toledano/drugs/24″/dt1st/mark2nd By JESSICA TOLEDANO Staff Reporter Employers and consumers should get ready to dig into their pockets, once again, to pay for health care. This time, the culprit is drug prices. Managed care companies say that rising demand for brand-name drugs, along with skyrocketing prices and increased regulation, will force them to pass through more of the bill. “If costs continue to go up, we will not be able to afford pharmaceutical coverage,” said Dr. Alan Jacobs, director of pharmacy operations for Health Net in Woodland Hills. “Legislators have to make informed choices. If they tie our hands and stop us from making good-quality decisions, then we will not be able to afford it.” Jacobs was referring to a move by the Department of Corporations last week to investigate six health maintenance organizations in California for deleting or switching drugs from their formularies (list of covered drugs) after open enrollment season. Also, a new statute is going into effect July 1 that will require health plans that remove drugs from their formularies to continue providing them to patients who were taking them at the time they were removed. Many managed care companies have controlled the cost of drugs by refusing to cover brand names, thus forcing patients to use cheaper generics. But over the past year, pharmaceutical companies have started to advertise brand-name drugs on television, and doctors feel obligated to prescribe the drugs when patients insist they are the only ones they want. As a result, generic alternatives are being refused, and the trend is costing managed care companies more money at a time when they can ill afford it. In the last year, health plans nationwide have seen their profit margins drop sharply. Pharmaceutical costs in general went up last year 10 to 15 percent. Jacobs cited one drug for arthritis, called Embrel, which costs $12,000 per patient, per year. To make up for the losses, managed care companies imposed double-digit premium increases last year. Some employers saw their monthly rates rise as much as 16 percent. “Drug costs are the single greatest driver of rising health costs,” said Walter Zelman, president and chief executive of the California Association of Health Plans. “The plans are feeling pressure from a number of sources.” Meanwhile, pharmaceutical companies saw a 30 percent jump in profits industrywide. Drug company executives say the cost of developing cutting-edge medicine is very high. Jeff Trewhitt, a spokesman for the Pharmaceutical and Research Manufacturers of America, the trade organization for companies like Amgen Inc. and Genetech, said industry profits are three times higher than most industries, but they are quickly re-invested in research and development.