2005_APhA-ASPL_Podium_Presentation 2

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Exploratory Study on Ethical Issues Exploratory Study on Ethical Issues involving involving

Pharmacy Benefit Managers (PBMs): Pharmacy Benefit Managers (PBMs): An Agency Theory PerspectiveAn Agency Theory Perspective

Lt. Col. David A. Gettman, R.Ph., M.B.A., Lt. Col. David A. Gettman, R.Ph., M.B.A., Ph.D.Ph.D.● ● Associate Chief, Pharmacy Element, Associate Chief, Pharmacy Element, Patrick Air Force Base, FL Patrick Air Force Base, FL ● ● Associate Professor, Pharmacy Practice & Associate Professor, Pharmacy Practice & Administration, Lloyd L. Gregory School of Administration, Lloyd L. Gregory School of Pharmacy, West Palm Beach, FLPharmacy, West Palm Beach, FL

American Society for Pharmacy LawAmerican Society for Pharmacy LawContributed Papers Podium SessionContributed Papers Podium SessionOrange County Convention Center, Orlando, Orange County Convention Center, Orlando, FloridaFloridaRoom 310A/BRoom 310A/BSaturday, April 2, 2005, 1:30 pm – 4:30 pmSaturday, April 2, 2005, 1:30 pm – 4:30 pm

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DisclaimerDisclaimer: : The views expressed in this The views expressed in this presentation do not necessarily presentation do not necessarily represent those of pharmacists represent those of pharmacists either in the U. S. Air Force in either in the U. S. Air Force in general or those assigned to general or those assigned to Patrick Air Force Base, Florida Patrick Air Force Base, Florida in particular.in particular.

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Additional Disclaimer: The views expressed in this presentation also do not necessarily represent those of the faculty/students at the Lloyd L. Gregory School of Pharmacy, Palm Beach Atlantic University, West Palm Beach, FL.

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Concern for man himself and his fate must Concern for man himself and his fate must always form the chief interest of all technical always form the chief interest of all technical endeavors … concern for the great unsolved endeavors … concern for the great unsolved problems of … the problems of … the distribution of goodsdistribution of goods … in … in order that the creations of our mind shall be a order that the creations of our mind shall be a blessing and not a curse to mankind. blessing and not a curse to mankind.

-- Albert Einstein (1875-1955), -- Albert Einstein (1875-1955), German-born American German-born American theoretical physicist, theoretical physicist, philosopherphilosopher

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PROBLEM STATMENTPROBLEM STATMENT Pharmacy Benefit Managers (PBMs) already administer prescription

drug benefits for nearly everyone with employer coverage and for many Medicaid recipients.

Unresolved ‘transparency’ issues have plagued PBMs for several years -- state governments and professional associations are ‘clamoring’ for accountability and regulation of their activities.

Despite these unresolved issues, the federal government is embarking on a vast ‘experiment’ with the new Medicare Part D and is placing responsibility for implementation squarely on the PBM industry.

The PBM industry ‘appears’ to have both the capacity and the technical capability to deliver the benefits. However, there may even be more daunting issues for those PBMs choosing to participate (and ultimately for those not choosing to participate) in the new Medicare Part D.

Most of these issues might be more critically examined using agency theory so as to elucidate ethical and performance considerations.

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METHODOLOGYMETHODOLOGY Second-year Pharm.D. students utilized problem-based Second-year Pharm.D. students utilized problem-based

learning cases to develop eighteen clinical/research ethical learning cases to develop eighteen clinical/research ethical competencies: competencies:

One of these cases involved One of these cases involved truth-tellingtruth-telling Another case involved Another case involved distributive justicedistributive justice Note: agency theory was utilized to elucidate some problems Note: agency theory was utilized to elucidate some problems

inherent in these two cases.inherent in these two cases. The next year, the same Pharm.D. students discussed The next year, the same Pharm.D. students discussed

some of the more recent issues facing PBMs by state some of the more recent issues facing PBMs by state governments and the insurance industry during a visit with governments and the insurance industry during a visit with the Executive Director of the Florida Pharmacy the Executive Director of the Florida Pharmacy Association.Association.

