American industry is full of epic battles between interest groups that put the Washington Redskins/Dallas Cowboys rivalry to shame. There's the doctors vs. lawyers battle. The cops vs. lawyers battle. The retailers vs. lawyers battle. Hmm, a trend seems to be emerging.
Actually, today I want to tell you about another epic rivalry: the insurance industry vs. Big Pharma. Ever since Abraham first called the Mutual of Ur Insurance Company to ask about the description of benefits for Isaac's allergy medication, doctors (and the insurers who pay them) have been blaming the high cost of drugs on the pharmaceutical industry and its "exorbitant" profit margins. One means of cutting down on the expense of prescription drugs, that some insurers have backed, is the practice of "pill splitting" -- taking one big dose of a drug administered in pill form and cutting it in half to create two smaller doses.
In a recent story, The Wall Street Journal described Big Pharma's reaction to the practice of pill splitting: It doesn't like it. According to the Journal, a unit of drug king Johnson & Johnson (NYSE:JNJ) recently conducted a study of how close a pill-splitter could get to the recommended five-milligram dosage of J&J drug Flexeril by splitting a generic 10 mg pill of the same compound (cyclobenzaprine). The finding: After splitting a total of 90 pills by various means, J&J determined that a pill-splitter could get sometimes half the recommended dosage, sometimes as much as one-and-a-half times the recommended dosage, or anywhere in between.
Music to J&J's ears (of course, it did conduct the test itself), and also not unwelcome news to co-Big Pharmas such as Pfizer (NYSE:PFE) and Merck (NYSE:MRK). On the other hand, I'll bet that at this very moment, generic producers of cyclobenzaprine, Mylan Labs (NYSE:MYL) and Henry Schein (NASDAQ:HSIC) to name two, are working on refutations of the study. Why, insurers Aetna (NYSE:AET) and Cigna (NYSE:CI) might even lend them a hand with this.
The debate over pill-splitting has gone on for some time, and it's unlikely that a single study, by a presumably less-than-impartial source, is going to settle it. But it will keep the battle going, and that's likely to have an effect on the stock prices of whichever side is winning in any given quarter, be it Big Pharma or big insurance and its generic-drug allies.
Interested in reading more Foolish coverage on the health-care industry? Try:
- Translating Your Doctor Bill
- Cigna's Good Medicine
- Aetna's Picture of Health
- and the ever-popular HMO A-Go-Go
Fool contributor Rich Smith owns no shares in any company mentioned in this article.
