Foundation.

###

The Center for Individual Freedom Foundation is a nonpartisan
constitutional advocacy group that fights to protect individual
freedoms and rights in the legal, legislative and educational arenas.

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[Posted July 9, 2003]