Focus group of 12 of these Pharm.D. students exchanged Focus group of 12 of these Pharm.D. students exchanged ideas and feelings on ideas and feelings on how agency theory applies to PBMs how agency theory applies to PBMs nownow and and how performance and ethical considerations need how performance and ethical considerations need to be made in the formulation of policy.to be made in the formulation of policy.

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Overview of PresentationOverview of Presentation

History of PBMsHistory of PBMs PromotersPromoters OpponentsOpponents

Agency TheoryAgency Theory Performance Performance

ConsiderationsConsiderations Ethical Ethical

ConsiderationsConsiderations

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HistoryHistory of PBMs of PBMs PBMs came into being four decades ago, when PBMs came into being four decades ago, when

employment-based health benefits were gaining wide employment-based health benefits were gaining wide adoption. They trace their roots to four sources:adoption. They trace their roots to four sources: Prescription drug cards.Prescription drug cards. Mail-service pharmacies.Mail-service pharmacies. Third-party drug claims administrators.Third-party drug claims administrators. Health insurer pharmacy benefit departmentsHealth insurer pharmacy benefit departments

Not withstanding their different origins, today’s PBMs Not withstanding their different origins, today’s PBMs have all developed comparable “full-service” capabilities. have all developed comparable “full-service” capabilities. The largest three PBMsThe largest three PBMs will take in combined revenues will take in combined revenues of perhaps $80 billion in 2004, which suggests that they of perhaps $80 billion in 2004, which suggests that they manage manage more than one-thirdmore than one-third of the estimated $208 of the estimated $208 billion in billion in U.S. drug spendingU.S. drug spending..*

* Estimated based upon April–June 2004 revenues as reported in corporate Form 10-Q reports filed with the * Estimated based upon April–June 2004 revenues as reported in corporate Form 10-Q reports filed with the U.S. Securities and Exchange Commission (SEC) in July or August 2004.U.S. Securities and Exchange Commission (SEC) in July or August 2004.

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After several acquisitions by drug companies of After several acquisitions by drug companies of leading PBMs, the Federal Trade Commission leading PBMs, the Federal Trade Commission (FTC) ruled that these PBMs had to erect so-(FTC) ruled that these PBMs had to erect so-called firewalls to prevent undue influence by called firewalls to prevent undue influence by their drug company parents. their drug company parents.

Most have sold off their PBMs at prices well Most have sold off their PBMs at prices well below what the drug companies had paid.[Merck below what the drug companies had paid.[Merck clung to Medco and ended up settling with twenty clung to Medco and ended up settling with twenty state attorneys general and the U.S. Department state attorneys general and the U.S. Department of Justice (DOJ).*of Justice (DOJ).*]

*Freudenheim, M. *Freudenheim, M. Medco to Pay $29.3 Million to Settle Claims of Drug SwitchingMedco to Pay $29.3 Million to Settle Claims of Drug Switching . . New York New York TimesTimes, April 27, 2004., April 27, 2004.

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Robert F. Atlas. The Role Of PBMs In Implementing The Medicare Prescription Drug Benefit. HEALTH AFFAIRS. October 28, 2004. W4-506.

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PBMs typically offer the following PBMs typically offer the following capabilities, with different PBMs capabilities, with different PBMs excelling in different areas:excelling in different areas: Pharmacy networks.Pharmacy networks. Mail service.Mail service. Claims administration.Claims administration. Formulary management.Formulary management. Manufacturer price negotiation.Manufacturer price negotiation. Utilization review.Utilization review. Medication therapy managementMedication therapy management.. ee-prescribing.-prescribing.

