News January 2007

Generic Drug Programs May Get A Boost

Four-dollar generic drug programs by large retailers like Wal-Mart and Target may get a boost this legislative session. Consumers would benefit from the cheaper prescription costs, and local pharmacies may not be as affected by the price competition as feared.

“I support the law; I don’t intend to undo it,” said Atkins.

Rather, the bill’s intent is to clarify the law’s relationship with prescription drug pricing designed to benefit the consumer, not drive out competition, he added.

The clarification would only apply to markets where two or more businesses are competing at below-cost prices.

Through Wal-Mart’s program, 56 of 331 prescriptions priced at $4 in other states are not available at that price in Minnesota Wal-Marts. Some of the excluded drugs cost $10 to $20 a prescription, and include some of the most popular prescription drugs, such as prednisone.

According to Jerry Prosnick, a pharmacist at Family Drug Mart in Virginia, customers will find the majority of generic drugs cheaper at an independent pharmacy rather than through flat rate programs at other retailers. All drugs currently sold at $4 are not sold below cost, and may cost less than $4.

Prosnick and other Iron Range pharmacists say they have not lost business to these programs. Discounting more expensive and popular drugs may affect that business however. Where only a fraction of Wal-Mart’s sales are in generic drugs, local pharmacists say about half of their business is in generics.

In addition, a recent study by the Department of Human Services found the average cost of dispensing a prescription is $9.59. For businesses that only deal with prescriptions, these costs cannot be covered by other product profit.

“Dispensing is a one-time cost, so the question is how often you are dispensing,” said Atkins.

Pharmacies have already shifted toward three-month prescriptions to help absorb dispensing costs of generic drugs. According to Atkins, local pharmacies haven’t lost business for a variety of reasons.

“It appears that the folks who are taking advantage of this weren’t filling prescriptions to begin with,” said Atkins.

Large retailers don’t seem to be shifting customers away from small pharmacies, rather they are making new customers. The issue may also come down to trust. People seek out their local or family pharmacist because they know and trust them, said Atkins, and are willing to pay a few dollars more for that security.

The Minnesota Pharmacy Association is taking a more cautious stance.

“We are concerned about that proposal because our pharmacies in greater Minnesota are already struggling financially,” said spokesperson Elizabeth Carpenter, who noted the Medicare Part D program has reduced insurance reimbursements to pharmacists in the past year.

Carpenter also said that patients who buy their prescriptions at different pharmacies may run greater risks of drug interactions.

“Pharmacists are put at a huge disadvantage if they don1t have all of the information about what a patient is taking.”

Source http://www.grandrapids-mn.com/