Prescription drug prices
...tomers. According to the article “Why does president Bush want to double the cost of prescription drugs for one million Americans,” the mayor of Springfield and the Governors of Iowa, Illinois, and Minnesota have taken the steps to enable government employees and retirees to access affordable prescription drugs from Canada. As of today November 13, 2003 Governor Pawlenty was going to Canada to meet with pharmacists to set up this type of program. According to Elizabeth Carpenteur of the Minnesota Pharmacists Association the governor plans to develop a website to: facilitate the purchase of prescription drugs from Canadian pharmacies, pursue purchase of foreign-made, FDA-approved prescription drugs that could be made available to Minnesotans, provide incentives for state employees to purchase prescription drugs directly, aggressively pursue federal action to eliminate carriers to widespread use of imported safe prescription drugs, and convene a governors prescription drug summit later this year involving governors interested in important issues. So now the question that needs to be answered is why are the costs in the United States so much more? According to the article “Hard to Swallow” other western governments have national health plans that either negotiate prices with drug companies or establish price ceilings for every drug. Insurance companies in the United States also negotiate prices, but they use their power as large scale purchasers to get the best deal. If drug companies will not give them a lower rate, then the insurance will not put the drugs on their formulary list. According to the article “Prescription drug pricing in Vermont,” it was found that older Americans and others who pay cash are charged far more for their prescription drugs than drug companies most favored customers, such as large insurance companies and health maintenance organizations. This is what is called price differentiation and this is a big problem. The behaviors of third party buyers, manufacturers, and retail pharmacies all have an impact on uninsured consumers. The cost of price differentiation can sometimes be beneficial in an economic sense and does occur in many industries, but uninsured consumers are likely to be charges relatively higher prices due to this. Third party buyers have a large amount of control over costs; they generally aren’t willing to pay the same prices as other buyers. In their drive to control the cost of health plans and other third party buyers pay drug retailers a wholesale drug reimbursement rate. Generally it is the average wholesale prices plus a fixed dispensing fee. Basically third party plans pay pretty close to the same prices pharmacies pay for the drug. It is because of this that pharmacies gross margins of prescription sales have fallen significantly. This leaves retail pharmacies with little or no profit. In interviewing three pharmacists at Target, whom all owned their own pharmacies at one point, this was the reason they had to close them down. So not only does price differentiation hurt cash paying customers but also retail pharmacies. According to the CRS report for congress studies have suggested a criticism of price differentiation is that it leads to “cost shifting” which occurs when sellers raise the prices they charge the uninsured in order to compensate for discounts given to third party buyers. It is because of this situation that there needs to be some type of Medicare coverage for prescription drugs and the government needs to take control of these outrageous prices. The Chain Drug Review stated, “There are 10 to 15 million seniors who don't have any prescription drug coverage”. Currently there is no prescription coverage for people on Medicare. According to the article “Drug benefit accord reached,” by Robert Pear, Medicare recipients would have to pay premiums averaging $35/month and a $275 deductible for drug coverage. The beneficiary would pay 25% of drug costs from $275 to $2,200 per year. Medicare would pay the other 75%. The program would then pay nothing until the beneficiary has spent a total of $3,600 out of pocket. After spending $3,600 dollars the beneficiary would pay 5% of the cost of each prescription or a normal co-payment of 5 or 10 dollars. They will also provide more assistance to those below 135% of the poverty level (income less than $12,123 per year). With this plan a beneficiary would pay a $2.00 copay for each generic, and a $5.00 copay for each brand name until the overall costs of the person’s prescriptions reach $5,000. Medicare will cover all costs beyond that. In addition, Medicare will provide assistance to those with incomes from 135% to 150% poverty level ($12,124 to $13,470). They will have a $50.00 deductible and reduced premiums depending on their income, and 15% of the cost of each prescription until they have spent $3,600 out of pocket. There are several plans that seniors do have, but they are at risk of losing them. According to AARP 24% of employers with 200 or more employees offered health coverage to their Medicare age retirees in 2001, compared to 31% in 1997. 50% of Medicare beneficiaries nationwide have access to a Medicare +choice plan with prescription drug coverage in 2002, compared with 65% in 1999. 51% of Medicare choice plans provided drug benefits only for generic medications in 2001, compared to 18% in 2001, yet many will need medications that aren’t available in a generic. From my experience, as a pharmacy technician, with seniors and insurance plans there are only a couple types. Seniors that get insurance through employees generally pay on average $200-$350 per month. There is a U-Care plan that a lot of seniors have, but they only pay $100 per quarter. For the average person taking Lipitor, for example, that $100 would be used in a one-month supply. Some seniors have a plan where they pay 50/50 but that still gets expensive. I had a guy come in on a 50/50 plan, and his antibiotic for 7 days was still $60.00. He refused to take it. There are also those discount plans that pay 10%, but from my experience those prices over half the time turn out to be more expensive than our cash price. There are also plans that drug companies give to patients with low income, if you qualify they are pretty good programs. The only problem is that it requires a lot of paperwork especially if you apply for several different programs. These programs aren’t advertised much so a lot of patients aren’t aware of them. I did an interview with a pharmacist on the history of this problem and his response was, “there was always the issue but back about 10 years ago people weren’t aware of it because it was so easy for people to get welfare that nobody noticed”. So as you can tell the people this affects are patients and their families, doctors, drug companies, pharmacies, pharmacists, the government, and the president. It is an issue that everyone will encounter one day in his or her family problems. This issue is a huge problem, especially with all the baby boomers getting into retirement age. The cost of prescription drugs keep rising every year and the elderly and uninsured patients are getting hit hard. If we could just deal with the real problem at hand which is the prices the drug companies are charging and let the government control these prices like Canada does we wouldn’t have half the problems. Instead our governor is going to Canada to try and set us up with an Internet type pharmacy, which orders from Canada. Yes, this may be...