Zantac Maker Battles State’s Plan to Restrict Medi-Cal Use : Health care: Officials want to limit the widely prescribed anti-ulcer drug for indigents because of its relatively high cost.
The manufacturer of the popular anti-ulcer medicine Zantac is fighting a state Department of Health Services proposal to restrict the drug’s availability for indigent Medi-Cal patients because of its relatively high cost.
Executives at Glaxo, a North Carolina pharmaceutical company, say California’s action may undermine the health of Medi-Cal patients and interferes with doctor-patient relationships.
But underlying the company’s complaint is what it sees as a disturbing trend for drug makers, who are already facing intense pressure from insurers and employers to rein in prices.
“We think this could be the tip of the iceberg of what might come in the future,” said Craig Q. Fitzgerald, Glaxo’s vice president of professional and state government affairs. “With health care reform looming, we wonder what precedent this might set for health care policy at the state or federal level.”
Michael Neff, chief of Medi-Cal’s contracting unit and head of its pharmacy program, concedes that the state is pursuing a new policy. Neff said the state hopes to exert the same type of influence over physician prescribing habits that many private health insurers already do to reduce medical costs.
“It’s something that’s happening in HMOs all the time; this is how the private sector operates,” Neff said. “The manufacturers are concerned that the public sector will start adopting some of the practices of the private sector.”
Health Services officials say the plan to remove Zantac from a list of drugs that physicians can prescribe without prior approval will save the state money and eliminate duplication.
“It’s an expensive drug and there are other as-effective therapies available,” Neff said. “We don’t need to make every single drug available when the other stuff works just as well.”
The agency’s decision on Zantac “is the first of many . . . to try to gain control over drug expenditures,” Neff said. “We’re spending $1.2 billion a year on drugs, and it’s going up at about 20% per year,” largely due to the state’s growing indigent population.
Neff said Zantac--at $2.52 per day--is the most expensive of four anti-ulcer drugs available to Medi-Cal patients. The others drugs range from $1.82 to $2.26 per day, based on what the state reimburses pharmacies, he said.
Fitzgerald said Glaxo has offered to negotiate Zantac price reductions with the state. It has also sued the Department of Health Services in District Court to block the removal of Zantac from the Medi-Cal list. As a result of the lawsuit, the health department has set a hearing for Nov. 4 in Sacramento to determine the public health impact of removing Zantac from the list.
Fitzgerald warns that patients may suffer from the state’s effort to “micro-manage” prescription medications.
“You can’t treat medicine like paper clips,” he said. “Paper clips you can substitute, but people have different needs.”
Glaxo maintains that the other anti-ulcer drugs are not as effective as Zantac for certain patients.
“If they are just as effective,” Fitzgerald said, “why is Zantac so widely prescribed?”
Zantac is Glaxo’s No. 1-selling product and the best-selling prescription drug ever, generating worldwide sales of $3.5 billion last year.
The state wouldn’t ban the drug entirely from the Medi-Cal list, but would require physicians to explain the medical necessity of the drug in each individual case.
Zantac is used by about 70,000 Medi-Cal patients and has 40% of the program’s market for ulcer medication.
Neff said Zantac’s share of the Medi-Cal market “would be significantly affected if the drug were put on prior approval.”
He said the health department has also recommended deleting other drugs from the Medi-Cal list, though none as widely prescribed as Zantac. The agency will review drugs in other medical treatment categories in the future.
