HealthLawProf Blog

Editor: Katharine Van Tassel
Concordia University School of Law

Monday, February 2, 2009

Mail Order Drugs: Do they save money and are they safe?

The Boston Globe has an article on the incredible cost-savings found in mail-order drug delivery but also some of the questions about the lack of regulations over their operations.  The article reports,  

. . . .  Mail-service pharmacies pitched themselves to Barack Obama's team as one tool for beating back rising health costs and improving healthcare quality.  In a country that spends a larger share of its economy on healthcare than any other in dustrialized nation, and where the chronically ill account for 75 percent of all health spending, owners of mail-service pharmacies say Medicare could save billions if more people bought their regular medications from mail-service pharmacies, exploiting their scale, efficiency, and specialized expertise.  "Chronic and complex disease is where you need to focus for meaningful health reform, and that's who we serve in mail," said Dave Snow, Medco's chief executive officer.

But like many issues in healthcare, drug delivery is more complicated than it seems. Community pharmacies see mail orders as shady operators that threaten neighborhood pharmacists, a crucial source for drugs needed right away. They also challenge the potential savings. And they say customers, particularly the chronically sick and elderly, crave a personal relationship with the person who gives them their medicine.  "When people call the 800 number at the mail-order pharmacy, how do they know if they're talking to a pharmacist?" said Reginia Benjamin, senior director of public policy for the National Community Pharmacists Association, the lobbying group for independent pharmacies.

Mail-order pharmacies are essentially middlemen in the prescription drug supply chain. Pharmaceutical benefit management companies - PBMs, which manage drug benefits for most Americans, and which own most of the mail-order pharmacies - buy discounted drugs from manufacturers in exchange for supplying drug makers with millions of customers. . . .

Mail-service pharmacies say that increasingly, they also save money by helping patients manage chronic disease. Medco says its specialized pharmacists develop expertise on side effects, drug interactions and dosages in a particular set of drugs relevant to a particular disease that a neighborhood pharmacist cannot match. That, they argue, means fewer mistakes and complications, which adds to the long-term cost savings. Pharmacists are typically available 24 hours a day.

There is a misconception that a PBM is just "a big benefits administrator," said Dave Snow, chief executive officer of Medco, which has teams of specialist pharmacists for more than a dozen common diseases. "The real truth is, we're an intensive clinical company with thousands of pharmacists who take care of patients each and every day in a very advanced way."

Right now, Medicare recipients order only 10 percent of their chronic care drugs by mail - far less than retirees with drug benefits through their former employers, who get 40 percent of drugs that way, according to the Pharmaceutical Care Management Association, which lobbies for the PBMs.

One reason for the low rate is that when Congress created the Medicare drug benefit in 2003, drugstore lobbyists won provisions that prohibit mail-service pharmacies from offering large incentives to switch to mail order. The PBMs want Medicare rules changed to make it easier for them to drive customers to mail-order, and they say consumers need to be educated about the benefits of switching.  They have told the Obama administration that Medicare could save $1 billion over 10 years for every 1 percent of recipients who switch to mail-service for their chronic care medications, or $40 billion over a decade if everyone with Medicare drug benefits were automatically enrolled in mail-service for chronic care.

They also say there are few independent studies documenting mail orders' savings, noting mail-orders have paid multimillion dollar settlements for things like giving patients more expensive drugs instead of cheaper ones in an effort to maximize their profits.  They question whether mail-order pharmacies have sufficient oversight to ensure that real pharmacists are answering the phones and filling the prescriptions. (Medco and Express Scripts say they adhere strictly to state laws governing pharmacists and undergo regular auditing.)  "Overall, I believe that mail-order facilities need more regulation and accountability," said Benjamin, the lobbyist for the independents. . . .

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