Like many people, Vacaville resident Sue Adair takes medicine daily, in her case, for a couple of minor illnesses. Her new health insurance wouldn't cover one drug she'd been taking for years, so her doctor ok'd a change to another one her insurance company suggested.

Sue Adair, patient: "I had a drug reaction. I had rashes that led to a doctor visit and had blood tests taken which showed that I had liver enzyme elevation. I'm absolutely convinced that the drug made me sick."

Adair switched back to her regular medication and is now fine. However, she is paying for the pills now, $120 per month. Her insurance promised it would cover a medically necessary exception, but after two months of faxes and phone calls -- what her husband calls delay tactics -- her insurance still hadn't approved it.

Dennis Adair, husband: "They hassle you to the point where you quit and they've got the money."

Novato pediatrician Albert Goldberg says he prescribes the medicine that works best for each patient, and insists there's a different among, say, various drugs for ear infections. Marcia Jacobs says her insurance wouldn't pay for the medicine Dr. Goldberg wanted for her 7-year-old.

Marcia Jabobs, San Rafael: "When you have a sick child, you just want your prescription filled and whatever the doctor prescribes I think is better than what the health plan thinks the child should have."

Physicians prescribing off-coverage drugs get insurance 'requests,' requiring that the doctor review the patient's case, and either give in and prescribe the preferred medicine, or make an individual, time-consuming appeal.

Goldberg says he appeals to insurers several times a day, spending as much as 20 minutes per patient.

Dr. Goldberg: "Eventually we get the medicine. Now, how many times a day can I do that? It's ridiculous, in the meantime, most patients and most physicians won't do that, they can't do it."

Larkspur pharmacist Paul Lofholm heads the California Academy of Pharmacy Owners. He says insurance more and more won't cover first-choice medicine; Increasingly, patients pay.

Walter Kulemin, health plan member, Novato: "The drugs cost me $500 a month, I have to pay out of my own pocket because the insurance I have won't pay for it."

Paul Lofholm: "The insurance companies are pushing all of us around, they're pushing the patient, the consumer, they're pushing the physician and they're pushing the pharmacist."

The drugs and dosages an insurance company prefers are called its 'formulary.' We discovered your insurance formulary often depends on secret deals your health plan makes with drug manufacturers. Depending on which drug is not selling well, manufacturers give incentives -- what some call kickbacks.

Fred Mayer, Pharmacist Planning Services: "These are billions and billions that they are giving, kickbacks to put their drug exclusively on a formulary."

Marin Pharmacist Fred Mayer heads a non-profit consumer drug organization. He says insurers manipulate patients' choices, and are cashing in.

By dropping a popular 20-milligram dose of cholesterol-lowering Lovastatin and substituting the poorer-selling 10-milligram pill, we've learned one health plan made $800,000 a month.

Fred Mayer: "If your presecription is for Celebrex, the most popular arthritis drug, your insurance may switch you to Vioxx instead, because it's manufacturer, Merck, offers big incentives."

Mayer: "These insurance executives get four, five or six million dollar salaries a year and $16-to-25 million in bonuses; how do they do it? By managing the formulary."

Kaiser is the state's biggest drug buyer. It was the only major health plan to agree to speak to us. Formulary Chief Dr. Bill Elliott says non-profit Kaiser is different.

Dr. Elliott: "There's no one getting rich off this -- there's no multi-million dollar executive sitting in downtown Oakland who is getting paid the big bucks to do this."

He says a doctor's committee picks the Kaiser formulary, based on safety, efficacy and best deal.

"We usually can tell the pharmacuetical companies what kind of market share they're going to get within our system so they can calculate how much money they're going to make getting a drug onto our formulary and then we just bargain with them straight up. There's really not a lot of backhanded deals, under the table deals."

Even straight-up deals can be lucrative.

Incentives for Vioxx, according to internal Merck documents we've obtained, gave 92% discounts to health systems putting Vioxx exclusively on their formulary. The wholesale price for Vioxx is $324 a bottle. With Merck's discount, it's just $27. That's almost $300 a bottle as incentive for health systems to push Vioxx, despite the drug's warning of increased heart problems.

Prescription drugs cost Americans $155 billion a year, rising twice as fast as other medical costs. And the nation's health plan lobbying group says insurers have to balance cost and benefit.

Susan Pisano, American Association of Health Plans: "Get the best drug to people when they need it but also to make sure that prescription drug benefits continue to be affordable."

Dr. Albert Goldberg: "I have a business, I understand that there's a bottom line and we have to be efficient but not at the expense of caring for our patients."

Doctors agree in most cases: formulary problems are merely inconvenient, rarely life-threatening. But consumers say they won't take it from their health plans.

Sue Adair: "Their interfering is interfering in medicine for financial gains."

California is among 15 states considering legislation to control health plans and their prescription coverage. Health insurers argue they are already over-regulated, but if they don't solve the growing problem with formularies, consumers will demand government fix it.

RESOURCES:

• The California Dept. of Managed Health Care has an 800 number for complaints: 1-888-hmo-2219 |

• The California Patient's Guide: Healthcare Rights and Remedies

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