Seattle Press on Line - No More Medicine

No More Medicine

By Rob Hampton

Mike Lafferty of Lafferty's Pharmacy. Rob Hampton photo.

Aug 01, 2002 -- Imagine you're an elderly, ailing Ballard resident who has been buying medication and getting advice at Barry Lafferty's Pharmacy since it opened in 1961. Money's been tight for the last few years, and arthritis keeps you inside most of the time. Thankfully, Lafferty's delivers your Medicaid-funded drugs to your door, but today you're feeling well enough to get out of the house to pick up your prescription.

Mike Lafferty, who has taken up the pharmacy trade of his father and grandfather, greets you by name as you walk in. But instead of chatting about the hot weather and the noisy road construction on nearby Market Street, your pharmacist has some serious news for you: Because the Washington Department of Social and Health Services (DSHS) will be reducing reimbursements for Medicaid prescriptions starting August 1, Barry Lafferty's Pharmacy won't be filling your prescriptions any more.

"It kills us to have to turn them away," says Lafferty. "They're like family."

Washington's independent pharmacists are seeing red over the state's cost-cutting measure. Red ink, that is. Washington has led the nation during the last decade in providing Medicaid care for its low-income citizens, but its current budget crisis has forced it to slam on the brakes on a program that demands about 10 percent of its yearly budget. Many of Washington's 900,000 Medicaid recipients will feel the jolt this month when pharmacists who can't afford the reimbursement cuts tell their Medicaid clients to look elsewhere for their medication.

Medicaid Quiz

So how severe are these reimbursement cuts? Well, sharpen your pencil. Sorting through the numbers is sure to awaken any latent trauma you sustained in math class. Don't panic, though--the answers are in parentheses.

Let's say Jane the Pharmacist buys a bottle of Wellbutrin SR for her client Steve, who suffers from depression. The average wholesale price (AWP) for a 60-tablet bottle of Wellbutrin is $114.94, but to keep the math manageable, let's set the AWP at $100. Jane gets a discount when she buys drugs because she's a pharmacist. Say the discount is 16 percent. How much does the Wellbutrin cost her? ($84)

Under the Washington Department of Social and Health Services' (DSHS) old reimbursement rates, Jane can bill the state AWP minus 11 percent of the AWP, plus a $4 dispensing fee. How much is that? ($100 - $11 + $4 = $93)

OK number-crunchers, let's speed things up a bit. After August 1, DSHS will use the same equation, except they'll subtract 14 percent instead of 11 percent. Under the new policy, what can Jane charge the state for a bottle of Wellbutrin? ($100 - $14 + $4 = $90)

Now figure out how much Jane earns before and after August 1 when Steve comes to the pharmacy to fill his prescription. ($9 and $6--she's lost 30 percent of her gross margin)

So Jane has just 6 bucks to pay for the bottle, cap, label, her employee's salary, the electric bill, the Wellbutrin that expired on the shelf last month when one of her clients moved out of town....

It's downright depressing.

"The welfare clientele that we serve are the least healthy and poorest in state," says Charles Kahler, president of the Washington State Pharmacy Association (WSPA). "They take a lot of extra services. The reduction in reimbursement will push a reduction in service, or pharmacies won't provide services at all."

It's not just small, independent pharmacies that are closing their doors to Medicaid clients. Bartell's Drugs has announced that the majority of their stores will stop filling Medicaid prescriptions, and Walgreens and Rite Aid are threatening to do the same.

The bigger pharmacies that do stay open to Medicaid clients won't give the kind of personal attention that independent pharmacies provide. This worries pharmacists like Mike Donohue of Bob Johnson's United Pharmacy, located in northern Ballard.

Donohue, whose ruddy face and blonde hair suggest his Norwegian roots, says he has already eliminated services that he believes are critical to the health of his Medicaid clients.

Eighty-five percent of those clients are in assisted-living situations and require delivery of their prescriptions. In addition, they often need their drugs packaged in compliance devices--tamper-proof boxes and blister packs that organize pills according to the client's schedule--which help caregivers enforce correct dosages. These extra services would break Donohue's bank under the new reimbursement rate, so now, deliveries will be limited to one per week, and the drugs will be in bottles, not blister packs.