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The effectiveness of PBMs was examined by four The effectiveness of PBMs was examined by four studies during the ‘run-up’ to the Medicare benefit. studies during the ‘run-up’ to the Medicare benefit. The prevailing ‘tenor’ of the findings was that The prevailing ‘tenor’ of the findings was that PBMs are capable of managing prescription drug PBMs are capable of managing prescription drug benefits cost-effectively. benefits cost-effectively.

However, none of the analyses explored PBMs’ However, none of the analyses explored PBMs’ impact on clinical qualityimpact on clinical quality..1. 1. Pharmacy Benefit Management Institute, The 2000 Pharmacy Benefit Pharmacy Benefit Management Institute, The 2000 Pharmacy Benefit

Manager Customer Satisfaction Survey Report (Tempe, Ariz.: PBMI, Manager Customer Satisfaction Survey Report (Tempe, Ariz.: PBMI, October 2000).October 2000).

2. 2. U.S. Congressional Budget Office, Issues in Designing a Prescription Drug U.S. Congressional Budget Office, Issues in Designing a Prescription Drug Benefit for Medicare (Washington: CBO, October 2002).Benefit for Medicare (Washington: CBO, October 2002).

3. 3. U.S. Government Accountability Office, Federal Employee Health Benefits U.S. Government Accountability Office, Federal Employee Health Benefits Program, Effects of Using Pharmacy Benefits Managers on Health Plans, Program, Effects of Using Pharmacy Benefits Managers on Health Plans, Enrollees, and Pharmacies, Pub. no. GAO-03-196 (Washington: GAO, Enrollees, and Pharmacies, Pub. no. GAO-03-196 (Washington: GAO, 2003).2003).

4. 4. PricewaterhouseCoopers, The Value of Pharmacy Benefit Management PricewaterhouseCoopers, The Value of Pharmacy Benefit Management and the National Cost Impact of Proposed PBM Legislation, July 2004.and the National Cost Impact of Proposed PBM Legislation, July 2004.

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The third (‘GAO’) study determined that PBMs The third (‘GAO’) study determined that PBMs saved money in three ways: saved money in three ways: (1) pharmacy (1) pharmacy price discountsprice discounts, ranging from 18 percent , ranging from 18 percent below cash below cash

priceprice for for brand-name drugs purchased at retail pharmaciesbrand-name drugs purchased at retail pharmacies to 53 to 53 percent for percent for generic drugs purchased through mail-service generic drugs purchased through mail-service pharmaciespharmacies; worth ; worth 18-53 percent18-53 percent

(2) (2) rebates from pharmaceutical manufacturersrebates from pharmaceutical manufacturers, worth , worth 3–9 percent3–9 percent(3) (3) cost/care management techniquescost/care management techniques, valued at , valued at 1–9 percent1–9 percent..

In 2003 citizens of Canada, the United Kingdom, and In 2003 citizens of Canada, the United Kingdom, and France paid an average of France paid an average of 34–59 percent34–59 percent of what of what Americans paid for a similar market basket of Americans paid for a similar market basket of pharmaceuticals.pharmaceuticals.*

If the Medicare program were to pay comparable prices If the Medicare program were to pay comparable prices for pharmaceuticals, it would be possible to eliminate the for pharmaceuticals, it would be possible to eliminate the “doughnut hole”“doughnut hole” in its prescription drug benefit and keep in its prescription drug benefit and keep Medicare drug spending within the overall limits Medicare drug spending within the overall limits established by Congress.established by Congress.

*Anderson GF, Shea DG, Hussey PS, Salomeh Keyhani S and Zephyrin L. Anderson GF, Shea DG, Hussey PS, Salomeh Keyhani S and Zephyrin L. Doughnut Doughnut Holes And Price ControlsHoles And Price Controls. . Health AffairsHealth Affairs. W4-396. July 21, 2004.. W4-396. July 21, 2004.

