Rx Buying Clubs Not Always Cheaper

Published March 1, 2004

Budget pressures, clamoring from senior citizen groups, and a recent favorable court ruling have prompted a number of states to create “drug buying clubs” and take other measures to cut prescription drug costs.

In Illinois, for example, the Rx Buying Club for disabled persons and those who’ve turned 65 years old went into effect January 1. The club is part of an initiative that combines the buying power of nine state agencies to negotiate lower drug prices. Illinois last year spent about $1.8 billion on prescription drugs for state employees and retirees and beneficiaries of Medicaid and other public health programs.

Within three weeks of its effective date, the Illinois Rx Buying Club had received more than 61,000 requests for applications, according to Nikki Smith, public information officer for the state’s Department on Aging, which oversees the program. More than 5,000 applications with the annual $25 fee were returned during the program’s first 20 days, she said.

Not Always Cheaper

Illinois Rx Buying Club participants pay a $25 annual fee that is waived for low-income residents. About 2 million seniors 65 and older, disabled people, and state employees and retirees may join. State officials predict Illinois will save $120 million a year through larger drug discounts negotiated by the program.

But at a ceremony at a Chicago-area senior center to promote the program, Blagojevich handed out information sheets with drug club prices. The Chicago Tribune contacted several pharmacies and found certain common medicines would cost less at retail than through the drug buying club.

For instance, 30 capsules of the acid reflux drug Nexium would have cost $124.19 through the buying club, but $119.99 at Walgreen’s. The cholesterol-lowering drug Zocor would have cost $125.88 for 30 tablets through the drug buying club versus $114.99 at Walgreen’s. Some drugs did cost less through the drug buying club than the advertised retail prices at Walgreen’s and other major drugstores.

Popping Up All Over

The recent state drug club activity stems from a Supreme Court ruling issued last summer. By a 6-3 vote, the justices rejected a challenge to a Maine plan to extend drug discounts to non-Medicaid patients. Drug makers and other plan opponents argued the plan interfered with interstate commerce because it would have penalized companies that refused to participate.

In Ohio, the new Golden Buckeye Prescription Drug Savings Program negotiates drug discounts with local pharmacies and passes on manufacturer rebates to participants. It also provides a free drug utilization review process for participants who are taking multiple medications. About 1.7 million Ohioans who are at least 60 years old and do not have prescription drug coverage qualify for the program at no cost. So do another 300,000 persons between 18 and 59 years old with total and permanent disabilities.

The Wisconsin Rx plan, a coalition of businesses and the state’s largest teacher union, on January 1 began negotiating discounts for its 260,000 members of up to 15 percent on prescription drugs from U.S. drug chains. The state also has established a Web site to help residents buy drugs from Canada.

Minnesota already has the Prescription Drug Program, which provides prescription drugs to low-income seniors and disabled persons who are ineligible for full medical assistance and who have been at least four months without prescription drug coverage. Participants must pay a monthly $35 deductible before program benefits kick in. Other states, including Alaska, Maine, and Washington, are considering similar measures.

It’s the Budget

Illinois has a multi-billion-dollar budget deficit, and Blagojevich has made the cost of prescription drugs a major focus of his administration’s effort to bridge that gap. He has lobbied heavily but unsuccessfully for the federal government to allow Illinois to import drugs from Canada, where price controls and economic factors make most drugs less expensive than in the United States.

Blagojevich also has sent letters to other governors encouraging them to lobby for their states to be allowed to reimport drugs.

Steve Stanek is an Illinois-based freelance writer. His email address is [email protected].