Boston Globe Examines Debate Over Cost Effectiveness of Mail-Order Pharmacies

Some mail-order pharmacy owners have told the Obama administration that Medicare spending could be reduced and quality could be improved if more beneficiaries ordered their medications by mail, the Boston Globe reports.

Medicare could save $1 billion over a decade for every 1% of beneficiaries with chronic conditions who switch to a mail-service system, or $40 billion over 10 years if all Medicare drug benefit beneficiaries were automatically enrolled in such a system, mail-order pharmacies have told the Obama administration. Dave Snow -- CEO of pharmacy benefit manager Medco, which operates a mail-order pharmacy -- said, "Chronic and complex disease is where you need to focus meaningful health reform, and that's who we serve in mail."

Snow said there is a false impression that a PBM is "a big benefits administrator," adding, "The real truth is, we're an intensive clinical company with thousands of pharmacists who take care of patients each and every day in a very advanced way."

Drug companies give PBMs, which own most of the mail-order pharmacies in the U.S., discounted medications in exchange for PBMs' supplying the companies with millions of customers. PBMs pay community pharmacies a fee to dispense each drug, but can avoid paying that fee by encouraging customers to order through their own mail-order pharmacies. PBMs share some of the resulting savings with patients and employers, the Globe reports. According to the Globe, PBMs also argue that their mail-order service pharmacists develop expertise on the side effects, interactions and dosages of drugs used to treat a particular disease, which can mean fewer patient errors and complications.

Medicare beneficiaries purchase 10% of chronic care medications by mail-order, compared with 40% of the medications purchased by retired individuals with drug coverage under their employer-sponsored health plans, according to the Pharmaceutical Care Management Association. PCMA lobbies for PBMs. One reason for lower usage among Medicare drug beneficiaries is that the 2003 Medicare law prohibits mail-service pharmacies from offering large incentives for switching to mail order, the Globe reports.

Arguments Against Mail Order
Advocates and lobbyists for community pharmacies have questioned the projected savings of switching to mail order. They also say that community pharmacies serve as a source for individuals who need medications immediately and for customers who "crave a personal relationship with the person who gives them their medicine," the Globe reports.

Neighborhood pharmacists also say that they are pushed into an unfair competition with the mail-order companies, as PBMs have greater control on how to drive their customers to the companies they already own.

Reginia Benjamin -- senior director of public policy for the National Community Pharmacists Association, which lobbies for independent pharmacies -- said, "When people call the 800 number at the mail-order pharmacy, how do they know if they're talking to a pharmacist?" She added, "Overall, I believe that mail-order facilities need more regulation and accountability" (Wangsness, Boston Globe, 2/2).