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Spending on prescription drugs in the United States rose Spending on prescription drugs in the United States rose at at double-digit ratesdouble-digit rates throughout the past decade, even as throughout the past decade, even as the rate of cost increases in the rate of cost increases in other medical services fell to other medical services fell to near the overall rate of inflation.near the overall rate of inflation.1

In 2000 pharmaceutical spending increased 19 percentIn 2000 pharmaceutical spending increased 19 percent. . Consequently, the percentage of national health care Consequently, the percentage of national health care expenditures allocated to prescription drugs rose from expenditures allocated to prescription drugs rose from about about 5.4 percent5.4 percent in 1990 to in 1990 to 8.2 percent8.2 percent in 1999, in 1999, representing more than $100 billion per year.representing more than $100 billion per year.2

This trend is expected to continue into the future, This trend is expected to continue into the future, largelylargely because of the development and increased use of new drugs because of the development and increased use of new drugs and the introduction of pharmacogenomics, rather than and the introduction of pharmacogenomics, rather than because of increased prices for existing drugs.because of increased prices for existing drugs.3

1. Employee Benefit Research Institute, 1. Employee Benefit Research Institute, Prescription Drug Costs Up Sharply—but Still Small OverallPrescription Drug Costs Up Sharply—but Still Small Overall, Press Release 470 (Washington: EBRI,1999); , Press Release 470 (Washington: EBRI,1999); and Consumer Price Index—All Urban Consumers (Washington: U.S.Department of Commerce, Bureau of Labor Statistics, 2000).and Consumer Price Index—All Urban Consumers (Washington: U.S.Department of Commerce, Bureau of Labor Statistics, 2000).

2. Smith S, et al., “The Next Decade of Health Spending: A New Outlook,” Health Affairs (July/Aug 1999): 86–95.2. Smith S, et al., “The Next Decade of Health Spending: A New Outlook,” Health Affairs (July/Aug 1999): 86–95.3. Hughes EFX “A Perspective on the Future of American Health Care: The Increasingly Central Role of Pharmacy,” Proceedings of Pharmacy 3. Hughes EFX “A Perspective on the Future of American Health Care: The Increasingly Central Role of Pharmacy,” Proceedings of Pharmacy

Benefit Management: Balancing Clinical and Financial Objectives (HAP/AFHS Conference, Dearborn, Michigan, 13 April 1999), 1–3.Benefit Management: Balancing Clinical and Financial Objectives (HAP/AFHS Conference, Dearborn, Michigan, 13 April 1999), 1–3.

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OppositionOpposition to PBMs to PBMs The National Community Pharmacists Association The National Community Pharmacists Association

(NCPA) has sued PBMs and declared that “counteracting (NCPA) has sued PBMs and declared that “counteracting PBMs is our PBMs is our number 1number 1 priority.” priority.”

Retail pharmacies assert that PBMs profit at their expense Retail pharmacies assert that PBMs profit at their expense by paying too little for both dispensing and ingredient costs.by paying too little for both dispensing and ingredient costs.

Retailers also complain that PBMs steer prescription volume Retailers also complain that PBMs steer prescription volume to mail-service pharmacies - which the PBMs themselves to mail-service pharmacies - which the PBMs themselves usually operate - thus depriving them of business. usually operate - thus depriving them of business.

In particular, independent pharmacies are opposed because: In particular, independent pharmacies are opposed because: • they lack the wholesale buying power of big drugstore chainsthey lack the wholesale buying power of big drugstore chains• they depend more heavily than the chains do on sales of they depend more heavily than the chains do on sales of

prescription drugs - versus otc drugs and non-drug products.prescription drugs - versus otc drugs and non-drug products.

Frederick, J. Frederick, J. Indies Target PBMs at NCPA’s Annual ConferenceIndies Target PBMs at NCPA’s Annual Conference, , Drug Store NewsDrug Store News, November 17, , November 17, 2003.2003.

