Chris Silva
Employee Benefit News •January 2007
To help drive down the costs of prescription drugs, some
employers are encouraging their workers to bypass their insurance
plans and purchase drugs directly from their local pharmacies.
While there's no hard data available, companies figure they
save money by not using their health insurance, and workers
save money because the price of the drugs is cheaper than
their insurance copays.
To take advantage of this growing trend, several neighborhood
pharmacies nationwide have attempted to shed their "mom
and pop" image by becoming more business savvy with
their price structuring. For example, a program called 1
Price Prescription promotes the sale of a large list of generic
drugs, approximately 200, for $18 for a three-month supply,
or 100 pills. The prices also are stacked to offer volume
savings; it's $34 for 200 pills, $48 for 300 and $60 for
400. Consumers pay out of pocket - no insurance or copays
involved.
The program is the brainchild of Dan Benamoz, CEO of Pharmacy
Development Services in Lantana, Fla. PDS is a consultant
organization that provides business solutions and coaching
services to independent pharmacies. Not all pharmacies run
the program the same. Benamoz and his team present the concept
and the model, and pharmacies then shape it to their specific
needs.
" We're doing this with pharmacies all over the country," says Benamoz, "and
if people are interested in finding a pharmacy in their area [that offers 1 Price
Prescription], they can contact us and we would be happy to put them in touch
with one."
Johnson Drug in Waltham, Mass., is an independent pharmacy
that uses 1 Price Prescription. Owner Steve Bernardi says
he's been using the program for about two years, but its
popularity has really taken off within the last few months.
Bernardi doesn't charge a fee to be a part of the program,
and it's open to everyone, whether they have health insurance
or not. And if the drug isn't on the formulary, Bernardi
encourages people to tell him so he can look into including
it.
He believes that the system benefits both employers and employees. "The
employee saves money because the cost is not as high as their
usual copay, and the employer saves money because this is
an out-of-pocket worker expense that's not utilizing their
insurance," says Bernardi, who has owned Johnson Drug
with his wife, Diane, since 1987.
A personalized service
Christine Budd serves as the senior benefits specialist at
Nova Biomedical Corp., which is based just a couple miles
away from Johnson Drug in Waltham. She has been encouraging
the firm's workers to get their prescription drugs from Johnson
Drug, even though the company offers health care benefits
through Blue Cross Blue Shield.
Budd says she's been promoting the use of generic drugs as
more cost-effective treatments than their brand-name counterparts.
The 1 Price Program's generics emphasis appealed to her." We've
been encouraging the workers all along to use generic drugs," says
Budd." When Johnson Drug came out with the one-price
formulary for generics, we had one of their pharmacists come
in to talk with our folks. He met with our employees one-on-one
and told them how much money they could save."
Under their insurance plan, Nova Biomedical's employees pay
a copay of $15, $30 or $50 for a 30-day supply of a drug.
So they're saving money by paying just $18 to Johnson Drug
for a 90-day supply. Budd feels the company is getting a
more sincere and involved service as well.
" The folks over there are willing to take the time to meet with people,
come in and discuss their prescription and talk about alternatives," she
says. "They're also willing to talk to our employees' doctors. So it's a
very personalized service that our workers have been responding to."
Of Nova Biomedical's 450 employees at the Waltham site, Budd
estimates about 30 get their prescriptions filled at Johnson
Drug. Nova Biomedical began promoting 1 Price Prescription
in the spring of 2006. The biosensor company has considered
making Johnson Drug its pharmacy benefit manager; however,
the pharmacy doesn't have the electronic means in place to
track savings, Budd says. In addition, she adds, some of
employees work off-site and would be compromised if an emergency
arose and they couldn't get to Waltham.
Growing the model
Independent pharmacies believe tools like the 1 Price Program
give them a card to play in competition with HMOs and PBMs.
Many of the pharmacies that use the program have only done
so for about a year. But expectations are high that its popularity
will grow, particularly among small business owners.
