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California Health Care Bill Targets Pharmacist Kickback Schemes

by Taylor Tyler, published

California health care bill Maria Dryfhout /

A bill recently filed in California aims to close a loophole in state law that allows health insurers to give a financial kickback to pharmacists every time they decide to give customers cheaper, poorer quality drugs that are not chemically equivalent to those prescribed by the customer's doctor.

AB 670, filed by California Assemblymember Toni Atkins, would “prohibit a pharmacist or pharmacy employer from receiving any payment or other compensation, in the form of money or otherwise to specifically recommend or replace a patient’s originally prescribed drug product with a drug product that does not have the same active ingredient as the originally prescribed drug product, unless the recommendation or replacement is the result of, and the payment is included in the reimbursement for, the pharmacist performing a comprehensive medication review, as specified.”

Unlike switching patients to chemically identical -- and cheaper -- generic drugs, the practice known as “therapeutic substitution” subjects patients to drugs with different ingredients, dosages, release mechanisms, side effects and compilations, often without patient or physician knowledge.

Doctor Samuel I. Fink, president of the Los Angeles County Medical Association, explains why therapeutic substitution is a dangerous practice with potentially grave consequences:

“Patient health often suffers when they are switched to therapeutically different medications. Although the medicines may treat the same conditions, the chemical ingredients are not the same. This often results in side effects or ineffective treatment. Patients who are stabilized on medications to treat epilepsy or mental health are particularly vulnerable.”

Current California law prohibits doctors from receiving financial benefits from insurers for prescribing specific drugs, but there are many instances in which a prescribing doctor will take advice from pharmacists on alternative medications.

A pharmacist may recognize potentially dangerous interactions with other prescribed medications or may realize the patient's health plan doesn't cover the medications prescribed by the physician.

Because of these legitimate reasons a pharmacist may have to switch medications, physicians are often left wondering if the switch is being done because it's truly best for the patient, or if it's due to the pharmacist potentially receiving kickbacks.

“Doctors are not permitted to accept payment to specifically switch their patients’ medications from one drug to another based solely on a financial incentive,” Atkins said. “AB 670 places similar restrictions on pharmacists and will ensure that science and patient well-being are the determining factors when choosing a drug and that consumers are protected.”

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