Feb
Your stupid paper card is just that…
Posted by The *Angriest* Pharmacist as Drug Companies, Drug Topics, Education, Laws, PHARMACY SECRETS!, Patient Education, Robbery, Stupid People, True Story
Happy Super Bowl Day! I don’t watch much football. I’m a BASEBALL fan, myself, but I will get drunk and scre eat some wings with my wife.
I know you’ve seen these stupid ass little paper cards floating around in magazines and periodicals. They are laid out like your standard insurance card, and they do a great job at tricking stupid people into thinking they are insurance cards. What I don’t understand is how someone could be so dense as to think that, “I bought a magazine / insurance policy last Tuesday. On Wednesday, I went to the pharmacy and got all my ’scripshuns filled up for free….that insurance I bought for $3.99 was awesome! Celebrex for free? DAAAYYYUUUMMM!” [You now hear and see me beating myself about the head with my stack of bathroom Drug Topics]
I’m now going to drop some serious knowledge on the non-pharmacy people of the world. Pharmacy Secrets numero leche con wavy lays.
- Amphetamine XR 5mg has an AWP** of $100 for 30 capsules
- The true cost to the pharmacy for #30 caps is AT BEST usually around 20% less than AWP. Most of the time, it is closer to 15% these days (the bulleted list below explains that). So, we can paid $80-85 to acquire.
- So the Pharmacy will put in the computer system that we bought the drug for 80. There will also be an AWP field. We put 100 in there. [This is for simplicity. In reality, AWP is calculated by taking the AWP per the number of caps in a stock bottle. So AWP is 138.99 for a 60 count bottle, AWP is input as 2.3165 (138.99/60). Cost is the same way.
- Insurance companies get the claim and, to them, it looks like we are telling them, “Hey, this medicine COST us $100 to fill. We need that to break even.” -- Well ins companies know how the game is played and they tell us to piss off. They know AWP is set at 20% above our cost. So, they pay accordingly. The most common equation is AWP-10% to AWP-15%. Sometimes, there is a constant put in. For instance, AWP-10%+$3. Whereas, the $3 is considered a dispensing fee. It helps increase profits for pharmacies, but usually means that the percentage is going to be LARGER…
- Going by these methods, we would get paid: $85 to $90 if using just AWP-10/15% [+/- $3 depending]. If I make $85 dollars on an $80 prescription, can I afford the pharmacist, technician, computers, utilities, paper, support staff, telephones, and just about a million other costs associated? Absolutely not. How does this work? Ahh…you’re forgetting the COPAY! That….she’s a mine! So, Amphetamine XR is a generic, but it’s a new generic…still made by the BARR, the brand name manufacturer. Hell, even the numbers/symbol on the cap is the freaking same. I’m not sure what the copay would be, but let’s say it’s 25 dollars. That means that I actually made $110 on the $80…which is a gross margin of 27%. That’s pretty good for a pharmacy in 2009. To really stay competitive and continue living, you need to get some 30%+ in there as well….to balance w/ the next bullet:
- $4 prescriptions. So, we are charging $4 absolute to the patient. We can say the AWP=$4 then. The cost is NOT usually 20% less on these…it’s actually MUCH less (WM wouldn’t have thunk it up otherwise). Cost on $4 rxs range from $0.20 to $2.50 for others. Average would be around $1.25. That means that we only make $2.75 per Rx average. While the gross margin appears to be good on this, at 30+%, it’s a TRICK – think economy of scale. It costs just as much to fill this single prescription that is going to net me $2.75 profit while your Amphetamine is going to net me $30. Same amber vial, pharmacist, technician, labeling, etc….and we’re filling a lot more$4 rxs than ever before due to doctors using them to dictate their prescribing habits.
