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Managed care and sexual dysfunction. Based on a presentation by William Parham, MD
Abstract:
The availability of managed care benefits for the treatment of sexual dysfunction is inextricably linked with cost. An atypically low increase of 4.4% in aggregate healthcare expenditures in 1995-1996 stands in sharp contrast to outlays of more than 11% between 1966 and 1993. Between 1993 and 1996, that increase hovered at about 5%, the result largely of the growth of managed care and low levels of general inflation. However, despite relative containment of overall healthcare expenditures, those related to pharmaceuticals have risen more than 9.2% annually, an increase that reflects the managed care industry's failure to restrain drug costs. In deciding whether it will cover a particular treatment, the managed care industry applies three sets of criteria relating to efficacy, medical necessity, and appropriateness. Managed care companies are expected to counter runaway pharmacy costs for sildenafil by excluding it from coverage, imposing significant limitations, or requiring higher copayments.
Insights
Managed care benefits for sexual dysfunction treatment face cost challenges. Despite overall healthcare cost containment, pharmaceutical spending, including for sildenafil, is rising, impacting coverage decisions.
Area of Science:
- Health Economics
- Pharmaceutical Policy
- Managed Care
Background:
- Aggregate healthcare expenditures slowed significantly in 1995-1996 (4.4%) compared to previous decades (over 11% 1966-1993).
- Managed care growth and low inflation contributed to this expenditure containment between 1993 and 1996 (around 5%).
- Despite overall cost control, pharmaceutical expenditures rose annually by over 9.2%, indicating managed care's ineffectiveness in restraining drug costs.
Purpose of the Study:
- To analyze the relationship between managed care, healthcare costs, and pharmaceutical spending.
- To examine the criteria managed care organizations use for treatment coverage decisions.
- To anticipate managed care strategies for controlling costs associated with new pharmaceuticals like sildenafil.
Main Methods:
- Analysis of aggregate healthcare expenditure trends from 1966 to 1996.
- Examination of pharmaceutical spending patterns within the context of managed care growth.
- Review of managed care coverage criteria (efficacy, medical necessity, appropriateness).
Main Results:
- Managed care significantly slowed overall healthcare spending growth.
- Pharmaceutical costs, however, continued to rise substantially, outpacing general inflation and overall healthcare expenditure containment.
- Managed care organizations utilize specific criteria to evaluate treatment coverage.
Conclusions:
- Managed care has shown success in controlling overall healthcare costs but struggles with pharmaceutical expenditure containment.
- Sildenafil and similar drugs may face coverage restrictions (exclusion, limitations, higher copayments) due to rising pharmacy costs.
- The interplay between pharmaceutical costs and managed care policies will continue to shape access to treatments for sexual dysfunction.