Payers vary in reactions to Prilosec OTC, but expect savings from switches

Drug Cost Management Report, Sept 26, 2003

Prilosec OTC by now has arrived on many drugstore shelves, and payers hope to reap long-awaited savings from the event. The ulcer drug category, primarily driven by proton pump inhibitors (PPIs) such as Prilosec, represents almost 9% of total drug costs for PBMs, according to AIS's survey data.

Experts say over-the-counter (OTC) availability of a PPI offers savings for payers. But don't expect the launch of the drug to cause as marked a change as did the 2002 OTC switch of Schering-Plough's Claritin (DCMR 12/02, p. 10), after which many payers discontinued coverage for the nonsedating antihistamine category altogether.

That's partly because of AstraZeneca's success in switching consumers to its newer PPI, Nexium. "What we've seen in other therapeutic classes when new agents become available is that there's a perception that the new product will be better," says Kendra Lofgren, R.Ph., executive vice president of clinical pharmacy services at AELRx, Inc., a pharmacy benefit consulting firm. She notes that AstraZeneca's success with Nexium, which the company claims had worldwide sales of $1.98 billion in 2002, will reduce the cost-savings potential of the Prilosec OTC switch. "Once patients are on a prescription PPI treatment, it has such a profound 'cure' effect on them that it's not going to be easy to get them off that prescription," she says.

Also, the indications for Prilosec OTC, which comes in 20 mg doses and has different inactive ingredients than does generic or branded Prilosec, are different than those of the generic and branded versions, Lofgren points out. Prescription versions of Prilosec are indicated for heartburn treatment as well as heartburn prevention as a sustained therapy, whereas the OTC version is indicated only for adults aged 18 or older to treat frequent heartburn that occurs twice or more a week, not to exceed 14 days' usage and not to be repeated more than once every four months.

"Or as directed by a physician," which can increase the applications of the drug, adds Kathleen Shoemaker, Pharm.D., clinical pharmacy manager at M-Plan. With the availability of Prilosec OTC, the 170,000-member Indiana health plan is discontinuing coverage for any Prilosec product. The insurer will keep its prior-authorization process in place for the category, with a preferred branded PPI of Prevacid, according to Shoemaker.

"We evaluated not covering the category once Prilosec went OTC, but there will be a continuing need for the prescription products" such as for implant patients, she notes. "But for the occasional heartburn people, who make up about 80% of our costs, they'll easily be taken care of with the OTC products," and ultimately will pay less compared with most members' preferred drug copay, she maintains. Shoemaker adds that the health plan also might consider coverage for OTC drugs, a still-rare departure from standard pharmacy benefit design.

Formulary Adjustments May Help

Some payers are making dosage-specific formulary adjustments in the PPI category with the availability of Prilosec OTC. For instance, Anthem, Inc., which manages prescription benefits through its subsidiary Anthem Prescription Management, will stop covering 10 and 20 mg doses of prescription Prilosec, according to John Shumacher, the subsidiary's executive director of clinical programs. Generic Prilosec, omeprazole, will be a first-tier drug in other dosages on Anthem's formulary. Wyeth Pharmaceuticals' Protonix is on the second tier, and other branded PPIs will carry a third-tier copay.

Still other payers, such as WellPoint Health Networks, Inc., aren't making drastic formulary changes but are promoting the adoption of Prilosec OTC to members, "Our coupon program should help transition many members from Rx to OTC," says Rob Seidman, Pharm.D., WellPoint's chief pharmacy officer. He adds that "this will be a gradual change," however, and predicts that "it will take some time for Prilosec OTC to consume prescriptions."

Lofgren says that perhaps greater cost-savings potential for the PPI category could come from more manufacturers producing generic omeprazole, which has remained nearly as pricey as branded Prilosec because of production limitations. That view is shared by George Van Antwerp, senior director of trend management at Express Scripts, who says the PBM told its clients "to expect some minor savings associated with Prilosec OTC--but the true cost savings in the PPIs will come when you have more manufacturers of generic omeprazole." However, "you're not going to find a generic at 80 cents a dose," Lofgren contends.

Call Lofgren at (360) 546-3644, M-Plan's Tammy Hull at (317) 571-5314, Anthem Prescription Management's Sharon Larrimer at (513) 336-2419 or WellPoint's Lisa Mee-Stephenson at (805) 557-6790.