- How does insurance figure in on these? They don’t. While we are required to submit the claim to them, as they track the patient’s utilization of their benefits and ensure compliance for their own records, they don’t pay us a cold damn cent. In fact, it COSTS us a nickel to 15 cents to process the damn claim – like it’s dialing a long distance fucking call…bogus! The claim submits, and comes back with the cost the same, AWP acknowledge, and third party paid $0.00. But, don’t forget the copayment! Some insurances have flat copays of $8 for generics (even though $4 is less than $8,right? Duh.) So, the patients would most likely say, “Take it off my insurance! Just bill it cash!” Across the country this is happening for third party claims – private insurances and medicare part D. Now I’m not sure about the private ins claims and a patien’ts contract with them, but I’m 100% positive that it is illegal for a patient enrolled in medicare to not utilize their benefits – even if the benefit may be a detriment at the time. People do this like crazy to avoid “the donut hole” as if $4 is going to get them there with any haste. I don’t fight people on it because I know they’ll never charge someone for evasion, but it is certainly illegal to do this for Part D — and it’s fucking immoral if the patient is on Medicaid. If they have Medicaid and can pay cash, they need to be paying cash and removed from the Medicaid register. Why is this illegal? Because. Because medicare wants to track patient compliance. Medicare wants people to use up their eligibility and MAKE it to the donut hole – then medicare can really start letting the patient have it! I dunno if they make any money, but they certainly LOSE MONEY AT A SLOWER PACE when a patient is eating doughnuts.
- As a funny aside, Medicare sends these old fogies these printouts of the drugs they’ve gotten, what we billed to medicare, and how much money has been changing hands. I get fucking screamed at for these stupid ass pieces of paper once a week and these dumb printouts say dick and mean even LESS than dick. What they show people is the following.
Pravastatin 40mg Rx#1234567 – January 27, 2010
What Your Pharmacy Billed to us: $75.29
What you paid for copays: + $3.30
The total of these 2 rows is: $78.59
(the amount we actually paid your pharmacy is $0.00)
I bet you’re wondering what the infinitely small line of text is:
(the amount we actually paid your pharmacy is $0.00)
What the point in sharing this information with an old person? Not a damn reason one other than to get ‘em all riled up and hope they die of a heart attack before being beaten to death by their pharmacist. All these old people see is that bottom line. Now…why did they add that column? Because that’s what you do with columns…you add the mofos! They have nothing to do with each other. And that “billed to us” is a joke. That’s the AWP at work…being worthless. Pravastatin is a drug that the AWP has never fallen. We get it for less than 5 bucks per bottle of 100 and the AWP is still hundreds….the insurance companies are well aware of the $4 rxs as well as the COST of each medicine as it’s available to each chain – they know all and see all. They pay nothing.
Now, to finally answer your question – it’s exactly as above….except on every drug. Not just $4.
Some companies negotiate contracts with the drug manufacturers and that’s what dictates their formulary and the costs that the patient pays. For instance Amoxicillin is a $4.00 rx. We bill it to Anthem, they have a contract with us to give them discounts in specific areas. So, the copay comes back to the patient $2.75 cents. Then you look at what the 3rd party actually paid — $0.00! This is precisely how those free cards work – only w/o the contracts. MY computer system won’t let me fill a prescription w/o at LEAST covering the cost of the medicine (what we paid) plus 3 dollars. Well, since this Amox is 2.75, we didn’t cover that – no way! Since it’s $4, we’d let it slide, but a 3rd party wouldn’t. But, it doesn’t say paid under cost. It’s good to go…cause of the contract my pharmacy has with anthem. We give them a discount there and somewhere else, we get a better deal – plus we get them in the store buying Tylenol and sodas and shit.
The freebies cards just manipulate the price down and hope that the pharmacist is a east Georgian Tard Hound. Hopefully, I won’t notice that this medicine cost me $50, the patient is being charged $30, and I was paid $0.00 by the third party….Well, I always notice – my computer system helps me. But, how in the hell does the free card company make money? They are in cahoots, if not MAJORLY owned by the drug companies. Bingo! So, the claim comes through when it’s filled and they know, badabing, we got a sucker. If it doesn’t get deleted after X days, they get a kickback from the drug company for essentially filling a script. The manufacturer still sells the drug to the pharmacy at the same price regardless – their only concern is to get them to buy more and more! Those cards aim to help…and aim to screw over your pharmacy.
ON AVERAGE: Calculating COST from AWP
• For single source innovator drugs: pharmacies purchased the drugs at an estimated discount of 17.2 percent below AWP.
• For all drugs without Federal Upper Limits of Cost (FULs): pharmacies purchased the drugs at an estimated discount of 27.2 percent below AWP.
• For multiple source drugs without FULs: pharmacies purchased the drugs at an estimated discount of 44.2 percent below AWP. A further breakdown of multiple source drugs without FULs showed the estimated discount for innovator multiple source drugs to be 24.4 percent and 54.2 percent for non-innovator multiple source drugs.
