from the president’s desk o€¦ · in past issues of the sba frontline magazine and newsletter,...

FRONTLINE Winter 2010 An NYPD Sergeant—The Toughest Job In the World www.sbanyc.org1

ED MULLINSPRESIDENT

Vol 3 No 1 Winter 2010

FRO M THE PRESIDENT’S DESK

O versight is the defining style of management of the SBA Health and Welfare Fund. We have studied the critical elements that are responsible for the exorbitant increases in the cost of benefits that we

read about every day. We are steadfast in our belief that by managing the com-ponents that drive escalating costs, we can stabilize the cost of providing bene-fits to our members.

Lowering what the fund pays allows us to enhance benefits for all of our mem-bers and their families. In past issues of the SBA Frontline magazine andnewsletter, we have identified the business practices that maximize the rev-enues of benefit providers, while doing little to improve the daily lives of ourmembers. The business practices of drug manufacturers, pharmacy benefitmanagers and medical providers and their surreptitious dealings have severelydamaged the financial health of too many labor organizations.

This has been particularly prevalent where the organization has fixed employ-er contributions. In many instances, this has resulted in a reduction of services,increased member out-of-pocket costs, and the exclusion of coverage forretirees, spouses and dependents. In the most extreme cases this has led tothe insolvency of some benefit funds. However, because of our aggressivemanagement, the SBA has been able to reverse the negative impacts and dramatic price increases.

Our successful approach has created the capital necessary to fund the follow-ing new benefits or plan enhancements during Fiscal Year 2010:

• Zero co-payments for all generic drugs for active members and line-of-duty spouses.

• Creation of a Catastrophic Drug Benefit to supplement the active phar-maceutical cap of $7,500. Coverage has been increased to $20,000.

• Retiree drug cap increase for Medicare D qualified individual partici-pants from $6,000 to $7,500. There is also a Retiree A and B generic co-pay decrease of 10%.

• Coverage of birth control for all participants.• Creation of an enhanced network of dental providers in upstate

New York (Rockland, Putnam and Orange Counties).• Creation of an enhanced dental network for retirees residing in the state

of Florida.• The SBA Dental Program now covers necessary caps/crowns for dental

implants.• Expanded our Optical Plan to include all frames available under the

Davis Vision Premier Plan. This change also includes the expansion ofavailable plan contact lenses and polycarbonate lenses.

SBANewsltr_Winter2010_SBANewsltr_SeptVol4 No2 12/8/10 8:18 AM

EDWARD D. MULLINSPresident

ROBERT GANLEYVice President

ROBERT W. JOHNSON, ESQ.Treasurer

MAUREEN E. MURPHYRecording Secretary

GARY DEROSAFinancial Secretary

JERRY LEARYHealth & Welfare Secretary

PAUL A. CAPOTOSTOCity-Wide Secretary

JOHN DORSTSergeant-at-Arms

VINCENT VALLELONGMarshal

DIRECTORS

MICHAEL PERUGGIAE.M.D./Headquarters

COSMO LUBRANO23 Precinct/Manhattan North

ARTHUR SMARSCHPBMS/Manhattan South

ANTHONY AUGELLOTD-33/Transit Bureau

STEPHEN O’HAGANSOD/Housing Bureau

EDWARD CONROYCiti Field/Queens North

ANTHONY BORELLIMNND/OCCB Director

RAYMOND BRICKLEY42 Precinct/Bronx

PETER MCCORMACK44 Squad/Detective Bureau

PATRICK LOGAN67 Precinct/Brooklyn South

VINCENT GUIDASITF/Staten Island

KEVIN KERRIGANHwy District/PBQS


• Creation of a Hearing Aid Reimbursement Benefit, which is avail-able to all active and retired members, their spouses and dependentchildren.

Unfortunately the process of procurement of pharmaceutical drugs is stillfraught with pitfalls. We must therefore remain vigilant in our approach toadministering our pharmaceutical plan. With this in mind we have workedclosely with our medical consultants and clinical pharmacists to identifyselect brand medications that have been recreated through the “magic” ofcombining existing generic drugs, line extensions or changing the avail-able dosage.

With the absence of breakthrough drugs entering the market, these prod-ucts are nothing more than attempts by drug manufacturers to createexclusive patents and maintain the highly inflated prices that are typicalto new brand name drugs. These revenues are then used to fund stock-holder equity and executive compensation.

An obvious case that epitomizes this deception, is Minocycline 50 mg.caps, which have a unit cost of 32 cents versus a newer versionMinocycline ER (extended release) 45 mg. with a unit price of $18. Themanufacturer has modified the strength in what our experts havedescribed as a negligible amount, and the patient is required to take onepill versus two daily. Multiply this difference across 30 days and you canclearly see the financial cost to our welfare fund, as well as the potentialsavings to members.

