Heres looking at you, Medco. Jerry Lacy played Humphrey Bogart in the 1972 film Play It Again, Sam. He also appeared in various soap operas. These days, though, hes playing a bit part in the disaster movie known as the U.S. health care system.
Lacy, 76, of Calabasas, Calif., requires prescription meds to control his cholesterol and blood pressure. His wife takes pills for a thyroid condition.
But now Lacy has a choice to make: Pay full price for the meds at drugstores like Walgreens, or buy from a single source the online drugstore belonging to Medco.
Thats the company his actors union uses to manage its prescription-drug benefit, which, until now, Lacy has preferred to stay with rather than switch to a more cumbersome Medicare Part D plan available to people his age.
Just a few years ago, pharmacy benefit managers like Medco would contract with most leading drugstore chains so people could fill their prescriptions almost anywhere they pleased.
Then the pharmacy benefit managers, or PBMs, realized they could operate more efficiently (and profitably) by limiting peoples choices to a single drugstore their own. So they laid down the law with consumers.
In Lacys case, he received a letter from Medco recently informing him that hes allowed to buy his meds just twice at a retail pharmacy before higher prices kick in.
You will pay the entire cost of those prescriptions if you continue to fill those long-term prescriptions at a retail pharmacy, the letter declares in big block letters.
On the other hand, Lacy was told, he can fill his prescriptions at Medcos online drugstore at insured prices, and your prescriptions will be sent right to you, with free shipping for standard delivery.
Hmm. Tough choice.
But is it fair for consumers to be limited as to where they can shop, especially if their choice consists of just one alternative, and that one alternative just happens to be owned by the same company managing the insurance plan?
Moreover, are people really well served by missing out on the personal interaction with their regular pharmacist, who can answer questions while filling a prescription?
Weve been with the same pharmacist for 30 years, Lacy said.
PBMs serve as middlemen between insurers or employers and drug companies. They use their purchasing power to try to drive down drug prices and thus save their clients (that is, insurers and employers) money.
Although there are a number of PBMs operating, the market is dominated by just three firms Express Scripts Holding, which recently acquired Medco for $29 billion; CVS Caremark; and OptumRX, a subsidiary of insurance giant UnitedHealthcare Group.
Together, these three companies represent about three-quarters of all prescriptions filled by PBMs. The merged Express Scripts/Medco accounts for about 40 percent of the market.
That market became even smaller this spring when a mid-size pharmacy benefit manager, SXC Health Solutions, announced the buyout of rival Catalyst Health Solutions for $4.4 billion. Brian Henry, a spokesman for Express Scripts, said the company was acting in peoples best interest by encouraging them to buy meds online from the companys own drugstore.
The goal is to deliver medicine in the most cost-effective way, he said. The most affordable way to receive many drugs is as a generic through the mail.
Gerald Kominski, director of the Center for Health Policy Research at the University of California-Los Angeles, said Express Scripts makes a fair point. The question, he observed, is whether the prices that an online pharmacy like Medco may charge are the lowest possible prices, or whether theyre simply lower than what a brick-and-mortar drugstore would charge.
Would a more competitive marketplace bring about even lower prices? Kominski asked.
DAVID LAZARUS Consumer columnist and contributor to American Public Medias Marketplace radio program