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Tuesday, September 1, 2009

Drug Managers Should Keep Their Health

By The Wall Street Journal

They are the arteries of the prescription-drug network. Pharmacy-benefit managers earn billions pumping orders between drugstores, manufacturers, Michigan health insurance providers and Michigan Medicare. Can competition undermine their vitality?

With the Senate pressing benefit managers for more transparency, many fear that Michigan health insurance and prescription coverage could soon be squeezed by the private sector.

Just as important, benefit managers have scale that ensures they are able to manage prices. With control of a price list, benefit managers can save health-care providers money by pushing manufacturers for rebates.

Benefit managers also can tweak price lists if rebates don't justify a drug's expense. The cholesterol drug Lipitor was removed from a list of preferred treatments in 2006, prompting the Lipitor retail price to surge. But when patients switched to the generic substitute Zocor, treatment costs fell by hundreds of millions of dollars.