On one hand, the U.S. Food and Drug Administration tries to keep Grandma and Grandpa from buying discount prescription drugs from Canada. On the other, the U.S. government buys drugs at discounts that put Canada in the shade.
The average person can't get those prices. The United States does not control pharmaceutical prices for all its citizens. But when the U.S. government buys drugs, it controls costs with a vengeance. It demands much lower prices than the uninsured person must pay at the drugstore.
When the federal government buys a month's prescription of Lasix, those pills cost only $8.98.
If an uninsured West Virginian walks into Rite-Aid and asks for the same blood pressure prescription, he or she must pay $21. That's $12 higher, or 130 percent more.
The government-as-customer buys for the Department of Defense, Indian Affairs, the Public Health Service, prisoners, and the Coast Guard, among others. It tells pharmaceutical companies, in effect: Look, we're not paying your market prices. If you want our business, you will give us, to start with, a 24 percent discount, and if you're giving anybody else a deeper discount, we'll take that too, and go from there. Take it or leave it.
They all take it. "It's government price control, pure and simple," said Jeff Trewhitt, spokesperson for PhRMA, the pharmaceutical industry lobbying group. They don't like it, but there's nothing they can do, he said.
Pfizer Inc. charges the government $64.74 for a month's prescription of Lipitor, for instance, compared to the $114 the uninsured West Virginian must pay.
If that uninsured West Virginian were to try to tell Pfizer, Inc., "This is what I'll pay you. Take it or leave it," Pfizer will probably leave it.
The government also demands and gets discounts ranging from 15 to 30 percent for the drugs it buys for Medicaid.
"This is a numbers game. Bigger groups get bigger discounts," said Pat White, Administrator of West Virginia Healthright, which secures discount medication for low-income people. "There are huge differences in the price of the same pill. Our clinic pays less than retail pharmacies do. Hospitals pay less, too.
"And at the pharmacy, a person with no insurance pays more than a person with insurance. Ain't it fun? The customer who needs the break most pays top dollar."
Every insured person is, by definition, part of a buying group. The pharmacist checks to find out what price that insurance company negotiated for that drug. Many insurance companies negotiate deep discounts ranging from 20 percent to 40 percent for their members, Trewhitt said.
The uninsured person is a buying group of one, so he or she pays the highest prices. "What stronger evidence does anyone need that we have a totally irrational, dysfuctional system?" said Gail Shearer, Director of Health Policy Analysis for The Consumers Union, which publishes Consumer Reports. "We ask people who have modest incomes and people who are sick to pay the most."
The top prices the federal government will pay for drugs are listed on the Federal Supply Schedule (FSS). Federal agencies start there and sometimes negotiate extra discounts, as the Veterans Administration does.
Those prices — which benefit between 5 and 10 million people — are slightly higher than Canadian prices, which are negotiated for 30 million people.
"Before the Internet, the FSS list used to be very hard to get," said Dr. Alan Sagar, who directs Boston University's Health Reform Program for the BU School of Public Health. "The drugmakers wanted it kept secret, because they said if people knew they gave anybody those kinds of prices, everybody would want them."
The FSS prices can be found at www.vapbm.org/PBM/natform.htm.
'Why doesn't our government negotiate ... for everybody?'
The Gazette-Mail gathered FSS prices and retail price numbers for 13 drugs West Virginians commonly use. A comparison shows that the uninsured West Virginian pays — on the average — 99 percent more than the top price the government pays.
About 25 percent of that goes to the pharmacy and wholesaler. Almost all of the rest goes to the pharmaceutical company.
In July 2003, the U.S. Public Interest Research Group (U.S. PIRG) got similar results when they compared FSS prices in 18 states and the District of Columbia, using a different set of 10 common prescription drugs. People often use drugs to treat chronic conditions, so "the percent difference between the retail and discounted prices quickly adds up," the U.S. PIRG report emphasized.
The discounts on the 13 drugs on the Gazette-Mail list are typical of FSS prices. They do not include the most drastic markdowns. For some specialty drugs, FSS discounts amount to more than 1,000 percent.