Another example of their deception is the marketing of a product calledLovaza. This brand name drug is Omega 3 Fatty Acids (Fish Oil), a readi-ly available over-the-counter (OTC) product. This product is typicallyprescribed to be taken four times a day, with an annual price tag of over$1,800, of which about $500 is an out-of-pocket expense to members.

We have very carefully researched the OTC market, reached out to manufacturers, conferred with our doctors and pharmacists, and discov-ered that there are comparable OTC products readily available. We havecreated a new OTC program for those eligible to receive fish oil underplan guidelines.

All plan participants on an existing drug regimen with excluded medica-tions or affected by changes have been authorized to continue their cur-rent prescription until January 1, 2011. All affected participants will needto confer with their medical provider to discuss alternative medications.Ask your doctor if you can use an equally effective generic.

All of our newly created benefits and plan enhancements have been paidfor through the savings that would have, under inattentive management,added millions to the profit column of brand drug manufacturers. We willcontinue to be vigilant in finding opportunities to extract proceeds fromthe profit margins of drug manufacturers and pharmacy benefit managers,and return them to you, the member.

Best wishes for a happy and healthy holiday season.

Fraternally,

Ed MullinsPresident



As we have reported to you in the past, the UnitedStates is one of only two countries in the world thatallows direct to consumer pharmaceutical advertising. Asa result of this, as well as the inappropriate relationshipsbetween medical providers and the drug manufacturers,our country has the highest per capita prescription costsand some of the lowest health outcomes.

An excellent example of how we—the patients and thepurchasers—are exploited is the marketing of a productcalled Lovaza. This prescription is Omega 3 Fatty Acids(Fish Oil), a readily available over-the-counter (OTC)product. This brand drug is typically prescribed four pillsa day with an annual price tag of over $1,800. Memberstypically shell out about $500 a year in out-of-pocketexpenses for this product.

We have very carefully researched the OTC market,reached out to manufacturers, conferred with our doctorsand pharmacists, and discovered that there are compara-ble OTC products readily available. Based on these fac-tors it has been determined that, as of November 9,2010, Lovaza will no longer be covered under the SBAPrescription Plan.

The mechanism for reimbursement of OTC FishOil products is as follows:

1. Plan Participants must be authorized for partici-pation in this program. This is done through sub-mission of a Prior Authorization Form and a writ-ten prescription to the SBA Health & WelfareOffice. Note: Current participants eligible to receive Lovaza are automaticallyqualified and do not need to submit any further documentation.

2. Members may purchase any brand OTC productthat reasonably corresponds to a Lovaza or doublestrength fish oil product in dosage or strength.The critical ingredients are the DHA and theEPA levels.

3. Members may submit the eligibility paperworkand cash register receipts to Scott Nicholls at theSBA Health and Welfare Office, 35 Worth Street,New York, N.Y. 10013, phone 212-431-6555,email: [email protected], for processing.

OVER-THE-COUNTER FISH OIL REIMBURSEMENT PROGRAM

Each 1-gram capsule of LOVAZAcontains at least 900 mg of the ethylesters of Omega-3 fatty acidssourced from fish oils. These arepredominantly a combination of

(EPA—approximately 465 mg) and (DHA—approximate-ly 375 mg).

Nature Made “Double Strength” Fish Oilproducts consist of a concentrated formulathat provides (EPA—672mg) and (DHA—552mg) per serving of two soft gels, with astrength of (1224 mg) per serving.

As an alternative we have created an OTC program. Thisproduct will be provided at no cost to eligible plan par-ticipants. We will provide reimbursement up to $35 per30 day period.

To be eligible to participate in the program you mustmeet the following criteria:

Member must have had one or more of the following:

a. Acute Cardiac Eventb. Strokec. Angioplastyd. Diagnosed with Ischemia (underlining blockage

of arteries)e. Diagnosed with Anginaf. Fasting triglyceride level, greater than 250 mg

per deciliter, done at 12 hours



IMPORTANT INFORMATION ABOUT YOURS.B.A. PHARMACY PLAN

Starting on November 19, 2010, Prescription Solutions® and its associate mail service Prescription SolutionsMail Service Pharmacy will be administering your retail and mail order pharmacy benefit. This completesInnoviant Pharmacy’s transition into Prescription Solutions which began in 2008 when UnitedHealth Groupacquired both Innoviant and Innoviant Mail Pharmacy.

• This change should appear seamless to plan participants.

