Seattle Press on Line - Letter to the Editor: Medicare Problem

Letter to the Editor: Medicare Problem

Aug 29, 2002 -- SOMETIMES, IN ORDER to solve a problem you have to change or redefine what the problem is. First let's ignore the question of why one in four people in Washington are on Medicare. The real problem isn't actually the small margin that independent drug stores get but the distribution model, discounts and the reimbursement formula we are using.

It took me less than 5 minutes to log on and compare the retail 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 of between $27.4 and $63.7 at retail and $9 and $45 for 60 tabs of Wellbutrin SR retail to wholesale. At drugstore.com the retail price for 180 tabs is $262.61 prior to any insurance discounts or $87.53 for 60 which is $9 better than the wholesale price that the independent pharmacies pay. Even better you can go to the online Canadian drugstore and the retail price is only $51.24 or a $45.31 savings! (In your example you changed the actual wholesale price from $114.94 to $100 and the discount was $84 to make the math easier but I calculated all savings using the higher real wholesale cost of $96.55.)

Ah, you might say poor people can't buy drugs online and many of them 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 and deliver them to the clients.

The discounts for volume sales such as at drugstore.com and the canadiandrugstore.com seem 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 and resell it to the pharmacies. Certainly we can get a discount as good as 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 since they wouldn't be getting any discount per se by buying retail and would get stuck with the $4.00 fee only. The $45 savings could be split 50/50 and the state would still save up to $25.62 per prescription (in this example). They could use this money to expand coverage and the pharmacy would now gross $25.62 (in this example). The product would already be packaged and labeled so they would be able to cut their labor and material costs and increase service at the same time! Medicare patients would no longer be the pariah of pharmacy's but solicited.

Of course this makes too much sense and no one likes to do math or change the contract right so they won't do it, will they? The bottom line is that sometimes you do have to change the definition of the problem to find a solution and there is a very simple one that will save money, increase services and expand coverage.

Sherry Reynolds

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