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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 their cost.

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 program.
    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 percent.
    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 above.
    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 continued.
    "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 drugs.
    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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