• Your prescription benefit plan is not affected by this transition.

• You can use your existing ID card when filling prescriptions at your pharmacy and you can continue using the same pharmacies.

• This change does not change which medications are currently covered by your plan.

• All retail prescription refills remain in force at the originating pharmacy.

• There is no change to our national network of available pharmacies.

• Future communications and newly issued or replacement I.D. cards will display the Prescriptions Solutions name and logo.

• You can use the same 1.877.559.2955 phone number where Customer Service Advocates are available to assist you 24 hours a day, 7 days a week. Customer Service calls will also still be answered by the Wausau, WI service center.

• The Innoviant web site www.Innoviant.com will be discontinued. Plan participant can visit the Prescription Solutions web site www.PrescriptionSolutions.com and discover a wealth of health tools and information about your pharmacy benefit.

• Current prior-authorizations will automatically transfer to Prescription Solutions.

• If you have current prescriptions with Innoviant Mail Pharmacy you should have received a communication letting you know how to order refills on or after November 19, 2010. Choose from several convenient options to order future refills:

1. Return the enclosed refill form.

2. Online at www.PrescriptionSolutions.com

3. By calling Prescription Solutions® Mail Service Pharmacy Customer Service at 1.800.562.6223.



IN THE NEWS: PRESCRIPTION OVERFLOWBy Errol Ogman

SBA Fund Administrator

On September 25, 2010, the U.S. Drug Enforcement Administration (DEA) held its first ever nationwide Prescription Drug Take Back

Day. The purpose was to ensure the safe and proper dis-posal of unused, unwanted or expired prescription drugs.This served to prevent the diversion of dangerous drugsfrom home medicine cabinets to drug abusers, while alsoallowing for an environmentally sound way to dispose ofthese accumulated medications.

The American public turned in more than 242,000pounds of prescription drugs from more than 4,000 sitesin 50 states. This represents 121 tons of pills thatwere removed fromAmerica’s medicinecabinets. Althoughthe removal of allthese medications frommainstream America isgood news, in all probability itis just the tip of the iceberg. Whatfactors create the atmosphere whereconsiderable surpluses can occur is some-thing that needs to be reviewed. Here aresome of my thoughts:

PHARMACY BENEFIT MANAGER (PBM)MAIL ORDER PHARMACIES

This overflow of prescription medications in thehome can be a result of the increased use ofPharmacy Benefit Manager (PBM) mail orderpharmacies. These locations operate with a busi-ness methodology that generally calls for 90 daysupplies, which are authorized to be replenishedwhen 70% of the medication has been exhausted.Mathematically this means when 63 units of the 90pill prescription have been used, a new refill is auto-matically forwarded to the patient.

This accounts for a quarterly stockpiling effect of 27pills. Annually this translates to 108 units of excess perprescription (27 units x 4 quarters). With the large num-ber of patients with multiple conditions, and taking asmany as 10 medications a day, it sometimes seems thatwhole closets are necessary to warehouse this flood ofproducts.

RETAIL PHARMACIES

Generally speaking, 30 day prescriptions are filled atretail pharmacies. Patients become eligible for refill

when 70% of the product has been used. This translatesto 21 days of use being exhausted before replenishmentoccurs. This creates a 9 day reserve and again a 108 pillsurplus accumulated. Generally there are no limitationsin access to pharmacies, and prescriptions are able to befilled on the same day they are submitted or become eli-gible. This also unnecessarily adds to the warehousing ofprescription medications in households.

MEDICAL PROVIDERS

A visit to the doctor isn’t complete without a prescriptionor two in hand. If you have a sniffle you are most often

placed on an antibiotic, and will usually leave thedoctor’s office with aprescription for anasal spray, a non-sedating antihista-

mine and possibly anAlbuterol inhaler. Because

doctors are being detailed andsampled on a continual basis by drug

representatives, as revealed by theirNascar driver’s appearance while display-

ing all of their promotional freebees, theflow of prescription medications continues toincrease exponentially. These same medicalproviders are directly responsible for enablingsurpluses of medications, so they need to actresponsibly and professionally if we hope toabate the excessive amount of controlled sub-stances lying in America’s medicine cabinets.

At a time when pharmaceutical medications arebeing aggressively used for preventative care anddirect to consumer marketing is driving brand drugutilization, it is important that we realize the pricetag all these surplus medications have. The recentoperation collected 121 tons of pills, which represents$10 billion worth of medication going into the trash.With the price tag to payers so considerable, you have

to ask yourself what other benefits could have been pro-vided for that amount of money.

