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Pharmacies Flout California Drug Discount Law

Originally published by Reuters Health, March 13, 2002

NEW YORK — In a study with broad national implications, RAND researchers found that one in four California pharmacies fail to offer seniors state-mandated discounts on prescription medications.

Among the compliant pharmacies, only 45% offered the mandated discount before being asked about it.

The investigation, which involved pharmacy visits by volunteer Medicare beneficiaries with acting experience, found that independent pharmacies were least compliant with the law. Chains were nearly twice as likely as independents to offer the discount.

Since independents are disproportionately located in low-income neighborhoods, poor Californians most in need of getting discounts on their medications are least likely to get them, the research team noted.

“The message is that beneficiary awareness of pharmacy discount laws… is crucial,” said Dr. Joy H. Lewis, a RAND researcher and internal medicine physician at the Greater Los Angeles Veterans Affairs Health Care System.

Under a 1999 law, California pharmacies participating in Medi-Cal, the state’s Medicaid program, must charge customers who present a Medicare card the discounted rate that the state pays for medications. The program is open to all seniors, regardless of income, and promises savings of up to 70%, depending on the drug.

The California HealthCare Foundation, an Oakland-based philanthropy, commissioned RAND to determine how well the law was working and where improvements might be necessary.

Dr. Lewis and colleagues tested compliance with the law by sending 15 Medicare beneficiaries into 494 pharmacies with a scripted scenario. In each encounter, the beneficiary asked for prices for a 30-day supply of Vioxx (rofecoxib), Zoloft (sertraline) and Lipitor (atorvastatin), all used to treat chronic conditions that older people often suffer.

After getting prices, they also asked whether the pharmacy offered a “senior Discount” and, if so, what those prices would be. Finally, the beneficiary presented a Medicare card and asked for a “Medicare discount.”

In order to simulate a real encounter, beneficiaries made no attempt to direct their questions specifically to the pharmacist. “It was whoever was behind the counter where you would normally go to fill your prescription,” no matter whether that person was a pharmacist or a clerk, Dr. Lewis explained.

The study found that seniors can potentially save a bundle, averaging $55.70 a month if they take all three drugs. At Medi-Cal rates, the total cost for a 30-day supply of all three drugs was $218.45. But the savings may be eluding beneficiaries who don’t know about the law.

State Sen. Jackie Speier, a Democratic from San Francisco, sponsored the legislation creating the discount program. “The good news is that the program that we created in California, which is the first in the country and very comprehensive… is saving seniors on average about 20% on their prescription drugs,” Speier told Reuters Health. “And we did that without creating a bureaucracy.”

But while the study found that 91% of the chain pharmacies are complying with the law, “45% of independents are not,” she noted. Overall, 25% failed to offer the required discount.

“It saddens my heart that it’s 75% compliance,” said Carlo Michelotti, CEO of the California Phamacists Association (CPhA), the largest state pharmacy association in the nation. “On the other hand, I’m delighted it’s not a lower number.”

Despite it’s own efforts to educate pharmacists, “some of them just don’t get it,” Michelotti said. He conceded that many pharmacists don’t think the law is fair to them. “It’s our cash registers that have to come up with the discounted amounts,” he told Reuters Health. “Nonetheless, that’s the law, and we want to see people comply with the law.”

In anticipation of the study’s publication, Speier recently introduced a bill that lifts a December 31 sunset on the original bill, making those discounts permanent, and requiring drugstores to put up signage telling beneficiaries about the mandated discount.

Michelotti said that his association is reviewing the bill and hasn’t taken a formal position yet. But CPhA does support placing signage in pharmacies to help educate beneficiaries.

The findings have sweeping implications for the growing number of states considering similar legislation. “In 55% of the pharmacies, unless the patient knew to ask for the discount, they wouldn’t get it. So it’s import for policymakers to consider education and compliance as part of this type of legislation,” RAND’s Dr. Lewis said.

“Something very simple like placing a sign at the cash register … we think could really make a difference,” she added.