Pharmacist Cynthia Kirman urged workers and retirees at General Motors on Lipitor last year to take their daily dose in one larger pill...
Pharmacist Cynthia Kirman urged workers and retirees at General Motors on Lipitor last year to take their daily dose in one larger pill instead of two smaller ones to fight cholesterol.
The advice helped workers cut medical costs. It also was good for a patient in more serious condition: GM, where Kirman is corporate pharmacist.
The former drug-store pharmacist is part of a team trying to lower the $1.5 billion in annual prescription drug costs for the world’s largest automaker, the biggest private purchaser of health insurance in the U.S. Health costs at GM rose 8.3 percent to a record $5.2 billion last year.
The shift on Lipitor, which follows federal recommendations, might save GM as much as $1 million a year.
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“I always ask the same questions, ‘What lets us give the most appropriate therapy, and what is waste?’ ” says Kirman, who may be the only full-time corporate pharmacist in the United States. “We’ve got to get people to be better educated about the drugs they are taking.”
Lower health-care costs are key to Chief Executive Rick Wagoner’s attempt to end losses at GM’s North American auto unit. The expenses add about $1,525 to the cost of each car.
U.S. health-care costs climbed 7.6 percent in 2003 to $1.68 trillion, four times the rate of inflation, according to the most recent government data. For GM, Ford Motor and DaimlerChrysler’s Chrysler unit, that means a combined $9.3 billion in annual health-care costs for 2 million workers, retirees and their dependents.
To try to control rising costs, GM hired Kirman from managed-care company SelectCare in 1999. A year later, it started monitoring consumption trends in daily drug doses of Lipitor, antidepressants including Zoloft and gastrointestinal medicines like Nexium.
The Food and Drug Administration recommends each of the drugs be taken once a day because patients are less likely to miss a dose and higher concentrations can be more effective.
Yet patients often end up with prescriptions for smaller pills throughout the day as doctors try to find the optimum dosage, Kirman says. Doctors can be more focused on getting the ideal dosage than the most efficient delivery method, she says.
From her office in Pontiac, Mich., a 30-minute drive north of GM headquarters, Kirman works with more than 40 other employees, including doctors, health-care administrators, analysts and nurses, to evaluate GM’s health-care insurance programs.
GM produces newsletters for factories and offices and daily 5-minute news broadcasts to get health messages to employees, including recommendations from Kirman, company spokeswoman Sharon Baldwin says.
Kirman also holds face-to-face meetings with employees extolling the benefits of diet and exercise to reduce dosages, and she contributes to quarterly health newsletters sent to retirees, Baldwin says.
The approach helped reduce the number of GM workers and retirees taking two 20-miligram doses of the stomach-acid reducer Prilosec by 12 percent in 2003 from 2002, says Kirman.
Each Prilosec patient who switched to one 40-miligram pill a day saved the automaker $45 a month. That would amount to about $1 million a year should all GM enrollees taking two pills switch to a single pill. Workers can usually save money buying a single daily pill rather than two half-dosage pills.
The techniques also helped GM boost the proportion of patients taking less-expensive generic drugs to more than 90 percent last year, saving as much as 60 percent on each prescription. In 1999, GM paid for more than 11 million prescriptions for its hourly workers, with about half using generics and the other half using brand-name drugs, Kirman says.
Trimming costs has risks. The program needs to be closely monitored to make sure employees and retirees aren’t steered from needed medications, says David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.
“They have to be careful that nothing they do, in any way, affects the health of their patients,” Cole says. “GM is in a full-court press to make sure it gets waste out wherever it can.”
Kirman says she always takes patient health into account in recommending ways to reduce costs and doses.
GM needs to reduce costs beyond counting pills, says Wil Stith, who helps manage $2 billion at Baltimore-based MTB Investment Advisors, including GM debt.
“It’s really just like putting a Band-Aid on a chest wound,” says Stith, who has reduced his holdings of automaker debt this year. “They have to change the entire paradigm, whether it’s with the union or something else, to raise the confidence of the bond investors.”
General Motors eventually wants to switch its 112,000 union employees, dependents and retirees to less costly plans, more like those offered to salaried employees. Chief Financial Officer John Devine estimates that would save more than $1 billion annually.
“It’s a problem for all industries that pay for employee health care,” says Dan Poole, vice president at Cleveland-based National City, which helps manage $34 billion, including shares of Ford, GM, Home Depot and Sears, Roebuck & Co.
“It’s a bigger problem for automakers because they pay benefits for employees and retirees and they are precluded from making changes by the unions.”