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    Saturday, November 11, 2006

    Help is On the Way: According to this story, the elderly are looking to Democrats to reduce their drug costs. If they want help in the here and now, they should be looking to Walmart.

    Walmart's $4/month generic drug offer is having significant ramifications. They've induced Target to lower prices, as well as grocery store chains. Even mail order giant Medco has been spurred to offer low-priced generics. They've done more in six weeks by slashing prices than Congress could do in six years with legislation.

    UPDATE: The comment below warrants discussion:

    Do you really feel like WalMart's policies are having a huge impact? I was struck, when reading through the list, that most of the 300 drugs offered at $4 were duplicates (so there were only around 80-100 individual drugs), and that they didn't cost terribly much to begin with. The drug prices don't appear to affect an awful lot of the drugs people are prescribed to the elderly.

    The more I've looked into it, the more it seems like a marketing ploy. (I'd like to see a study of how many people actually are prescribed the medications on the $4 price list, or how many WalMart fills a month, comparaed to other drugs.)


    Yes, I think it is having a huge impact, and that's why you're seeing price slashing even at the mail-order pharmacies. The Walmart prices have only been in place in my town for two weeks, and I've already had patients bring in the list to see if they could switch to them safely. I've even had patients in the hospital ask me to make sure I give them generics on discharge so they can see if they can get them at Walmart. I'm sure it's a marketing ploy, but it happens to be a marketing ploy with a beneficial impact.

    The main reason it's working so well is the transparency. People know the price of the drug. This generally isn't true. In the past, when people complained about the cost of their medications and I suggested they try generic, they balked not only because they didn't trust generics over brand names, but because they weren't sure it would give them enough savings to be worth it.

    People also assume that their mail-order prescriptions are a better deal than they can get at the pharmacy because that's what they've been told by their insurance companies. It often is, but not always, especially when it comes to generic drugs. Now people can see that $4 a month for enalapril is a heck of a lot cheaper than $30 for a three month supply at Medco.

    Finally, $4 is cheaper than most co-pays for drugs. And that's another thing a lot of people didn't know - that they would be better off paying out of pocket for their generic pills than handing over their insurance card automatically when they fill a prescription. Many pharmacies charge the patient the co-pay even when the drug they're getting costs less out of pocket. By advertising their prices, Walmart has made people realize that.

    It's true that the list is limited, but it still isn't a bad list. My patient with ischemic cardiomyopathy went home with seven medications- every single one available at Walmart for $4. Before, his drugs were costing him about $80 a month out of his own pocket - and that was with insurance coverage.

    Believe me, it's making an impact.
     

    posted by Sydney on 11/11/2006 08:53:00 PM 10 comments

    10 Comments:

    Do you really feel like WalMart's policies are having a huge impact? I was struck, when reading through the list, that most of the 300 drugs offered at $4 were duplicates (so there were only around 80-100 individual drugs), and that they didn't cost terribly much to begin with. The drug prices don't appear to affect an awful lot of the drugs people are prescribed to the elderly.

    The more I've looked into it, the more it seems like a marketing ploy. (I'd like to see a study of how many people actually are prescribed the medications on the $4 price list, or how many WalMart fills a month, comparaed to other drugs.)

    By Blogger BuddhistValkyrie, at 11:11 PM  

    Sure it's a marketing ploy. Wal-mart is not in the charity business. However, it's a marketing ploy that might be helping a lot of people as well as earning Wal-mart some goodwill and additional business. What I would like to know is when it will be available nationwide.

    I think the point about copays is significant. Between copays and deductibles, a person with a chronic illness can end up paying several thousand dollars a year in addition to insurance premiums. Drug plans are often run separately from a person's health insurance plan, and drug costs may not count toward the health insurance deductible or OOP max. When one has several different medications, each with a copay, it's often more expensive than a single brand-name drug. Multiply that by twelve months and it really is a big chunk.

    By Anonymous Danie, at 11:05 AM  

    This is moving beyond Wal-Mart and will open the discussion concerning branded drug pricing and generics. Nearly $40B of branded drugs will go generic in the next few years. The numbers I have seen indicate you get about a 90% savings in cost. This will be a tremendous opportunity to lower medical cost in this country.

    On a personal note my doctor refused to allow for generic Flonase. The branded drug cost me $147 in co-pays. A new doctor was shocked when I insisted on the generic. The co-pay is $25. A big difference even though this is my only medication.

    Remember, the US is the only country that does not have some sort of price controls on pharmaceuticals.

    Steve Lucas

    By Anonymous Anonymous, at 2:50 PM  

    "Remember, the US is the only country that does not have some sort of price controls on pharmaceuticals"

    I remember that. But I don't remember what it means.

    John Fembup

    By Anonymous Anonymous, at 3:09 PM  

    Steve - very few countries in the world price control all drugs - most will price control only those on the WHO essential drugs list - this is a VERY basic list and does not include Flonase!

    By Anonymous Anonymous, at 4:16 AM  

    My point concerning the Flonase was the savings available by using a generic. Other countries use their price controlled drugs as their first choice for medication, similar to our VA, thus reducing their overall drug cost.

    What does cost control mean? It means a drug must be reviewed by a panel prior to being added to an approved list of medications. Yes, this does mean some very effective drugs are not approved due to cost.

