Thursday, October 05, 2006

affordable drug costs and isolation from market realities

I recently read an article in the Chicago tribune discussing Wal Mart's $4 generic drug program in FL.

Key point:
* The number of drugs has expanded to 314
* Drugs cost $4
* Target is matching Wal Mart in tampa

A major point for me:

1. I realized I have very litte if any knowledge of the market price of generic drugs. I have had drug coverage included in my health insurance plan and typically saw generic drugs priced from $6 - $12.

Impact:
  • Health Insurers - what does this do to their $6-$12 generic copays? Will this effect enough drugs to lower the copays for most health insurance plans? Will it lower the premiums for the portion of health insurance that covers the drugs?
  • Medi-Save Plans - Does it make medical savings plans more feasible if many drugs (is it the majority) can be bought cheaply.
  • Does the inexpensive pricing introduce market / consumerism into the drug purchase equation that was previously obfuscated by health insurer mandates, discounts, etc...?
  • Cost of living for retirees and social security payments - if the program went national, how would it effect cost of living calculations?
  • Part D - how does this effect medicare part D? Could the premiums be lowered due to lower generic costs? My mother-in-law's program doesn't require her to pay for generics in exchange for a monthly $18 premium. I wonder if the economics of this formula suddenly change - maybe a different premium structure would make sense?

A point of warning:

I am not a physician or pharmacist, so please take what I say below with a grain of salt (consider it hearsay).

My physician told me that not all generics behave the same as brand name. Often, my physician specifically prescribes brand name drugs due to either tollerance / effect issues with patience or formulation consistency.

If your physician feels the same way, this may mean that not all generic substitutes can be used. I have a relative who cannot take the blood thinner warfarin, but must take the brand name product coumadin. When the substitue was tried, the relative did not find it as effective.

Have a wonderful day,

makingourway

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