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Others opposed to PBMs include some regulators Others opposed to PBMs include some regulators and consumer advocates, who argue that and consumer advocates, who argue that manufacturer rebate money causes PBMs to favor manufacturer rebate money causes PBMs to favor more costly brand-name drugs over generics (or more costly brand-name drugs over generics (or even lower-cost, therapeutically equivalent brand-even lower-cost, therapeutically equivalent brand-name drugs). name drugs).

These arrangements are seen as posing These arrangements are seen as posing conflicts conflicts of interestof interest that escalate costs for employers and that escalate costs for employers and consumers. consumers.

In the past two years, In the past two years, thirty-two state legislaturesthirty-two state legislatures have considered laws to regulate PBMs; have considered laws to regulate PBMs; six states six states have enacted such legislationhave enacted such legislation..

These regulations would/will generally require PBMs to beThese regulations would/will generally require PBMs to be licensed licensed and to and to report data on their business practicesreport data on their business practices, including information , including information on transactions with drug companies.on transactions with drug companies.

*MacDonald, J.A. MacDonald, J.A. States Want Say on DrugsStates Want Say on Drugs, , Hartford Courant,Hartford Courant, August 22, 2004. August 22, 2004.

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PBMs also are being challenged by PBMs also are being challenged by some of their largest customers. some of their largest customers. This year a coalition of 54 employers This year a coalition of 54 employers

(~ 5.5 million beneficiaries), intends to (~ 5.5 million beneficiaries), intends to negotiate pricing directly with drug negotiate pricing directly with drug manufacturers and to use PBMs strictly manufacturers and to use PBMs strictly for administrative services.*for administrative services.*

*Davis, M. *Davis, M. Medco and its Peers Brace for Flank AttackMedco and its Peers Brace for Flank Attack.. The Street.comThe Street.com, , August 16, 2004.August 16, 2004.

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PBMs & MMAPBMs & MMA

Ways For PBMs To Ways For PBMs To Participate In Participate In MedicareMedicare Traditional behind-Traditional behind-

the-scenes support the-scenes support of plan sponsors.of plan sponsors.

Operation of Operation of government fallback government fallback plan.plan.

Risk assumption in Risk assumption in stand-alone PDPs.stand-alone PDPs.

Centers for Medicare & Medicaid Services

Prescription Drug Plan (PDP) regions

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PBMs & MMAPBMs & MMA

Major Medicare Challenges For PBMsMajor Medicare Challenges For PBMs Unpredictability.Unpredictability. Lack of control.Lack of control. Adverse selection.Adverse selection.

Other Medicare Challenges For PBMsOther Medicare Challenges For PBMs Access.Access. Formulary.Formulary. Exceptions and appeals process.Exceptions and appeals process. Financial disclosure.Financial disclosure. Marketing.Marketing. PBMs’ intentions.PBMs’ intentions.

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PBM: Policy QuestionsPBM: Policy Questions

How are PBMs to be regulated in the How are PBMs to be regulated in the future? (As operators of employee-future? (As operators of employee-based programs? Of Medicaid? Of based programs? Of Medicaid? Of Medicare Part D?)Medicare Part D?)

How are regulators and independent How are regulators and independent analysts going to assess the analysts going to assess the effectiveness of PBMs’ effectiveness of PBMs’ performance? (As operators of performance? (As operators of employee-based programs? Of employee-based programs? Of Medicaid? Of Medicare Part D?)Medicaid? Of Medicare Part D?)

How are benefits to be ethically How are benefits to be ethically distributed by PBMs if the distributed by PBMs if the experiment fails as some experts experiment fails as some experts forsee? (As operators of employee-forsee? (As operators of employee-based programs? Of Medicaid? Of based programs? Of Medicaid? Of Medicare Part D?)Medicare Part D?)

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Agency TheoryAgency Theory In an agency relationship, the principal delegates In an agency relationship, the principal delegates

decision-making authority to an agent to perform some decision-making authority to an agent to perform some action on the principal's behalf.action on the principal's behalf.11

The performance of this action results in some outcome The performance of this action results in some outcome that falls on a continuum between that falls on a continuum between perfectperfect (the action is (the action is congruent with what the principal would have done) and congruent with what the principal would have done) and imperfectimperfect (the action is not congruent with what the (the action is not congruent with what the principal would have done) agency. principal would have done) agency.