These costs are certainly represented in premiums orpatient out-of-pocket costs and are a major factor for theescalating cost of health care. This area needs a lot ofattention because it is so debilitating to patients’ payers,which include Medicare and Medicaid, and health andwelfare funds. Something needs to be done about this,and it needs to be done now.



Pharmaceutical companies and many doctors havebeen very busy settling lawsuits lately. The NewYork Times reported on October 1 that Novartis

Settled Off Label Marketing Case Over 6 Drugs for$422.5 Million. This settlement was based on bothcriminal and civil investigations commenced by the U.S.Attorney’s office. The basis of the legal actions was theunlawful off-label marketing of their products and thepaying of illegal kickbacks to health care professionalsthrough speaker programs, advisory boards, entertain-ment, travel and free meals.

As previously outlined by the SBA in the Frontlinenewsletter, Volume IV, Issue II in 2006, off-label market-ing is the legal prescribing of medications by doctors foruses other than that which they were tested andapproved for by the FDA. Once a drug has beenapproved for a single condition, physicians have the dis-cretion to prescribe it for any illness. The uncertaintycomes from the information source that provides or pro-motes the alternate use of the medication. It can be verylucrative for drug companies to increase consumption oftheir products by creating multiple uses.

While the marketing of products by drug manufacturersfor non-FDA approved uses is illegal, there are ways tocircumvent the law. The messages of drug manufacturerscan be delivered by enlisting doctors to be speakers atdrug sponsored events held at upscale restaurants,mandatory continuing medical education (C.M.E.) train-ing courses, or through mentoring at hospitals and med-ical schools. By serving as consultants and promoting thebrand product, these “thought leaders” are ferriedaround the nation and catered to in the finest placeswhile earning thousands of dollars for “educating” theircolleagues.

The speakers also become personally indoctrinated withproduct loyalty, so it is more likely that they, and others,will personally prescribe the drug. If the law prevents acompany from off-label marketing, all they need to do isprovide a seasoned and dynamic speaker. It usually justtakes one interaction with the drug representative for theindoctrination to occur.

Until recently medical journals looked the other waywhen it came to ghostwritten papers for publication. Butdrug companies regularly contracted with medical com-munications companies to outline favorable articles, draftthem and then solicit top physicians to sign their names,even though many of the doctors contributed little or nowriting to the article. The ghostwritten papers were typi-cally review articles, in which an author weighed a largebody of medical research and offered a bottom-line judg-ment about how to treat a particular ailment.

These articles were sponsored by pharmaceutical compa-nies and specifically created to put a favorable face ondrug maker’s products or to introduce a new use for anexisting product. The articles did not disclose the drugmaker’s role in initiating and paying for the work.Because physicians rely on medical literature, the con-cern about ghostwriting is that doctors, if unaware that anarticle was commissioned by a drug company, mightchange their prescribing habits after reading certain arti-cles, The medical journal deception has only recentlybeen corrected, with there now being a requirement ofwriters and researchers being authenticated and disclos-ing all financial relationships with pharmaceutical manu-facturers as a caveat to producing the article.

The drugs involved in this hefty settlement wereTrileptal, Diovan ($6 billion in sales), Sandostatin ($1.2billion), Exforge ($290 million), Tekturna ($290 million)and Zelnorm (withdrawn from the U.S. market). Thechicanery went on for years. It was disclosed by fourwhistleblowers who will share more than $25 millionunder a government program created to encourage thereporting of illegal activity.

This settlement joins an ever-growing listing of pharmaceutical companies that have found it in theirself-interest to settle federal investigations with a size-able payout. The follow represents recent companies andtotal payouts:

Pfizer $2.3 billion September 2009Eli Lilly $1.4 billion January 2009Glaxo Smith Kline $750 million October 2010Allergan $600 million September 2010Astra Zeneca $520 million April 2010Bristol Myers Squibb $515 million September 2007Novartis $422.5 million October 2010Forest $313 million September 2010

The reality is that revenues from these deceptions are inthe billions of dollars. Corporate stock values actually risewhen payouts are made. Besides signifying that they“dodged a legal bullet,” the secreted proceeds that wereamassed over the years of exploitation can now be freedup as stockholder equity and reflected in stock prices. Apenalty is viewed as just a cost of doing business. This iswhy the pharmaceutical companies are “the sweethearts”of Wall Street and personal investors. With such a posi-tive impact on earnings and stock prices, this behavior isundoubtedly encouraged.