• For multiple source drugs with FULs: pharmacies purchased the drugs at an estimated discount of 72.1 percent below AWP.
If you don’t want to read the LONG version (attachments and info I’ve typed above and below this line, go to this link: http://www.volunteer-ehealth.org/frisse/erx/2007/05/prescription-drug-pricing-mac-can-make.html — It provides a hell of a good simplified synopsis of all the different acronyms in pharmacy costs and explains them well. Give it a look either way actually.
Any links to documentation on it being illegal to not send these stupid $4 claims through a patient’s Part D plan?
This was posed to me several days ago. I’ve got questions sent to several “Medicare” and “Medicare Part D” websites. I haven’t received a reply yet. I’m not sure that I will… I did find a lot of websites/FAQ pages that ALLUDE to this fact, but I cannot find it written in statute/law terms — or anything remotely official. I didn’t just make it up! I’m pretty sure that a guy that sells CCRX told me originally…
http://tinyurl.com/yfnxelr
How will my retail pharmacy discount work with with my Medicare drug coverage?
If you enroll in a Medicare drug plan, you will have access to a long list of prescription drugs at discounted prices, but you can still benefit from retail pharmacy programs (e.g., Wal-Mart, Target, K-Mart and other retail programs that cover selected generic drugs for $4, etc.).
For example, if you have a Medicare drug plan that charges 25% coinsurance and you use the Wal-Mart pharmacy, you will have to pay only $1 (or 25% of $4) for the generic drugs covered by the Wal-Mart program. You will pay $4 for these medications if you are meeting a deductible or are in the coverage gap (in most cases). [More on website...]
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It doesn’t say you have to use the Medicare Part D plan if you have it…but it does say on 4 dollar Rxs, you get X discount on $4 and not your typical copayment amount…I will update here when I get something more definitive.
You are so angry it is challenging to read through your blog, but I guess you warned us. I was just hoping to learn something about your industry.
Ask a question…receive an answer…
How is it that our pharmacy gets negative reimbursement for generic Adderall XR ? AWP_-XX%+couple bucks=PBC. our favorite Price Below Cost. OUCH
How is your reimbursement on Paddock lab supp ie hydromorphone or belladonna/opium? Hydromorphone awp $66.82..COST $66.22. We dont stock them, might as well hand the patient 50 bucks. I spoke with Paddock Labs, they are clueless.
Just change your AWP in your computer system. Jack it up to 20% above your cost…
Thanks for the primer.
As a consumer, it sounds like a giant pyramid scheme, with scammers coming out of the woodwork every whichway but straightaways.
As a pharmacy student many years ago when I had no insurance, I paid my $15.00 scripts amoxicillin cash. Seems those of us without access to any insurance at that time (working 2-3 jobs and going to school full-time) would’ve appreciated a break to pay a discounted price, but it was illegal back then to charge different prescription prices to different customers. Seems, for all intents and purposes, it’s no longer illegal to charge different prices to different customers.
This craziness was one reason I never went retail. In the last few years when staff pharmacists got in on buying decisions i.e. pharmacy formulary decision-making. It seems outrageous that we charge hospitalized patients $300.00+ for an Advair inhaler.
But, the information about what drugs cost to the pharmacy, the price charged to keep the pharmacy open and in business, and actual return to the pharmacy from insurers seems like a pyramid scheme combined with a crap shoot for the actual drug provider, as described.
The hospital pharmacy director used to explain at first that the pharmacy department was considered a ‘reservoir’ to help make up for lack of proper reimbursement for other unseen supplies and services in the hospital.
Within the confines of my little pea brain, this complex explanation of exponentially elaborated minutiae of prescription drugs in retail, and as it applies to hospitals, only makes me want to advocate for a unified-system (uni-system) model in health care otherwise known as public option!
I had a customer give me a Rx Cut Discount card a few weeks ago. We had been filling a few scripts for him at retail and making decent (but not great) profit as I try to give a cash paying customer a break. Anyway, this discount card busted my price by about 50%. I couldnt believe it. Pissed me off. Then, the topper. I got a bill from Rx Cut telling me I owed them $7.00. Sorry, I’m not paying. Screw me on the price and charge me for the honor. No thanks.