Furthermore, Donohue has stopped accepting new Medicaid clients. Once he's fully evaluated his finances, he may drop his current Medicaid customers altogether.

Mike Donohue with blister packs, which will no longer be used for Medicaid clients. Rob Hampton photo.

For now, Donohue's worried that his reduced services could create a dangerous situation for his customers. "I think there are going to be errors," he says. "We have an elaborate system for preventing errors, and as careful as a nurse will try to be, they don't have the stock bottle label to look at, the computer resources, and the multiple sets of eyes to check things."

A pharmacist's close involvement in the drug administration process is especially important when customers aren't proficient in English. Donohue says, "You'd think here in Ballard the only thick accent you'd come in contact with is Norwegian. But actually, Cantonese is very common."

About 30 percent of Donohue's assisted-living clients speak Cantonese. Ensuring proper dosage for these clients was hard enough when the pharmacy could afford to separate medication into discrete doses and visit assisted-living locations in person. Now, much of the responsibility will be left to caregivers and the clients themselves.

Donohue and Lafferty hope that Seattle's bigger pharmacies will pick up some of the slack, an option that isn't available in smaller Washington towns. WSPA president Charles Kahler says, "There have been reports that a pharmacy in Republic won't be able to [serve Medicaid clients], and the nearest pharmacy is in Spokane, about 75 miles away. For someone who's really sick, that's going to be a big problem."

There are plenty of drug stores near Bob Johnson's United Pharmacy that could, in theory, accommodate Donohue's Medicaid clients. "Even with my old tired arm, I could throw a baseball from here to the parking lots of Safeway, Walgreens, and QFC. But they don't offer these kinds of services.

The thing that's most unfair is that the independent pharmacies who provide these extra services are the ones that are hardest hit."

Reader Comments

Discuss this article in the forums!


Sherry Reynolds	Aug 10, 2002	Wallingford	Financial Systems Analyst
Sometimes in order to solve a problem you have to change or redifine what the problem is. First let's ignore the question of why 1 in 4 people in Washington are on Medicare in the first place. Perhaps the problem isn't actually the small margin that independent drug stores get but the distribution model. It took me less than 5 minutes to log on and compare the prices at drugstore.com (and they make a note their prices are prior to insurance discounts) and to look at the first canadian drugstore that popped up with a search engine.(www.thecanadiandrugstore.com)and find savings that would give the pharmacy and the state . In your example you changed the actual wholesale price from 114.94 to make the math easier but using the real numbers the cost is 96.54. At drugstore.com the retail price for 180 tabs is $262.61 prior to any insurance discounts or $87.53 for 60. So right here we have $11 dollars (3 dollars better than their old margin)in savings per prescription at the retail level. Even better you can go to the online canadian drugstore and the retail price is only $51.24 or a $63.00 savings! Ah you might say poor people can't buy drugs online and they need the hand-holding that the people with regular insurance who buy online don't get. Good point and I have no problem providing services to those in our society who are the most vulnerable so the drugstores themselves could buy online for recurring prescriptions. Even paying retail they will come out ahead of their current model. The discounts for volume sales such as drugstore.com seems to be far larger than they are getting from their wholesalers. If they are blocked from doing this the state should start a buying club for the almost 1 million Medicare customers in this state. Certainly we can get a discount as good or better than in Canada from the drug companies? In this model the drugstores should negotiate to split the savings with the state instead of using the new formula with the new wholesale price. The state would still save $30 per prescription (in this example) the pharmacy would make $30 and they would have more than enough to provide the customer services they want to. Plus the product would already be packaged and labeled so you cut your labor costs and increase service at the same time! Of course no one will do this will they?


Charles	Oct 09, 2002	Monroe, GA	Student
I was doing some work for a relative of mine when I came across an old bottle of Wellbutrin (bupropion hydrochloride) 75mg. The expiration date on the bottle says 01/97. I'm just curious if it would be okay to maybe take one of these just to see what the effects would be, there is a STRONG odor coming from the bottle. Could this be carbon monoxide? Any reply would be greatly appreciated. -CharLeeJ2002@aol.com


ADENIYI, SULYMAN	Mar 17, 2003	UNIVERSITY OF ILORIN NIGERIA {PMB 1515}, DEPT OF	STUDENT
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