When I go to the doctor I want to know my medicalprovider is working in my best interests. I don’t want tofind out huge sums of pharmaceutical company money or

PHARMACEUTICAL MANUFACTURERSBy Vincent Vallelong

SBA Health and Welfare Designee



free meals are influencing his decision making. Why ishe writing a prescription for the expensive new brandname drug that has yet to be tested over time instead ofthe old generic counterpart that has demonstrated effec-tiveness? Is the newer drug more effective? Will I beforced to suffer potential side effects or unknown healthconsequences because my medical provider has beenoverly receptive to drug company indoctrination? Is itpossible I can become an unaware subject of an off-labeldrug that is prescribed based upon a self-serving drugpaid for studies that are certified and disseminated bywell-compensated partisan medical mentors? What I doknow is that it is wrong that my confidence should beundermined every time a doctor writes me or my familymember a prescription.

AUTHOR’S NOTE:

As this article was being created, the New York Timesdisclosed in an article about Secret Rebates Offered onCostly Eye Drug. Here we have a brand drug that costs$2,000 per injection and a potential equally effectivetreatment that is available for $20 to $50 per unit. Thecompany, Genentech, has begun offering “secretrebates” to eye doctors as an apparent inducement to getthem to use more of the company’s expensive drugrather than a potentially less costly alternative.

Under the program, which started on October 1st, med-ical practitioners can earn up to tens of thousands of dol-lars in quarterly rebates if they use a lot of the selectdrugs or if their usage increases over time. Rebate anddiscount programs are a common business practice acrossthe pharmaceutical industry.

The company reported it had such programs for otherdrugs and that they “help reduce the cost of our medi-cines for hospitals, pharmacies and doctors.” Using thismethod to lower the cost to providers serves to increasethe cost to payers, such as welfare funds, health insur-ance carriers and Medicare/Medicaid.

Interestingly, here we have an off-label product whoseuse can have a beneficial financial impact on payers. Theresponse of pharmaceutical companies has been to createinducements to providers to use the more costly product.Do they believe medical providers are receptive to thisincentive? This is nothing less than a kickback. Therebates might also encourage doctors to create question-able additional uses for other conditions or give more fre-quent injections. The reality is pharmaceutical compa-nies wouldn’t get away with this type of conduct any-where else in the world. With all the rhetoric abouthealth care change, stopping these practices is the typeof change we need.

CO UPONING: LEGALIZED DRUG DEALING

Pharmaceutical manufacturers have learned from street drug dealers how to hook users on a new prescription drug.Their mantra seems to be Give away the first doses for free, create patient reliance, and have a paying customer for life.

Couponing is the latest strategy pharmaceutical companies utilize to per-suade consumers to use expensive new brand drugs as an alternative toolder proven generic medications. They hire marketers who are skilled atcreating sophisticated coupons that enable them to track who actually fillsa prescription, then develop relationships with the patients by sending let-ters and encouraging them to refill. They also link coupons and sampleswith other marketing components like television or magazine ads or brand-ed web sites.

Distributing these coupons are their “partners,” the medical providers(doctors), thus beginning the process of placing members on a regimen ofexpensive new brand drugs. The most important thing to the manufactur-er is that the payers, namely our health and welfare fund, is on the hookfor up to 90% of the cost. More often than not, the new drug is no differ-ent or just marginally different from the old. It is essentially the same dogwith different fleas.

Physicians are perhaps the most important component in marketing. Withready access to free coupons and samples, they are more likely to pre-scribe brand name medication over equally effective alternativegeneric/OTC medications. Influencing the physician is the key to pharma-ceutical sales strategies.

Members should be wary of allowing themselves to be manipulated bysuch marketing gimmicks. They could become subject to inflated drugcosts and potential adverse reactions, as opposed to the use of long genericmedications where the history of effectiveness and potential side effects are well chronicled.

The reality is that after the free samples are exhausted, all that remains are the exorbitant out-of-pocket costs topayers and members.


SERGEANTS BENEVOLENT ASSOCIATION

35 WORTH STREET

NEW YORK, NY 10013

PRESORTEDFIRST CLASS MAIL

U.S. POSTAGEPAID

NEW YORK, NYPERMIT NO. 9881

1st Prize 2010 BMW 328i2nd Prize 2010 Harley-Davidson Dyna3rd Prize Bose Home Theater4th Prize MacBook Pro Laptop5th Prize 50" Plasma TV

FOR TICKETS CALLROBERT W. JOHNSON, TREASURER(212) 226-2180 SBA OFFICE

Drawing to be held on 12/16/10 At the Delegate Luncheon

ONLY 3000 TICKETS WILL BE SOLD

Raffle Ticket $50

For the Benefit of theWidows & Children’s Fund


from the president’s desk o€¦ · in past issues of the sba frontline magazine and newsletter,...

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