You forgot about something in your long post about the discount cards. Not only do these cards cause the Pharmacy to discount its price. The PBMs charge the Pharmacy to process the claim. I think it is $.50 or more for each claim. In other words, the card entitles the patient to a discount–provided by the pharmacy owner. I cannot understand why the Pharmacies take them.
No I didn’t… I’ll edit the post and make it RED for you…:-)
I work for Wrong Aid so don’t have the pleasure of giving a donkeys dick about the price actually paid vs what is submitted vs what the customer pays but I do have a question.
Why on earth can it not just be that the insurance has a price given by the manufacturers (not some made up price from retail) and pay us that price plus a reasonable fee of perhaps $15.00 per script? It seems like everyone would win this way. Sure the big chains would get a bigger discount than the indys but not enough to make that big a deal.
Is it because we have less than zero lobbying power? Is that why this profession is circling the drain?
I wasn’t working in the 80’s and 90’s when all this stuff started so what went wrong? Did we shoot ourselves in the foot by making up prices and in retaliation the dispensing fee was made a joke or was the dispensing fee lowered to the point that we HAD to start making up prices?
Anyone have a true history of how I became embarrassed to discuss my job?
I am not in pharm so I dont understand billing and profit. My med at target is 4 bucks tramadol 50 mg. at walgreens its 40 bucks, the same maker made both how do they profit? or do they just lose a ton of money for that specific drug?
Good atricle, great explaination. If you add in “spread pricing” or “lock in” pricing where the PBM pays the pharmacy one price for the drug and charges the plan sponser a higher price, keeping the profits for themselves you have the makings of a complete boondogle of a system.
Those “These Are Not Insurance” cards annoy me as well. Back in my Come Visit Satan days, I took them with no question, because what do I care if the Chain of Verylarge Stores makes a profit or not, I get paid either way. (For example, Rockland County, NY negotiated with them for a discount card for EVERY COUNTY RESIDENT AND THEIR DOG. (Yes, pets included too.) If someone came in with no insurance at all, we had a copy of the county discount card posted next to one of the terminals, and would just enter it in. Of course every script we fill on that plan is a loss, of profit if nothing else, but Corporate decided to take it, so it’s on them not me.) You start working for an independent, believe you me, you start looking at the P&L very damn carefully indeed.
Someone actually came into the store with one of those recently. I tried to put the script through, just for the helluvit, to see what kind of discount they’d screw me out of, prepared to hand it back to the customer and say “we don’t accept that card” if it came out to a loss. Turns out I got a rejection 40 PHCY NOT PARTICIPATING, so I didn’t have to worry about it, just sent him on to a chain.
What pisses me off more than anything else, though, is when the insurance pays us BELOW COST. Yeah, I’m looking at you Americhoice NJ you feckers. You know those generic budesonide nebules, that costs us $166 at the absolute cheapest for the 0.5mg, they pay us $141 for that, and it’s Medicaid so there ain’t no copay to make anything up with. We lose nearly $25 every time we fill that shit. Of course it’s illegal to charge the difference to the customer, you basically have to eat that loss. One of those negates the profit from a whole damn case of amoxicillin. How the hell we’re supposed to stay in business with a negative profit margin I don’t know. And they don’t tell you anything when you call to complain, just tell us that our vendor should be charging us less. Shyeah right, he’s not in business to lose money either. Maybe Rite Aid or Walmart can get away with taking such low reimbursements because they buy the stuff by the trainload and *maybe* pay $140 for it, so they make $1 and call it a day, but hell, I can’t compete with them on volume. Not to mention compounds… we stopped taking insurance for compounds the day we got back a reimbursement that didn’t even cover the cost of the ingredients, never mind my time in putting them together. Why do they get away with this? For the same reason a dog licks himself: because they can.
Sorry for hijacking your blog for this, but I had this rant building up for some time already and your post just triggered it off.
Easy problems to fix… “Ohh, we are out of the pulmicort…” then “We ordered it but it didn’t come in. Our distribution center can’t get it right now. Let me check walmart for you…” —- Problem solved….
