"Health care that's always there" has been the battle cry of the Clinton administration in its attempt to secure health care coverage for all Americans. No one can argue with the sentiment. But just as there's no free lunch, there's no such thing as a free prescription.
The debate over health care reform has focused the attention of the American people on a sore that has been festering for years. Still, the case has not been made for radical reform.
It's also not at all clear, despite the arguments of the National Association of Chain Drug Stores and the National Association of Retail Druggists, that the federal government should mandate prescription drug coverage. Inclusion of a drug benefit may not even be in the best long-term interests of pharmacists and pharmacies.
Drug prices are increasing at the slowest rate in years. Many of the most widely prescribed prescription drugs are coming off patent. Prescription products are being switched to over-the-counter.
Perhaps you remember those early third-party plans, 12 or so years ago. Reimbursement was for the pharmacy's "usual and customary" fee. It wasn't long, of course, before insurance companies started setting the fees, first at average wholesale price plus a dispensing fee of a few dollars, and since declining to AWP minus 10%, even AWP minus 15%.
The government's role is not necessarily benign. New York state Medicaid administrators wanted pharmacists to collect a co-pay from Medicaid recipients. Fair enough, but there was a catch. If Medicaid recipients merely said they didn't have the money, they didn't have to pay. And guess what? New York decided that, in such cases, pharmacies would have to pay the co-pays for those patients out of their own pockets. Only a court challenge from the Pharmaceutical Society of the State of New York has kept this from happening.
Then there's the Medicare program. This year's cost was projected to be $8 billion. The actual cost: $80 billion. The latest federal budget has cut reimbursement to doctors and hospitals.
Pharmacy organizations want a "pharmacy benefit" that provides relatively generous prescription drug coverage to all Americans. These examples suggest that however generous the initial plan is, it will ultimately prove too costly, and benefits along with payments to providers will be cut.
Choice of a pharmacy could be one of the first casualties. After all, it could be argued, why should patients be able to choose their pharmacist when they are not paying the bill? We are already seeing patient convenience, the raison d'etre for supermarket pharmacies, being replaced by what's convenient for third-party payers, namely contracts with large chains and mail-order pharmacies.
This separation of the payer from the patient is responsible for distortions in the prescription drug market and has contributed to the high cost.
Consider the sorry way cash customers are treated. It costs less to fill a prescription for a cash customer. Yet cash customers are charged the highest prices in order to subsidize others with third-party prescription plans. Call it a type of discriminatory pricing.
An article published earlier this year in Forbes suggests the source of much of the inflation of medical costs. Consider these prices: $150 for an ultrasound scan, $1,100 for reconstructive knee surgery. Prices charged in a foreign country? No. These are the prices charged by veterinarians to take care of peoples' pets, using the same equipment and materials as for humans. Prices differ by as much as a factor of 10.
Robert Antin, chief executive of Veterinary Centers of America, a group of 24 animal hospitals, explains: "In veterinary medicine there is no third-party-pay system. People pay vets with their own money. "Since we don't have the luxury of serving clients who have someone else to pay, we deal with the realities of economics much more quickly than the human side. In veterinary medicine the people who pay always ask: 'Is it worth spending one month of my salary to keep my dog alive for another two weeks?' "
What's needed is a health care system that provides incentives for people to make their own best choices, and that reinforces the pharmacists' role as an advocate for patients. Then pharmacies can go back to competing on price, professional service and convenience, the things that matter to patients.