    From my perspective two important factors distinguish the US system from the rest of the world:

    First, the rest of the world views death as a part of the natural process. You do not see an elderly terminal patient being put on ventilators, or given six figure treatments, when they are at the end stages of a disease.

    Second, medical treatment is viewed as a cost, not an income opportunity.

    John Abramson in a recent article makes some interesting points:

    "Britain spends only 40% as mush as the US on health care... and Americans live the shortest amount of time in good health." The calculated waste is approximately $650B.

    "The problem is, the US healthcare system is exquisitely well designed to maximize profits but exquisitely poorly designed to provide the best health care efficiently.

    And even nonprofit medical institutions shape the care they offer based on their own bottom lines instead of the health needs of the communities they serve.

    In Washington, the Food and Drug Administration is much better at protecting the interest of the drug and medical-device industries than those of patients."

    While I do not personally agree with all of the policies of the British system and certainly want more freedom of choice than the Canadian system there is certainly a place for government in improved consumer protection regarding medical cost.

    United Health Cares stock back dating, Kaiser's $4B computer problem, fen-phen, Vioxx, Actiq, excessive CT scans, and the list goes on raises the question: Is our current system providing the best care? I feel we do have room for improvement and limiting Pharma's control with approved bulk negated drug prices is a step in the right direction.

    Steve Lucas

    By Anonymous Anonymous, at 9:15 AM  

    Steve, I would agree that there is a great deal of waste in our health care system. I don't know that government regulation is the answer or if it is even possible without a complete overhaul. The demand for health care services is a direct result of the presence of private insurance, and to a lesser extent, our litigious environment.

    Also, like Wal-mart, drug companies are in business to make money. Were it not for our under-regulated and expensive health care system, new drugs would cease to be made. The rest of the world depends on the American market. Generics should more properly be termed off patent. They wouldn't exist if they were not patented and sold at a much higher price when first invented. Where's the incentive to make new medications, or even sell the old ones, if a profit can't be made?

    Finally, health and health care are two different things. There are a lot of reasons why Americans are not the longest-lived people in the world, but it's not the fault of the health care system, though people love to indict US health care over what really amounts to the bad health habits of its citizenry. Frankly, it's a credit to the Brits that they survive so well in spite of the NHS, with year-long waits for MRIs and operative mortality 4-8 times higher than the US. And it's a credit to our system that it keeps us alive as long as it does.

    By Anonymous danie, at 10:47 AM  

    daine,

    I have too agree that government is a poor way to regulate any system and the insurance companies are a large part of our medical system. A major overhaul would create a major economic impact on any number of companies and more importantly people.

    Where I have to disagree is that America is the sole source funding mechanism for the drug industry. New drugs will not dry up and nobody is suggesting we remove all of the profit incentive from drug manufacturing. If you review the drug companies financials you will find the largest expenditures are not on R&D, but on marketing and administration. After a boom time of cash flows from statins the major drug companies do not have a pipeline of new drugs waiting to go to market. Instead they are trying to buy promising drugs from small startups.

    Today's BBC has an interesting feed on a promising kidney cancer drug being developed in the UK. I am sure the company involved is planning on making a profit.

    An approved drug list would does not preclude making a profit. What it would do is subject drug manufactures, selling to government agencies, to negate bulk discounts. Usually private industry follows the government lead in pricing matters. There are any number of companies worldwide, who currently make and market non patented versions of any number of drugs, and they do make a profit.

    Steve Lucas

    By Anonymous Anonymous, at 12:46 PM  

    Steve, you ask: What does cost control mean?

    But Steve, you were speaking before about price controls. Now you speak of cost control. Price and cost are different. I think the high cost of pharmaceuticals is a different, and deeper, problem than their retail price.

    I also think mixing up health care and health insurance gets in the way of understanding. For example, you state "the insurance companies are a large part of our medical system." Well, no they are not. They are insurance companies. Another example: you mention United Health Care "stock back dating" - but the back dating of stock options has no effect on the cost of health care. (nor, I suggest, on the price of insurance)

    So while as you state the US may be the only country that does not have some sort of price controls on pharmaceuticals, it is not clear what that means.

    "Americans live the shortest amount of time in good health."

    Maybe more health care would change that - but I doubt it.

    I think it is more logical to seek ways in which the public health can be improved and demands for health care are reduced. And one good place to start thinking about how to do that is to examine how Americans' behaviors drive health care costs - I mean poor nutritonal habits; obesity; inadequate physical exercise; unsafe sexual activity; inadequate sleep; drug, alcohol, and other substance abuse;, tobacco use; violence; auto accidents; stress in the workplace; etc etc. Is it rational to ignore our self-destructive behaviors and believe that if society would only pay for it all, that would be a permanent solution? There's a whole lotta denial going on here I what I think.

    John Fembup

    By Anonymous Anonymous, at 2:38 PM  

    John
    I agree totally with your last paragraph.

    Steve
    I didn't say the world depended on American drug companies, I said the American market. Many, if not most, drug companies are foreign-owned. But, I would bet that UK company has its sights set on the US, since kidney failure is the one illness for which we do have universal health insurance! Although I completely agree that the amount of money wasted on marketing is a travesty. Only two countries allow direct-to-consumer advertising. New Zealand is one of them, but the drug companies aren't blowing their budget on the Kiwis, that's for sure!

    By Anonymous danie, at 1:15 AM  

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