As far as compounds, insurances usually reimburse based on the cost and/or AWP YOU INPUT. I send/delete/resend the claim raising the AWP until I reach sufficient reimbursement for the COGS and my time then adjust the cost to match (usually 20% less than AWP). I’ve never had this fail…if an insurance pays the claim at all, you can manipulate this. Is it legal? Who cares? Who is the insurance company to tell you what your goods and time are worth? Exactly…
County-sponsored freebie healthcare: worked in YubaCity,CA grocery pharmacy where local Supervisors (also local farm owners and growers) voted to create their own discount card ($0 copay) for uninsured. The brochure was targeted; as it was only printed in Spanish. I liked that the pharmacy staff, deciding that was racist and profiling, handed out the cards to all uninsured and insured-drug not covered on insurance formulary (eg RetinA, Propecia, etc).
So a patient who does not have health insurance but can save perhaps 50% on a $100 prescription for example, and pay just $50 instead shouldn’t because it hurts the bottom line of a national retail store?
That makes strange sense. Sure, it may affect your sales figures but please do not neglect to remember you are in the business of health. While it is mostly always about getting the money it is also about treating people who are ill. What about the medicines that are marked up enormous percentages? The consumer shouldn’t have to pay such outrageous prices at insane markups but guess what, they have to if they want their prescribed medicine.
If it’s going to save a patient money and they have no insurance but these discount cards help them save money, that is great news for the consumer.
The point of business is to make money. In pharmacy we are very lucky — we get the chance to help people along the way. Unfortunately, I cannot help people if I am out of business because I gave prescriptions away for less than what I bought the drug for the week before.
So, if the patient “saves 50%” by the pharmacy “losing 50%” — it’s just simply not going to work. I realize that American’s like to villainize the big chains for being successful. Whether it is Walgreens or a locally owned an operated Jack’s Pharmacy, we cannot expect them to work at a loss.
As far as your “outrages prices” and “enormous percentages” — we don’t create the prices out of thin air. We don’t decide how much Drug X costs — but I can assure you that when someone comes up to me and doesn’t have insurance, I don’t look at my cost, double it, and quote them a price. No pharmacy operates like that — unless there’s an idiot somewhere giving prices based on AWP!
I give people breaks. It’s always been said in pharmacy that your cash patient’s paid for the entire bottle of drug — the cash patient was your profit. With the $4 plan, et al, that’s no longer the case. I’m all for a card giving someone a $50 discount…I get it…I accept it… I just CANNOT give that $50 discount if they pay me $35. They have to pay me at least $52…right? Or is that too much to ask?
‘I send/delete/resend the claim raising the AWP until I reach sufficient reimbursement for the COGS and my time then adjust the cost to match (usually 20% less than AWP).”
I tried that, believe me. Problem is these were fairly cheap drugs (nystatin, hydrocortisone, coal tar etc.) and no matter what AWP I submitted it with, it knocked it down to whatever THEY thought it should be, then paid me on that basis. I just decided it wasn’t worth it. Pay me $30 (or whatever) and submit it yourself, or go somewhere else, if you can even find another pharmacy in this area who can be bothered to do compounds.
The PBM does not make the nickel to 50 cents when you submit a claim that is what your switch vendor is charging you to route the claim to the correct PBM…
Any PBM that knows what they are doing does not care how much you jack up your U&C or ingredient cost submitted, they are going to pay you the lesser of the U&C submitted and their calculations based off the AWP they have on file not the AWP you submit
Most if not all Medicaid plans fall under “most favored nation” laws or statues requiring the pharmacy to charge the lowest price they charge anyone else (cash customer or any other third party) Med D plans are commercial so my guess is they do not.
One of the flags for triggering an audit is excessive paid / reversals for claims. IMHO if it is compound, better to jack up the total cost and each line item the first time around. Yes the PBM will look at total charge and each line items charge to find the cheapest way to pay you.
Discount cards, lets be Blount, everyone wins except the dispensing pharmacy, as long as the pharmacies will take the hit, there will be someone lined up to take the money from them.
My biggest gripe is AWP, the third party and retail groups really need to A) come up with an adequate way to determine true acquisition cost of the drugs and B) come up with a reasonable fee structure for the additional services. ($xx to fill the rx, $YY to perform obra 90 counseling, $ZZ for enhanced counseling)
With the direction CMS is pushing the MED D plans for their MTM programs; hopefully we will see increased opportunities for Pharmacist to bill for more than what goes out the door in the prescription vial.
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