Giving Up Choice on Pharmacies


Anybody remember privacy? We’ve pretty much thrown in the towel. We have our picture taken every block or so, sign agreements without reading them, and can’t even manage to be properly outraged when it turns out that the government can’t be bothered to get a secret court to rubber stamp the latest invasion. Now there’s a new intrusion, but it’s for our own good. Really it is.

There’s a great line from “...the two biggest players in the drugstore space are Walgreen Co. (NYSE: WAG) and CVS Caremark (NYSE: CVS). If two-thirds of the Earth is covered by water, the remaining third is covered by these two companies.” That’s not quite true. Any New Yorker will tell you that you have to leave room for Starbucks, but it seems to come close. Walgreen’s is a bit bigger and pays a higher dividend, but CVS has a higher five-year growth rate.

No company the size of these two is going to do everything right, particularly when it’s this decentralized, and so CVS has been hit with a number of regulatory actions. In California the company was fined $658,000 for failure to have the pharmacists provide proper consultation services to patients. In North Carolina the chain was fined for overcharges, a Securities Exchange Commission (SEC) fine of $20 million for overstating earnings in a 2009 bond offering, and back in California there’s the matter of 37,000 missing narcotics tablets. According to the Los Angeles Times: “Federal prosecutors had accused CVS pharmacies in Oklahoma of creating fake DEA license numbers on dispensing records, filling prescriptions for doctors without valid licenses and improperly labeling prescription vials.” That’s not unique to CVS. Walgreen’s got hit for $80 million for letting oxycodone work its way into the black market, and has been running into problems with patient privacy issues.

Most of these episodes have more to do with individual personnel violating company policies than any corporate failings. It just feels worth mentioning because of the latest display of corporate rectitude. CVS has been adapting to the changing healthcare climate by reinventing itself as CVS Health. It plans more in-store clinics and recently stopped selling tobacco products as a symbol of its commitment to public health. Of course it expects to increase sales in other parts of the store as a result of customers wishing to show their approval of this decision.

Oh yes – CVS also owns Caremark, a Pharmacy Benefits Management (PBM) company, one that administers prescription plans for insurers and corporations. In theory, when a company in the drug business owns a PBM, the two sections are supposed to be kept separate. There have been occasions where a drug manufacturer which owned a PBM paid pharmacists for calling prescribers and talking them into changing prescription orders to the drug manufacturer’s products. Now CVS is proposing that patients whose drug benefits are managed by Caremark be charged a $15 surcharge for filling those prescriptions at pharmacies that sell tobacco products. Caremark has about 65 million members. This is not a surcharge on people who smoke, it’s a surcharge on people who fill prescriptions at pharmacies that sell tobacco products.

There are lots of reasons why people shouldn’t use tobacco, and other reasons why retailers in the health care industry shouldn’t be selling tobacco, but there’s also the principle that a corporation shouldn’t be extracting fees from customers who choose to exercise a reasonable choice of suppliers.

In theory, we believe in free markets and open competition. We may give up some elements of free choice of providers in return for other benefits – managed care insurers may limit us to a network of providers, but the coverage may be more extensive, or less expensive than other plans. We may prefer one physician over another based on age, or gender, or time spent in the waiting room. We may even have opinions about an MDs professional judgement. In the same way, pharmacies are not interchangeable. Location matters, and so do hours, services (delivery) and the personality of the pharmacist.

The PBM is entitled to know that a licensed pharmacy filled a legally written prescription and sold it at the contracted price. It has no business asking if we stopped to pick up breakfast cereal or birthday cards. And we shouldn’t have to pay extra for shopping close to home.

Sam Uretsky is a writer and pharmacist living on Long Island, N.Y. Email

From The Progressive Populist, December 15, 2014

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