Patterns of drug reimbursement shift

June 1, 1998

Pharmaceutical Representative

The number of commercially insured patients who used indemnity plans in 1997 was drastically lower than it was in 1993, according to a new report from Mountain View, CA-based strategic research firm Frost & Sullivan.

The number of commercially insured patients who used indemnity plans in 1997 was drastically lower than it was in 1993, according to a new report from Mountain View, CA-based strategic research firm Frost & Sullivan.

According to the report, one out of two commercially insured individuals used a traditional indemnity plan in 1993. By 1997, that number had changed to almost one in ten.

The strength of managed care organizations, such as Aetna/US Healthcare, CIGNA Corp. and Kaiser was the primary factor behind the shift.

Although government and traditional indemnity insurers remain important sources of drug reimbursement, managed care organizations accounted for $24.9 billion of the $48.1 billion reimbursed last year.

"The most important issue facing the pharmaceutical manufacturers is ensuring that their drug is accepted by managed care organizations," said Marina Ulmishek, medical analyst at Frost & Sullivan. "It's imperative that competitors understand the process of how managed care organizations make drug-related decisions and what factors have the greatest influence over these decisions."

Also noted in the report were the climbing populations of uninsured, elderly and disabled patients.

Many of these individuals are currently covered by federal Medicare and Medicaid programs, but how those programs actually work - and how they reimburse for prescription products - may undergo a transformation as the number and needs of insured patients grow.

Ulmishek said: "As out-of-pocket payments continue to fall, companies must anticipate how different sources of reimbursement will influence their markets." PR

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