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Clinton's Health Plan : Health Plan: A User's Guide : For Care Givers and Businesses. . .There Are Reasons to Hope and Fear : THE DRUG INDUSTRY : 'Health care costs will increase, not decrease'

September 26, 1993|RICHARD CORE

Inefficiency is such a big part of the drug business today that Samuel L. Westover's company compensates for it every day. Inefficiency also is why Westover and other drug industry officials generally support President Clinton's health reform plan.

Westover is president and chief executive of SysteMed Inc., a Laguna Hills-based company that distributes pharmaceuticals and manages prescription drug benefit programs for corporations and insurers.

From his position, Westover sees the inherent weaknesses in how the current health care system provides prescription drugs. Often, he said, interests of doctors, patients and insurance companies work at cross purposes.

"Whenever you disjoint those three, the marketplace doesn't work very well," Westover said.

Doctors will often prescribe a name-brand drug that is promptly filled by a pharmacist. The high price is then passed along to an insurance company or the patient, or both.

Part of SysteMed's service is to look for ways to cut those costs. So it notifies pharmacists when a generic drug exists that will satisfy the doctor's prescription at a price many times less than the name brand.

Westover said that Clinton's call for a federally mandated system requiring all Americans to have comprehensive coverage for prescription drugs may be just what the doctor ordered for SysteMed.

"That's good news for companies like ours," said Westover, who spent 14 years with health maintenance organizations before taking over the helm of the company, which posted revenues of $117 million in 1992.

Like Westover, most pharmaceutical company executives are generally pleased with the President's proposal, not only for what it would do but also for what it would not do. It does promise to expand federal benefits for the purchase of prescription drugs; it does not slap federal controls on drug prices.

Still, there are elements of the President's program that drug companies fear will lead to indirect pricing restraints. Their principal concern is a provision that would require them to pay rebates to the government system if their prices for drugs under Medicare exceeded specified levels. Currently, there is no regulation of drug prices under Medicare.

"I think President Clinton intends to put some pressure on the pharmaceutical companies and that will cause them to become more competitive," Westover said. "As they become more competitive, it may change some relationships that we have."

The Clinton plan would organize consumers into health care "alliances" set up and supervised by each state or by large corporations that would shop for the best insurance plans for their members.

Westover said SysteMed and companies like it should be able to adapt easily to such a system, given their already close relationships with large and small employers, insurance companies and health maintenance organizations.

And while Westover views the Clinton plan as good for his business, he is not convinced the President will achieve his goal of reining in overall health costs. Instead of cutting red tape and reducing services--the most significant means of controlling costs--Westover said that the proposal would add another layer of bureaucracy and increase the level of services.

"Health care costs will increase, not decrease," Westover said. "Then there will have to be another program to follow that up."

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