The actions taken by the agent might not result in perfect The actions taken by the agent might not result in perfect agency because of several assumptions about the agency because of several assumptions about the principals and agents.principals and agents.22

1Jensen MC and Meckling WH. Jensen MC and Meckling WH. Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Theory of the Firm: Managerial Behavior, Agency Costs and Ownership StructureStructure. . Journal of Financial EconomicsJournal of Financial Economics, 3 (4), 305-60, 1976., 3 (4), 305-60, 1976.

22Eisenhardt KM. Eisenhardt KM. Agency Theory: An Assessment and ReviewAgency Theory: An Assessment and Review, , Academy of Management ReviewAcademy of Management Review, 14 , 14 (1),57-74, 1989.(1),57-74, 1989.

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Four Assumptions Surrounding Four Assumptions Surrounding an Agency Relationship an Agency Relationship

1. Principals and agents are motivated by self-interest, which likely 1. Principals and agents are motivated by self-interest, which likely results in results in conflicting goalsconflicting goals. Agents likely attempt to accomplish a . Agents likely attempt to accomplish a task with as little effort as possible (“quality tax”).task with as little effort as possible (“quality tax”).

2. Principals and agents function in conditions of incomplete or 2. Principals and agents function in conditions of incomplete or asymmetrical informationasymmetrical information

3. Principals and agents 3. Principals and agents differ in the amount of riskdiffer in the amount of risk they are willing to they are willing to assume. For example, agents pursue their own interests instead of assume. For example, agents pursue their own interests instead of the principal's because there is too much risk associated with the the principal's because there is too much risk associated with the course of action desired by the principal. course of action desired by the principal.

4. Outcomes of agents' actions are influenced by factors in the 4. Outcomes of agents' actions are influenced by factors in the environment, such as changes in technology, the economy, or environment, such as changes in technology, the economy, or personal beliefs, which makes it personal beliefs, which makes it difficult for the principal to evaluatedifficult for the principal to evaluate whether less-than-desirable outcomes are the result of actions whether less-than-desirable outcomes are the result of actions taken by agents or external factors beyond the control of the agent. taken by agents or external factors beyond the control of the agent.

Pratt JW and Zeckhauser RJ. Pratt JW and Zeckhauser RJ. Principals and Agents: The Structure of BusinessPrincipals and Agents: The Structure of Business, Boston, MA: Harvard B,usiness School Press, 1-35, 1985. , Boston, MA: Harvard B,usiness School Press, 1-35, 1985.

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Two Types of Agency ProblemsTwo Types of Agency Problems

1. Pre-contractual (1. Pre-contractual (hidden information problemshidden information problems): ): the principal does not know whether an agent the principal does not know whether an agent possesses the ability to perform the desired possesses the ability to perform the desired actions. [actions. [RRxx=screening, trial, licensure.] =screening, trial, licensure.]

2. Post-contractual (2. Post-contractual (hidden action problemshidden action problems):agent ):agent may not perform as the principal desires may not perform as the principal desires because of conflicting goals, differences in risk because of conflicting goals, differences in risk preference, or uncertainty with factors in the preference, or uncertainty with factors in the environment. [Rx= more complete information of environment. [Rx= more complete information of factors]factors]

Pratt JW and Zeckhauser RJ. Pratt JW and Zeckhauser RJ. Principals and Agents: The Structure of BusinessPrincipals and Agents: The Structure of Business, Boston, MA: Harvard Business , Boston, MA: Harvard Business School Press, 1-35, 1985. School Press, 1-35, 1985.

