Mail Order Cuts Medical Costs
By George Anderson
The cost for filling a prescription through a mail-order pharmacy is $2.50. Performing the same function at retail costs $5, on average. Even with some added costs of doing business through mail order, the results of a new study released by the Pharmaceutical Care Management Association (PCMA) says prescriptions filled through the mail are 10 percent cheaper than those bought at retail stores.
According to PCMA, which represents pharmaceutical benefit managers, mail order is one way the government can reduce expenses for Medicare.
Mark Merritt, president and CEO of PCMA, told Reuters, “To the degree the mail-service pharmacy option can be more aggressively promoted and accepted, the better off seniors will be and better off the Medicare program will be.”
In a business environment where medical costs have become an operating expense burden, many believe that the use of mail-order pharmacies is a means to help keep costs under control.
According to Reuters, citing the PCMA’s study, mail order prescriptions, “which now cut $34.6 billion in private sector health care costs, could save 56.8 billion through 2015 if more chronic and other suitable prescriptions were filled by mail.”
Moderator’s Comment: What does the government’s emphasis on mail order prescriptions in the Medicare program mean for those involved in the U.S. pharmacy
business? Should government or business be able to require health plan participants to use mail order to keep costs down?
– George Anderson – Moderator
District Council 37 is one of the largest unions in NYC. It has many municipal workers, and its finances are poor. So it switched to a “mail order only” plan for certain drugs to save money.
The backlash has been bitter. People want convenience. And many don’t want to pay extra for it.
Look at the healthy profits and expansion of Walgreens, CVS, and other drug chains. Clearly, those profits may have be trimmed due to the health care spending crisis.
I wonder if by re-engineering the task of filling a prescription, the drug stores could reduce their costs. I noticed that some stores in NYC are now encouraging 90 day prescriptions to reduce prices.
I agree with Mark’s comments about 90-day supply. Why can’t a retail pharmacy have this option available if mail order can? Where is the equity? Also, if pharmacies could be incented to install robotic dispensing equipment, the “value” of the pharmacist will go up further and their perception as a mere pill counter dispelled.
Speaking selfishly, our organization is 100% dedicated to the retail healthcare market and moving more prescriptions to mail order has a direct impact on our business. However, removing emotion from my response, I do have genuine concerns about the “counseling” afforded patients who elect to fill their prescriptions through mail order. With the senior population consuming the majority of prescriptions in this country — according to the Center for Policy Alternatives, 20% consume five or more prescription medications per day — much confusion can arise. If retail pharmacists could be compensated for filling the gap in managing drug therapy, I believe a balance could be struck between prescription meds via mail order and the value of the pharmacist. If Medicare insists that all meds be filled through mail order and no stipulation is made for quality, face-to-face counseling, my instincts suggest that the overall cost of healthcare will increase … perhaps much greater than the initial savings on the prescription drugs themselves.
We are keeping a close watch on this topic – for the sake of healthcare costs in general and for our own company’s sake in particular.
In my view, “mail order” is just another way of saying “online.” We have lots of examples of products that are now shipped through the mail that used to be purchased in stores. Books from Amazon, music from iTunes, clothes from Lands’ End. As far as I can tell, retail stores for music, clothes and books still survive. I would expect the same to be true if large amounts of pharmaceuticals are purchased through the mail.
Lets see, the PCMA represents PBM’s who run mail order businesses and it surprisingly comes up with the conclusion that the government should mandate mail order for medicare (something it has pointedly not done in framing legislation). On the other hand Walgreens claims that by utilising a much higher generic fill rate it can provide payors (including presumably the government) with a 10% – plus reduced average cost per script. Who to believe ? I agree with the previous panelist who argued that face time with a real live pharmacist has a value not easily expressed in percentages and that choice is almost always a good thing.
I take Lipitor. When I went to fill a prescription for an antibiotic (and I sure wouldn’t want to wait for that to come in the mail) my CVS pharmacist routinely looked up my records and told me of an interaction — and to skip the Lipitor until I finished the antibiotic. How do you get around that sort of scenario? If pharmacies are gouging, the government could set limits on what they can charge, but I’m not sure I’d trust that, either. What’s needed is real investigation, rather than knee-jerk reactions.
Saving a few dollars on the cost of dispensing by using mail-order methods is one thing. Reducing the cost of the drugs themselves is another. I say it’s time people smartened up about this:
Many of us blindly apply our prescription drug coverage toward medicines taken daily and accept the $15 or $30 or $45 co-pays each month. For many medications, it can be much cheaper to skip the insurance coverage altogether and purchase the meds in 100-day quantities for cash. I do this with a commonly-prescribed antihypertensive. It reduces my out of pocket by more than half and I don’t need to bother with mail-order.
So is the system broken? Or are we just being lazy consumers? Could we ask the same question of the people who run Medicaid?
Colour me confused. There are so many contradictions and differences of opinion about what should and should not be legislated or who does and does not have responsibility that I no longer see any kind of consistency at all in the way that the roles of government and business are perceived. Or perhaps that is the point.
I think our country is moving in a dangerous direction. Requiring consumers to change to mail order prescriptions will ultimately cost more. The idea of cutting out the middle man sounds good, as if consumers are buying at wholesale, but in reality the goal is to eliminate competition. My experience tells me that competition keeps pricing down. There are other considerations that must be examined. Elimination of jobs for example. The trend of reducing costs by eliminating American jobs will have a far greater impact on the economy and reduce our standard of living. Consultation. There is a real value to having a local person who knows you and can advise you of interactions thus eliminating further cost and giving an overall safer medical environment. Accountability is another reason to be skeptical. When problems arise as they sometimes do you have a local person in which to register your complaint. In my opinion, let’s get back to a free marketplace environment, level the playing field for pharmacies by removing constraints of 30 day co-pays and let the consumer decide where to purchase their pharmaceuticals.