Politics from the Palouse to Puget Sound

Wednesday, May 16, 2007

Free-Market Health Care and Wal-Mart, Part II

From the May 13 edition of Florida Today:
$4 pricing makes more medicine affordable

Before Wal-Mart and Target decided to sell hundreds of generic prescription drugs for a flat $4 fee in September, Ann Maynard couldn't afford to take the medications her doctor prescribed.

"I went, 'Whoa!' " she said, describing her reaction when she realized what the new policy would mean to her life.

"If it wasn't for this new trend, I would still be walking around unmedicated. What they're doing is causing everyone to follow them," she said.

It has been about nine months since the discount-store giants Wal-Mart and Target decided to take on the drug industry by undercutting most of their competitors. The result has made many medicines affordable to the elderly, working poor and uninsured.

Experts say it might be too early to gauge the overall effect on the drug industry and consumers. Pharmacy chains -- which dominate sales -- say the move hasn't affected their business.

Sandy Lutz, director of the Health Research Institute with PricewaterhouseCoopers, said growth in drug spending is slowing down, as people move to using more generic drugs in general.

"Drug spending is going up, but not as quickly as in the past," Lutz said. "Part of that is generics and these types of pricing" from Wal-Mart and Target.

According to the National Association of Chain Drug Stores, doctors wrote about 3.38 billion prescriptions in the U.S. in 2005, costing consumers $230.3 billion. That was an increase of 110 million prescriptions and $10.2 billion over 2004.

About 41 percent of those prescriptions were filled at chain drugstores, while mass merchants like Wal-Mart and Target accounted for nearly 10 percent.

Experts say health-care providers were becoming sensitive to pricing, even before the $4 generic-drug programs went into effect.

"People overall are becoming much more aware of what health-care services and products cost," Lutz said. "It's partly because of consumer-directed access, high deductibles and industry efforts to be more transparent. It's good for consumers to see what things cost."

'Overpriced' brands

With the move to $4 generic drugs, some consumers have left traditional drugstores, and headed down the street to Wal-Mart and Target.

"Branded prescriptions are extremely overpriced," said Viera resident Dee Rustic, who was picking up an anticoagulant for her husband recently at Target.

"It's very, very difficult for people, especially on a fixed income, to take as many as 10 drugs. I think this type of program makes it easy for people to take the drugs they need," she said.

Rustic, who worked as a nurse-practitioner in Michigan and is looking for a job here, said she saw patients who didn't take blood-pressure medicine because they couldn't afford it.

"Patients need to ask their doctors to prescribe generics," she said.

Drugstores busy

But officials of drugstore giants Walgreen Co. and CVS/Caremark Corp. said the move by Wal-Mart and Target has not affected them.

Walgreen said generic-drug costs don't change costs for the majority of its customers, because those customers' insurance companies pay for the medications. In addition, Walgreen customers use other benefits at the stores, like 24-hour service and drive-through pharmacies.

CVS spokesman Mike DeAngelis agreed.

"For customers who have prescription coverage, the average generic co-pay is relatively nominal," DeAngelis said. "For example, the generic co-pay for Medicare prescription-drug plans is typically $5. Furthermore, under many health plans, the price paid by the consumer for some of these drugs is actually less than $4."

DeAngelis said his company's pharmacy sales were up 9 percent for the year, despite the Wal-Mart and Target generic-drug promotion.

New business

However, Wal-Mart and Target's customers are coming from somewhere.

"Response to the $4 prescription program has been considerable," Wal-Mart spokeswoman Jami Arms said. "Between Sept. 21 and Nov. 12, as the first 27 states were added to the program, 2.1 million new prescriptions were filled in those states, as compared to the same period" the year before.

Maynard, 51, takes medicine for high blood pressure, allergies and an occasional bout of depression.

Despite the fact that she works in an office for several doctors, she doesn't have health insurance.

Her antidepressant alone was $82. The total cost for her three prescriptions now is $12 a month.

"My doctor reviews the list before he prescribes to try and make sure that what I need can be found on Wal-Mart's generic list," she said.

Political angles

Chris Kofinis, a spokesman for the anti-Wal-Mart group WakeupWalmart.com, is among critics who think the list of $4 generics has too many drugs that aren't often prescribed. He said he thinks the move was part of Wal-Mart's political agenda to push government-paid health care.

"There's nothing wrong with cheap drugs," Kofinis said. "They're trying to deflect attention from the health-care crisis in their stores. That doesn't excuse your company not providing health care to 775,000 of its employees."

At least one expert said Wal-Mart's move is going to will have ramifications in Washington, D.C.

"Wal-Mart's push for universal health care lends more heft to the debate," said University of Arkansas associate professor Glen Mays, who studies the corporate giant, which is based in his state.

"It makes it a much more serious dialogue when you've got large corporations like that who are coming to the table," he said.
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HT: Marshall Manson

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