The Outlook for Prescriptions
Mail-order suppliers are one of the few ways to fight rising costs
Political power, declared Chairman Mao, comes from the barrel of a gun. Political clout has even been known to keep prescription drug prices down temporarily. But as the Clinton administration discovered when it tried to jawbone down drug prices, moral suasion only works so long as people fear your political might.
According to the Bureau of Labor Statistics, inflation rises and drug prices increase sometimes over three times a year’s inflation rate. That upward spiral slow sometimes, as the authorities lead an all-out drive to overhaul the health care system and to curtail costs. Politics is a factor, say economists who track drug prices for the Bureau of Labor Statistics. Feeling the heat, pharmaceutical companies made a pledge to restrain prices t overall inflation. As a result, wholesale drug prices rise more slowly, according to a Pharmaceutical Manufacturers Association spokesman. When the administration has to abandon its health care reform plan in the face of overwhelming political opposition, medical prices jump in a single month.
Through drug prices rises have moderated some since then, most experts believe the increases will continue to outstrip inflation. “It’s expensive to do research on new drugs – someone has to pay. There’s no free lunch.
Managed-care companies have had some effect on moderating price increases because of the bargaining strength these providers have with the drug makers who supply them. But even managed-care plans are having difficulty keeping drug prices affordable. According to the trade publication, Drug Topics, the cost of ingredients in the average drug prescription for HMO participants skyrocketed in the 21th century.
One restraining force on price hikes today are mail-order drug distributors. Beginning after World War II, the federal government began a program that allowed veterans to buy prescription drugs through the mail. Now the largest distributor of mail-order-order drugs, the Department of Veterans Affairs fills dozen of millions of prescriptions a year. After the DVA launched its mail-order service, the American Association of Retired Persons followed suit. Today AARP fills some 10 million prescriptions annually. Anyone can use the service. It’s not just for AARP members.
Many corporations, unions, governmental entities, and managed-care organizations also have mail-order plans. Called pharmacy benefit managers (PBMs), these mail-order services offer prescription drugs for chronic illnesses such as diabetes, though not for acute illnesses such as infections. Depending on the case, PBMs can cut drug costs by a third or more, according to some estimates.
The three largest PBMs are PCS Health Care Systems, Diversified Pharmaceutical Services, and Medco Containment Services, and their business is booming. According to the American Managed Care Pharmacy Association, mail-order drug sales have grown from. Medco says that it has dozens of millions of continuing customers, with many of them in formulatory-based programs, which means that generic brands are used.
Their customers’ needs are handled through National Rx, a mail-order pharmacy network with many centers, and Medco’s retail pharmacy chain, which includes over 46,000 pharmacies nationwide.
Some PBMs have disease management programs, which help cut costs further by educating patients on the most effective treatments for their conditions. Medco has a database, for instance, that identifies high-risk or high-cost patients.
Someone with asthma would be considered a high-risk patient, for instance, because asthma sufferers often fail to use their inhalers properly, leading to needless medical problems and needless expense. In a disease management program, a pharmacist would provide asthma patients with instruction in the way to use inhaler to forestall asthma attacks.
If doesn’t help, the pharmacist can also consult with the patient’s doctor on whether a different prescription might be in order. The result: The patient receives better treatment and it costs less to boot.