New Study: Independent Drugstores Charge 15% More for Prescription Drugs

New ‘Collective Bargaining’ Rights Would Empower them to Raise Costs Even More

WASHINGTON--(BUSINESS WIRE)--Reuters Health reports that a new study finds that independent drugstores in the state of Florida charged an average of 15 percent more for four widely used prescription drugs than the statewide average according to data examined on the web site MyFloridarx.com. Florida pharmacies that fill prescriptions for Medicaid patients are required by law to post their prices for the 100 most commonly used medications on the web site, according to Reuters.

“the ongoing shortage of pharmacy professionals continues to drive up pay.”

“With independent drugstores charging 15 percent more than other pharmacies, they shouldn’t be granted new collective bargaining rights which would empower them to charge consumers even more,” said Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt.

CBO: Collective Bargaining Would Increase Costs

Recently, the Congressional Budget Office (CBO) found that HR 971 would increase federal costs by $640 million over ten years and that increased drug costs to private health plans, employers, and consumers would result in “reductions in the scope or generosity of health insurance benefits, such as increased deductibles or higher copayments.” CBO’s analysis also contends that cost increases resulting from the legislation would be passed along to workers, reducing “both their taxable compensation and other fringe benefits.”

FTC: Collective Bargaining a “Costly Step Backward”

Furthermore, during testimony on HR 971 before the House Judiciary Committee Antitrust Task Force, the Federal Trade Commission (FTC) stated: “Giving heath care providers . . . a license to engage in price fixing and boycotts in order to extract higher payments from third-party payers would be a costly step backward, not forward, on the path to a better health care system.”

The research reported on by Reuters Health builds on a growing body of evidence on the financial health of pharmacies, including:

Independent Pharmacists’ Average Salary: $109,618

• The recently released 2008 National Community Pharmacists Association (NCPA) Digest reported that profits and salaries are increasing at independent drugstores.
• A 2008 survey from Drug Topics magazine found that pharmacists who practice at independent pharmacies earned an annual base salary of $109,618. The overall survey of pharmacists found that 84 percent received a salary increase in 2007. This corresponds with a new survey from Mercer that found “the ongoing shortage of pharmacy professionals continues to drive up pay.”
• In 2006, Money magazine and Salary.com released their annual list of Best Jobs in America and ranked pharmacists in the top ten. In addition, it noted that “demand for pharmacists is exploding as the population ages and new medications are developed.”

Bargaining Tools Already Available to Independent Drugstores

Independent pharmacies currently enjoy numerous bargaining tools to gain market power in government and commercial programs, including:

• Independent pharmacies often participate in joint purchasing groups that allow them to lower costs and compete more effectively.
• Both Medicare and private insurers require geographic pharmacy network access standards for their enrollees that already provide pharmacies—particularly rural pharmacies—extensive negotiating power with pharmacy benefit managers (PBMs).
• All health care providers, including pharmacies, can form joint ventures with other pharmacies to provide quality and clinical services and negotiate the fees for those services.

PCMA is the national association representing America’s pharmacy benefit managers (PBMs), which administer prescription drug plans for more than 210 million Americans with health coverage provided through Fortune 500 employers, health insurance plans, labor unions, and Medicare Part D.