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|12-27-02: Golden Buckeye gives seniors a drug discount
|But whose pocket is it coming out of?
This is the second in a three-part series on prescription drugs and
The Daily Standard
Next month, 2 million Ohioans over 60 years old will get a new Golden
Buckeye card that will allow them to claim a prescription drug discount, regardless of
income status, at participating pharmacies and mail order dispensaries.
The Ohio Department of Aging says there is no cost to the state for the
But Ernie Boyd, the executive director of the Ohio Pharmacist
Association in Dublin, says that is because most of the discount will come out of
pharmacists' pockets. He claims the profit margin for both independent and chain
pharmacies is too thin for the kind of hit this will likely entail.
The Golden Buckeye Drug Benefit Plan is being run under contract with
MemberHealth of Solon. According to state information, the plan is funded solely through
rebates and discounts negotiated with the pharmaceutical industry on 79 or so of the most
often used drugs by the state's over 60 population.
The rebates will be used to offset program costs and provide savings,
which the state says will be passed on to cardholders and pharmacists. The state says 45
percent or more of all manufacturers' rebates negotiated for a specific drug will be used
to lower the cost of the drug at the time of sale.
The program is expected to provide customer discounts up to 20 percent
or more off the normal cost of the drugs at pharmacies. The normal cost was calculated by
averaging the retail price at Ohio pharmacies last September.
The new Golden Buckeye drug discount program builds on the popular Ohio
program begun in 1976, which currently has 22,000 merchant participants offering discounts
on everything from haircuts to car repair, the state says. Each business voluntarily
participates and designs the type of discount, which best suits its business. Some offer
discounts daily, some only on certain days of the week and some only during certain
seasons of the year.
The new card, necessary to drug discounts, is being sent to those
60-plus seniors who have a state drivers license or state ID.
The seniors and the 200,000 citizens with total and permanent
disabilities who present the new Golden Buckeye card at participating stores or at mail
order companies will be able to get discounts, which the state warns can vary from day to
day and from pharmacy to pharmacy.
For example, the information packet from the state gives a range of
estimated savings on brand name drugs from 0.5 percent to 38.5 percent and on generic
drugs from 0.4 percent to 56.4 percent. By mail order, estimate savings on brand name
drugs range from 9.3 percent to 49.7 percent and on generic from 5.1 percent to 74.2
There is a $3.50 dispensing fee for pharmacy prescriptions and a $1.50
fee for mail order dispensing that the state says it has added into the cost calculations
The pharmacy or mail order house also is required to pay a 75 - cent
transmission fee per prescription, which a local pharmacist said "adds up."
It is important because the average profit margin of Ohio pharmacies is
a low 1.9 percent, says Boyd, who lobbied against the program on behalf of the Ohio
Pharmacist Association. The association's membership is 45 percent individual pharmacies,
5 percent hospitals and clinics and 50 percent of drug store chains.
"For every $50 prescription we fill, we make 80 cents," said
Boyd, who is a former pharmacist himself. He acknowledged a pharmacist's salary lowered
the profit calculation.
But it is still low, he said. At a recent movie, he related how he
bought a box of popcorn for $4. Because he had previously been involved in the sale of
popcorn as a fund-raiser, he knows what the wholesale popcorn costs.
"It is 10 cents. They are making a $3.90 profit. On a $300
prescriptions, we (pharmacists) make a $3.70 fee. That is less profit than from a box of
popcorn," Boyd continued. "Drug manufacturers, however, make 18 percent profit
on the same prescription."
He said he knows there are rebates discussed in the discount program,
and pharmacies may get part of a rebate back for participating. But he said rebates are
always a little iffy and likely do not cover the full drug cost.
Insurance companies, for example, pay the pharmacist for the drugs at a
price they have set. When the cost of a social program increases, rebates get cut. He said
the Medicaid program is now cutting promised rebates to pharmacists. The money is going to
support the program, he explained.
"Not one pharmacy gets a discount on the purchasing cost of the
drugs that they are asked to sell at a discount," Boyd said. "It is the
manufacturers the state and federal government should be asking to cut profits. But state
and federal government officials haven't got the guts."
By negotiating a discounted price statewide for senior sales, the state
program is essentially "fixing prices" for drugs they are discounting in Ohio,
he continued. "In reality every pharmacy has to price its products according to its
own costs and needs and every pharmacy to be profitable must carry an inventory of
$150,000 worth of drug products. A pharmacy in downtown Cleveland then may have to pay
extra for a security guard and other security measures, for example."
One set price also kills competition, he said.
"I also want to know why we are using our state tax money to
promote mail order out-of-state pharmacies," Boyd asked.
Pharmacies already are closing everywhere, he said, and the use of mail
order pharmacies is just another contributing factor.
"I know it's hard to get warm and fuzzy about chains, but a big
CVS closed in Toledo and Rite-Aid closed a big store in Columbus," he said.
Soon there will be less pharmacies around, leaving only box type stores
with prescriptions by the thousands and no time for consultations and personal service, he
"On average, pharmacists make 95 recommendations a week to their
customers. Most pharmacists deal with three problems (mistakes on prescriptions) a day. Of
those mistakes, one third would have injured the patient," Boyd said.
He relayed a story from his own days as a pharmacist when a doctor
mixed up a similar sounding cancer and thyroid medicine on his prescription.
"I called the doctor because I knew the patient had a thyroid
problem and he said, 'Oh, my God,' and it was fixed quickly with no problem. It would have
killed the patient if the mix-up hadn't been caught."
He said that kind of check is something you can't do with mail order
prescribing. And with fewer pharmacies, there will be pressure to fill prescriptions
faster and there will be fewer catches of such mistakes, Boyd predicted.
One thing that might help pharmacists, Boyd said is the
implementation of a law, passed by the U.S. Congress and signed by former President Bill
Clinton that would allow pharmacies to buy their drugs from a Canadian distributor. But
the director of the Federal Drug Administration (FDA) did not sign off on the rules to
implement the law in Clinton's administration, and it has not been done under President
George W. Bush either, he complained.
He said the drugs are made by the manufacturers in this country, but
they cost 40 to 50 percent less in Canada or Mexico. They are essentially the same drugs,
he said. "I don't know why there hasn't been a fuss about it, " Boyd concluded.
When Ohio Gov. Bob Taft announced the formation of the new Gold Buckeye
prescription drug program in late October, he said he was pleased to give seniors and
people with disabilities sorely-needed help in meeting the rising costs of prescription
But Boyd thinks putting pressure and rules on the drug manufacturers
might be a better way.
Part III of the series will focus on how some of our local pharmacists
see the Golden Buckeye program.
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