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Solving Agency Problems Solving Agency Problems Two broadly defined approaches to Two broadly defined approaches to align the align the

principal's and agent's interestsprincipal's and agent's interests are available to are available to the principal: devising reward structures the principal: devising reward structures (incentives) based on: (incentives) based on: actions (behavior-based structures)actions (behavior-based structures) outcomes of actions (outcome-based structures) outcomes of actions (outcome-based structures)

According to agency theory, principals can invest According to agency theory, principals can invest in in monitoring activitiesmonitoring activities to gather information to gather information about either the actions of an agent or the about either the actions of an agent or the outcomes of agents' actions and use this outcomes of agents' actions and use this information to devise reward structures.information to devise reward structures.

Eisenhardt KM. Agency Theory: An Assessment and Review, Academy of Management Eisenhardt KM. Agency Theory: An Assessment and Review, Academy of Management Review, 14 (1),57-74, 1989.Review, 14 (1),57-74, 1989.

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Performance ConsiderationsPerformance Considerations

The The degreedegree to which Medicare beneficiaries opt for the to which Medicare beneficiaries opt for the drug coverage, including drug coverage, including how quicklyhow quickly they do so after they do so after January 2006 and whether they January 2006 and whether they remain enrolledremain enrolled over over timetime

The The range of choicesrange of choices beneficiaries have, both of PDPs beneficiaries have, both of PDPs and of drugs covered by the PDPsand of drugs covered by the PDPs

The The costscosts that the government, PDPs, and beneficiaries that the government, PDPs, and beneficiaries incur relative to incur relative to baseline projectionsbaseline projections

The extent to which having better access to prescription The extent to which having better access to prescription drugs and to PBMs’ drugs and to PBMs’ interventions actually improves interventions actually improves beneficiaries’ health and quality of lifebeneficiaries’ health and quality of life..

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Ethical ConsiderationsEthical Considerations

Efforts to limit pharmacy costs raise both ethical and economic considerations. Six values should inform pharmacy benefit management: (1) accepting resource constraints

(2) helping the sick

(3) protecting the worst off

(4) respecting autonomy

(5) sustaining trust

(6) promoting inclusive decision making

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Ethical ConsiderationsEthical Considerations Direct controls: Formularies, step therapy, and prior

authorization, can focus limited resources on the sick and worst off. However, direct controls limit autonomy and are administratively burdensome.

Indirect controls: Physician capitation, tiered co-payments, and drug benefit caps, align physicians’ and patients’ interests with resource constraints, respect autonomy, and are administratively efficient. Unfortunately, they deter use based on cost, not medical need; they do not focus cuts on unnecessary or marginal drug use or focus resources on the sick.

Budget caps are the least defensible, while tiered co-pays and physician capitation can be justified if implemented with safeguards. Formularies and step therapy are ethically justifiable if they can be efficiently instituted.

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Let us resolve to be masters, Let us resolve to be masters, not the victims, of our not the victims, of our

history, controlling our own history, controlling our own destiny without giving way to destiny without giving way to

blind suspicions and blind suspicions and emotions.emotions.

-- John Fitzgerald Kennedy (1917-63), -- John Fitzgerald Kennedy (1917-63), 35th US President35th US President

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Lt. Col. David A. Gettman, R.Ph., M.B.A., Ph.D. Lt. Col. David A. Gettman, R.Ph., M.B.A., Ph.D. Associate Professor, Associate Professor, Department of Pharmacy Practice & Administration Department of Pharmacy Practice & Administration Lloyd L. Gregory School of Pharmacy Lloyd L. Gregory School of Pharmacy Palm Beach Atlantic University Palm Beach Atlantic University P.O. Box 24708P.O. Box 24708901 South Flagler Drive901 South Flagler DriveWest Palm Beach, Florida 33416-4708West Palm Beach, Florida 33416-4708Telephone: (561) 803-2724Telephone: (561) 803-2724Fax: (561) 803-2703 Fax: (561) 803-2703 E-mail: [email protected]: [email protected]

QUESTIONSQUESTIONS