General Motors Pays Higher Price for Some Generic Medications Through Mail-Order Pharmacy System
General Motors pays "far higher" prices for some prescription drugs offered through its mail-order operation than individuals pay at retail pharmacies, the Wall Street Journal reports. According to pharmacy benefit manager Medco Health Solutions' Web site for GM employees, the total cost for 90 pills of ranitidine, the generic form of the anti-ulcer medicine Zantac, is $181.22, including a $5 copayment. The same prescription is sold at retail pharmacies for $62.88, at Wal-Mart for $78.62 and at Costco's online service for $22 (Martinez, Wall Street Journal, 2/15). GM recently eliminated Walgreen from its pharmacy network for employees as part of a cost-saving effort to require workers to order medications for chronic diseases from Medco (Kaiser Daily Health Policy Report, 2/14). PBMs "promise to realize savings for their corporate customers" by lowering overall costs, but "they also preserve large profit margins for themselves," the Journal reports. Both PBMs and retail pharmacies "typically make big margins on generic drugs," but employers "believe they are getting better prices on branded drugs through PBMs," according to the Journal. Susan Hayes, a consultant with Pharmacy Outcomes Specialists -- an Illinois company that helps employers control their drug costs through audits and contracting -- said that the price GM pays for some generic medications is "a big deal," asking, "Why should you pay more than $1 a pill for generic Prozac to the mail-order pharmacy when you could get it for 23 cents in the retail store?" GM's pharmacy chief, Cynthia Kirman, said that Medco saved the company $80 million in 2003, and she added that it is unfair to "cherry-pick" certain drugs for price comparisons (Wall Street Journal, 2/15).
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