" If you can't provide a drug benefit because of cost, then this is an option," says
Darlene Able, owner of Able Care Pharmacy & Medical Supplies in Enfield,
Conn. Able has been running 1 Price Prescription for over a year now and has
over 100 clients, although no employers. She hopes to change that by touting
the program's benefits to area businesses through her newly anointed position
on the town's Chamber of
Commerce.
" It's just a great program," remarks Able. "It's gone
over very well with the patients, and I think ultimately it's
something we can do to show
we're here, we care and we can differentiate and compete."
Some pharmacists are bewildered that they're not doing more
direct business with employers.
" I wonder why benefit mangers don't call up independent pharmacies and
try to work something out on a more regular basis," says Joe Nowell, co-owner
and pharmacy director of East Tennessee Discount Drugs in Lenoir City, Tenn.
Nowell mostly operates his 1 Price Prescription program on an individual basis,
although he says a local steel company recommends its 10 employees to Nowell,
much like Nova Biomedical encourages its workers to see Bernardi at Johnson Drug. "I've
had referrals coming in from everywhere," Nowell says. "The patients
love it. The doctors love it. And it has a strong impact on our bottom line and
on the community's vision."
Denise Weaver, owner of Weaver's Rocky Face Pharmacy in Rocky
Face, Ga., has also used the 1 Price Prescription model for
about a year. She likes the value the program offers to her
pharmacy and the community, as well as the consistency it
offers.
" We've actually marketed it to a few small companies that
have said, We have to reduce our costs.' And we have offered
[1 Price Prescription] as a way
of doing that. If they know exactly what they are going to spend, then that's
a plus. Some of these companies have even looked at picking up part of the cost
for that."
Teaching wellness
Part of the attraction of working with independent pharmacies
is the personal intimacy with a local store in the community.
Indeed, an integral part of the 1 Price Program is teaching
pharmacists how to correct faulty prescriptions.
" We're actually pharmacists who are not trying to dispense medications," says
Benamoz. "We're trying to teach people about lifestyle, diet and supplement
changes to improve their conditions. We've become a very medication-oriented
society and that causes problems, and a lot of times we're treating side effects
of another medication."
Comments Nowell, "I spend most of my day talking to
people about not taking medications."
The problem with Wal-Mart
Nowell and other independents also stick to the same manufacturer
no matter the price fluctuations, thus guaranteeing the patient
they're getting the same generic drug each month.
This is where the 1 Price Prescription program differs from
competing generic discount offers, such as those from Wal-Mart
and Target that make $4 monthly prescriptions available.
Wal-Mart's program - which it announced last September and
has since spread to multiple states - is $2 cheaper a month
than 1 Price Prescription. However, proponents of the latter
say they stick with the same manufacturers regardless, whereas
Wal-Mart, Target, Kmart and other large discount chains seek
out the cheapest bargain of the month.
" The problem with Wal-Mart," comments Benamoz, "is
they bounce from manufacturer to manufacturer and focus solely
on price and the cheapest
generic that's around that particular month. Our people on the 1 Price Program
stick with the same manufacturer month to month. This will cost a little more,
but it works out better for the patient, I believe."
Some industry followers believe the concept is solid but
might need some tweaking in order for it to grow, particularly
to a business model where a community pharmacist could completely
displace a PBM as the prime provider of prescription drugs.
" I think the concept makes a lot of sense. But for the employer to contract
directly with the drugstore themselves presents administrative challenges," says
Michael Jacobs, national practice leader, pharmacy health management group with
Buck Consultants. The support of a larger player would be required, such as a
PBM run by a pharmacy association or by the state government, Jacobs believes. "You
would need a target payer market to support it and give it legs, and then you
would need a relatively broad distribution."
Jacobs says he sees the value in the program though, and
believes it has room for growth, particularly as more brand-name
drugs lose their patents and the generic market grows.
" I think it's a great way for independent pharmacists to make
a name for themselves and demonstrate the value of pharmacists
in the community as health
care professionals."
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