The decision of General Motors to go with a closed pharmacy network for its 1 million employees and retirees is only the latest in a series of blows for prescription drug customers' freedom of pharmacy choice.
Freedom to choose is also being eroded in less visible ways by managed care plans that use financial incentives, or rather disincentives, to push people into mail-order. Because mail-order companies can pay as little as 10 cents on the dollar for pharmaceuticals, compared with retail pharmacies, they can afford to pass on part of their savings to insurance companies, which leads to plans being structured to favor mail-order.
Then, when retail pharmacies are finally allowed to provide services to their third-party plan customers, they are burdened with having to enforce formularies and other cost-containment practices whose only purpose is to return money to plan sponsors. Such efforts are not only time consuming, but also undermine and thwart the pharmacist's professional role as an advocate for patients. "They are using the pharmacist to move market share," says one supermarket pharmacist of third-party plans that tie pharmacist reimbursement to increasing the use of "preferred" drugs. "My job is to take care of patients. We should be choosing for the patient. Instead, we're being asked to phone the physician to change therapy based on rebates being paid back to the insurance company."
These comments, spoken by a professional trying to care for patients, illustrate what is so wrong with some so-called cost-cutting tactics now in vogue that have nothing to do with patient care, and what happens when pharmacists lose control of the profession to others.
Fortunately, supermarket pharmacies are starting to fight back. In two unrelated developments, supermarket companies with pharmacies have indicated that they intend to reclaim their customers and take back control of their businesses.
Super Net, the supermarket pharmacy network launched by a few visionary supermarket pharmacy directors two years ago, is now positioning itself to compete aggressively for regional and national managed care contracts. Super Net has hired a company to market the network to third-party payers.
The industry support that Super Net has received is one sign that supermarket companies are serious about pharmacy and are committed to doing what it's going to take to succeed in this new environment.
Another sign is the lawsuit filed recently by four supermarket companies with substantial pharmacy operations, alleging "discriminatory" pricing practices by pharmaceutical manufacturers. This latest suit joins two similar lawsuits filed by chain drug stores and independent pharmacies.
The logic is inescapable that the huge price differentials among certain classes of trade have distorted the market and are largely responsible not only for the rapid growth of mail-order in recent years, but also for the high cost of drugs borne by retail customers.
Addressing members of the National Wholesale Druggists Association, Dr. Edward Hughes of Northwestern University said the current drive to a more "centralized and organized" delivery of health care will mean more mergers of companies and the formation of strategic alliances. Forming alliances has become the latest survival tactic not only of pharmacies and drug manufacturers, but of hospitals and physicians, too.
The wisdom of the founders of Super Net also is confirmed by the news that the National Association of Chain Drug Stores is looking to form its own network of pharmacy providers.
Hughes goes on to suggest that the current difficult and unsettling climate will usher in a new era, in which the customer will be king. Choice will rule. "Those who help keep people healthy and provide the services that people want will be the winners," he says.
Such a scenario favors supermarket pharmacies and the convenience they offer. Long-term, supermarket pharmacies will do well to align themselves with their customers and support customers' freedom to choose the services they need, the pharmacy that is convenient, the pharmacist who looks out for them.
In the meantime, Super Net, and perhaps the lawsuit as well, may be the best strategies for supermarket pharmacies to compete in the current environment.