Apr 27, 2004
L.A. Could Cut Drug Costs With Bulk Buys
City Council plan would ease the prescription bite for residents
The Los Angeles Times
by Antonio Villaraigosa and Jerry Flanagan
Hardly a day goes by that we don't hear from senior citizens and others who cannot afford prescription drugs. Faced with gridlock in Washington, a proposal being considered by the Los Angeles City Council offers a meaningful solution at the local level. Insured or not, from the Eastside to the Westside, in Hollywood or South L.A., we are all paying too much for prescription drugs.
For those on Medicare, the new prescription drug law has several deficiencies. It bars Medicare from negotiating bulk discounts. That means a big chunk of the $400 billion earmarked for the program over the next 10 years will be spent on overpriced drugs. The plan requires seniors to pay $670 out of pocket before any benefit kicks in. Coverage stops when spending reaches $2,250 and does not resume until a patient has spent $5,100.
The uninsured, including seniors still searching for a real prescription drug benefit, can least afford to pay for medication but are forced to pay the most. And Los Angeles has one of the highest percentages of working uninsured in the nation.
The sticker shock also hits insured patients without prescription drug coverage and underinsured patients who may have drug coverage but are paying ever-higher co-payments.
A recent study found that uninsured patients in Los Angeles paid 69% more for common prescriptions than the federal government. That's because the government buys at bulk discounts. For the cholesterol-lowering drug Lipitor, for example, Angelenos without drug coverage pay $75.64, while the U.S. government spends only $41.12. Acid reflux sufferers in L.A. pay $151.58 for a month's supply of Prevacid, but the government spends only $72.11. Lanoxin, used in the treatment of chronic heart failure, costs the uncovered 65% more.
The city should be buying drugs through bulk purchasing too. Under the proposed plan, Los Angeles would negotiate bulk discounts on prescription drugs from pharmaceutical companies by combining the purchasing power of individual consumers, small businesses, hospitals, employees and others.
The city would set up a purchasing consortium to enroll members and collect a small yearly fee to cover administrative costs. Residents could sign up at city offices, by mail or over the Internet. The city would then use a benefits manager to provide pool members a pharmacy card, a pharmacy network and a mail-order option. Employers could join the purchasing program on behalf of their workers. Hospitals and even health insurers could join to save on behalf of members and patients.
L.A. could become a national model for bringing residents together to get the best prices for their medications and, ultimately, if the model works, for their other health coverage. Several small states have banded together to implement their own bulk purchasing pools. The city is exploring a partnership with L.A. County and other cities to join forces to negotiate on behalf of our residents, creating an even bigger purchasing pool.
The ban on negotiating bulk-rate prices in the federal plan benefits only the powerful drug companies, not the taxpayers. Los Angeles can take the lead by approving the proposed plan and showing the nation how to get a better deal for seniors and others who need more affordable prescription drugs.
Antonio Villaraigosa is a Los Angeles City Council member. Jerry Flanagan is healthcare director for the Foundation for Taxpayer and Consumer Rights.