Why We Can't Have Nice Things

(Editorial cartoon by Joel Pett / Lexington Herald-Leader (June 3, 2013) and featured at McClatchy DC.  Click on image to enlarge and then boogie on back.)

The cost of health care in this country has come down, but only slightly.  One of the reasons, a big reason, is the cost of prescription drugs, even in their generic form.  David Lazarus examined why this is the case in a recent column.

Generic prescription drugs have to meet exacting standards for ingredients and quality, which you'd think would make them uniformly priced at pharmacies.

But that, of course, isn't the case. Generic drug prices can be all over the map, depending on where and how you buy them. ...

For example, a 90-day supply of the generic equivalent of the cholesterol drug Zocor cost $51.99 at Safeway, $62.97 at Walgreens, $75.99 at Target and $122.99 at CVS. At Costco, however, the price was just $9.99.

The generic equivalent of the hypertension drug Zestril cost $10 at Target, $28.99 at Safeway, $31.99 at Walgreens and $38.99 at CVS. But at Costco, the price again was $9.99.

In fact, Costco's drug prices consistently came in well below those of other leading pharmacies. And you don't even have to be a Costco member to use the company's drugstore. ...

What I'm hearing from these big chains is that drug prices are complicated, so don't go thinking that it's just about who can offer a generic drug for less.

What I'm hearing from Costco is that drug prices are relatively simple, and that it's all about who can offer a generic drug for less.   [Emphasis added]

So why the big disparity?  As to be expected, the pharmacy chains claim  they are available 24/7 for prescriptions (which is not always the case).  And they are closer and more plentiful than Costco, which means there is the brick-and-mortar overhead (there are 3 Costco stores with pharmacies within 8 miles of my home). 

The reason the chains charge more is that they can.  Most, if not all health care policies only pay a portion of the cost of the drugs.  The insurance companies don't have any real reason to complain about the cost and often use companies owned by CVS or Rite Aid to manage their mail-order prescription orders.

For Medicare/Medicaid participants this is an especially expensive problem.  When Medicare Part D was passed, one of the provisions denied the government the right to negotiate with pharmaceuticals on the price of drugs.  The "donut hole" provision has since been moderated, but the pricing of drugs section remains unchanged. 

I'm currently thinking about ways to work around the problem.  At this point, the only one I've come up with is to have the prescribing doctor write a new script every 30 days so that mail-order can be avoided, but I'm not certain even that would work.

Which means that at this point, the consumer is screwed.