Tuesday, March 27, 2012

Narcotic Subsidization: Deadly Price Illusions

In the current U.S. health care system, the government and insurance companies subsidize the black market for narcotics (for more on this, please read: http://bit.ly/wlrjEI).  By setting prices for narcotic pills far below the market rate between individuals, they subsidize the street narcotic industry and set up a false price paradigm that affects the price perceptions in medicine.  This pricing malady is incorporated into insurance prior authorization (PA) algorithms and consistently distorts clinical care delivered to patients.

In an effort to reduce costs, government payers and insurers use a process of PAs to control the behavior of patients and physicians.  It is basically behavior change mediated by discouragement (a form of hassle-based rationing).  If the barriers and criteria to meet the PA are too high, physicians and patients get discouraged and often decide to pursue a pathway with less resistance.  The problem is that many PAs incorporate subsidized narcotic price information which makes the use of narcotics seem like the most cost-effective option.   Vicodin is preferred by insurance companies, and they will use a PA to limit the use of medications that seem to be more expensive.
An example of this distorted PA process can be found when comparing Vicodin to Celebrex (an effective anti-inflammatory medication).  Which is cheaper?  It depends on what prices are used: the market rate or the subsidized rate.  Vicodin’s street price is $600 for 120 pills on the street.  The cash price for a month’s supply of Celebrex 200mg daily on www.Healthwarehouse.com is $143.00 (http://bit.ly/GNVIzJ).  That makes Vicodin more expensive (4x more expensive!) than brand anti-inflammatory medication when using its nonsubsidized price.  Which medicine gets the hassle of a PA?  Why Celebrex of course!

Suboxone (a partial opioid agonist used for opioid addiction treatment) costs $426 per month for 60 films at www.Healthwarehouse.com (http://bit.ly/GO07Bj).  Again, Suboxone is cheaper than 120 tablets of Vicodin ($600) once the subsidy is stripped away.  Cash MRI prices in Michigan are as low as $400 making Vicodin more expensive than MRI’s.   Physical therapy visits are also cheaper than Vicodin therapy.   Actually, most things in outpatient medicine are cheaper than Vicodin.  So why do so many useful medications and therapies have PAs while Vicodin gets easily paid without any hassle?  In classic “garbage in, garbage out” fashion, if subsidized price data for Vicodin is used, it will always appear cheaper than other options even though it is actually more expensive.

These structural price defects in clinical care pathways create the unintended consequence of pushing patients and physicians down the dangerous pathway of using narcotics more frequently than needed.  With more narcotic prescriptions come higher amounts of black market narcotics, more overdoses, and more cost to the health care system as addiction disorders rise.  In 2009, 31,758 patients died in the US due to unintentional poisoning (CDC: http://1.usa.gov/gUcZVx).  How many more people will have to die before the subsidization of narcotics ends?

What can be done to stop the flooding of our streets with prescription narcotics?  The next post on this subject will focus on concrete solutions.  The first step:  stop the massive subsidization of narcotics.