Campaign2008

This blog features information about the political campaign nationally and in the state of Pennsylvania. it will discuss congressional races western PA, but it won't restrict comments to those jurisdictions. On many occasions, it will feature humor, but its main purpose is to "cut the legs off" political jihad. This is a site for political grown-ups of all ages.

Name:
Location: Ambridge, Pennsylvania, United States

I have a Ph.D. from the University of Rochester (English and American Literature). I taught for 10 years at various educational institutions (Univ. of Rochester, my alma mater, College of William and Mary, and University of Georgia, where I was also Asst. Ed. of the Georgia Review. Later, I worked as a speechwriter and "thinker" at various large companies, including Phillips Petroleum, Gulf Oil, Aetna, Merck (consultant), and Eli Lilly (consultant), among many others. I'm a full-time writer and political commentator/analyst. Favorite company: AudioTech Business Books. Favorite female: my wife, Patricia Ann Maloney. Favorite politcal candidate: Diana Lynn Irey (PA's 12th congressional district)

Sunday, January 07, 2007

CVS Pharmacy: Cost Very Steep

My wife, I, and our daughter, Elizabeth, consume a lot of prescription medicines -- a total of 14 every month. We've normally obtained them from the CVS Pharmacy at 8th and Merchant in Ambridge, PA, three blocks from where we live. However, in the future, we'll be getting our prescribed drugs from Wal-Mart in the Chippewa Mall, about 25 miles from where we reside.

Why?

Wal-Mart along with Target and a few other companies is dragging the pharmaceutical business into the world of private enterprise. In the past, drug prices have been set by pharmaceutical companies, pharmacy chains, and large health insurance companies, but that's changing now.

In my last purchase -- and I do mean last -- at CVS I bought Paroxetine (generic Paxil(R)), an anti-depressant. I used my United Healthcare Medicare Plan D program, and a 30-days supply of 40 mg. tablets of Paroxetine cost $23.30. My co-pay -- the out-of-pocket cost -- was $6.00, and the insurer paid $17.30.

My monthly premium to United Healthcare is $27.40, and it covers the four prescription medicines I take each 30 days (including the Paroxetine).

At the same time, I purchased a 30-day supply of Paroxetine for my daughter. The out-of-pocket cost was $58.59 -- $36.29 more than the register price of the same drug I got.

My daughter is learning disabled. She works at McDonalds, where she makes minimum wage and receives no health care benefits.

Why is her cost for the same drug so much higher than mine? Well, my health care insurer "negotiates" a discount from CVS (and every other pharmacy chain). In a sense, Beth is doing two things: (1) helping offset the discount the insurer gets; (2) keeping CVS's bottom line firmly in the black.

What is the effect on people like Beth? For one thing, the high cost of the drug (along with another one she takes) strips her of much of the income she makes. The second thing is that it's a powerful disincentive to "remain compliant," that is, to keep taking the drug in the dosage and frequency prescribed.

But where does that far-away Wal-Mart come into all this? Recently, it began offering more than 300 generic drugs at a discount, $4.00 for a 30-day supply, with some generics (regulated prices by the state) going for $9.00 per month..

In other words, if I go to Wal-Mart and buy my Paroxetine there, it will cost a TOTAL of $9.00. My co-pay will be $6.00, and the insurer's share will be $3.00. That's important because it will help keep me going over the yearly limit that the insurer will cover (a total of $2400, including both my out-of-pocket costs and the insurer's payments).

What about my uninsured daughter? She'll also get her Paroxetine at Wal-Mart for $9.00. Her monthly savings will be $54.39. She'll also be able to get her other medication -- an anti-cholesterol drug -- for $4.00. In other words, she'll be spending not a week's wages to buy medicines, but rather what she earns in about three hours.

That's all to the good of course. But what on earth is the matter with CVS?

I asked the pharmacist there if they intended to match Wal-Mart's prices on generics, and he said they had no such intention. They'd determined that the average CVS customer spent about $5.50 (out of pocket) for generic drugs, so they felt no imperative to lower prices.

Of course, the $5.50 average at CVS reflects purchases mainly by people who have insurance and who shell out little or nothing for co-pays. The "Beths" of the world who end up giving them nearly $60.00 for a $9.00 drug don't seem to a major concern at CVS, many of whose customers are old and/or disabled and can't make their way out to Chippewa Mall.

The pharmacists at CVS and similar concerns look at themselves as health care providers. But the main principle underlying the Hippocratic Oath says, "First, do no harm."

Wildly over-charging people without health insurance -- and few prospects of ever getting it -- constitutes the doing of real harm. It's very bad business. It gouges people who don't have real alternatives.

Pharmaceutical companies (and pharmacies) do much that is good. Yet they resist being real members of a market economy, and the result is that too many people, like my daughter, get faced with some difficult choices.

When markets are allowed to work, they bring benefits to all concerned. Wal-Mart is demonstrating that, and it's time for CVS to begin "negotiating" prices that consumers can afford.

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