Why reforms won’t help Harry

“Harry” is one of my elderly patients who could have been helped by a comprehensive, Medicare prescription drug plan. But when he hears about the bill signed by President Bush last week -- with deductibles, co-payments and a large cash contribution coming out of his pocket -- he simply shakes his head and moves to my drug sample closet.

I often find him there at the end of his visits -- unauthorized, rummaging through flashy boxes that the drug company representatives bring me. Harry, who lives on a fixed income, would never take anything without my permission, but he can’t resist the attraction of his medicines in plain sight. The victim of a small stroke, depression and high blood pressure, he relies on my samples.

Unfortunately, I am not always fully stocked, and he cannot afford to pay a pharmacy for his pills. When I run out of his depression medication, he becomes sad and listless. Because new side effects are possible, I resist his suggestions to switch to whatever other depression pill I happen to be carrying at the time of his visit.

I was never sure of his claim that insurance companies don’t have to pay pharmacies as much as he does for medications, but it turns out he is right. A survey of 100 pharmacies, published this fall by the New York Public Interest Research Group, revealed that uninsured consumers and those on Medicare pay 100% more on average for prescription drugs than our government does and 130% more than the Canadian government does. They also pay, on average, 40% to 50% more than the insurance companies pay.

The main problem with the new Medicare plan is that it doesn’t allow the federal government to negotiate for members. Although the federal government can bargain for veterans and those in the armed services, it will end up paying inflated prices for those covered by the drug benefit.

Without that leverage, drug prices will continue to soar out of the affordable range for Harry and others like him. The drug benefit, regardless of its pluses and minuses, will provide minimal coverage at top-dollar prices, a prospect that is worthless to most seniors.

Those people who find themselves in the coverage gap will not be able to reimport cheaper drugs from Canada without FDA approval. Instead they’ll face the same high prices that cash customers -- the uninsured and those on Medicare -- are already paying.

A pharmacist at a Rite Aid store chain in Irvine recently acknowledged that cash customers pay at least 20% to 30% more than insurance companies. Another pharmacist, in West Los Angeles, said that “a pharmacy only gets a few dollars per prescription on insurance patients, and makes whatever profits it can on cash products.”

For example, a month’s supply of Lipitor, a popular cholesterol-lowering medication, may cost a pharmacy $60. They then charge their cash customers as much as $75 for the prescription. By negotiating a bulk price, the federal government can get the same drug for $41.12, to be used in its Veterans Affairs hospitals and other programs.

Once the full benefit of the new plan takes effect in 2006, Harry will have to pay a $420 annual premium. After he pays a $250 deductible, Medicare would cover 75% of his annual drug costs up to $2,250 and 95% of expenses above $5,100, but nothing for drug costs between $2,250 and $5,100.

Even before this plan gets going, Harry understands that it does more to preserve drug company profits than it does to provide comprehensive coverage for the poor or those on fixed incomes.

Harry will continue to be charged top prices at the pharmacy, and the government, forbidden to negotiate or leverage for lower prices by buying in bulk, will also pay top dollar for what little coverage they do provide. In the meantime, I remain Robin Hood with my drug samples, brought by sexy salespeople who interrupt me in the hallway on my way to caring for Harry and others.

My office is steeped in their opulence, from flashlight pens to free lunches to dinners at upscale restaurants. I let the drug company reps interrupt my work, if only because their token pills are a lifeline for patients like Harry.

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Dr. Marc Siegel is an associate professor of medicine at New York University School of Medicine. He can be reached at marc@doctorsiegel.com.