Wednesday, December 27, 2006

Drug Dealer: New State Giveaway Program Deals in Drugs

Have you heard all the commericals (at taxpayer expense no doubt) about how the state "wants to know your opinion" about a new state prescription drug plan. I decided to go to the website to tell them to keep their theiving fingers out of other people's pockets and quit with the nanny-state socialized medicine.

Well, it turns out that wasn't the kind of input they were looking for. In fact, there was no place to give feedback on the shoddy-looking website. I am not going to give you the URL. Anyway, they didn't really want to hear our views. There was only a form to sign up for the handouts. And believe me most of you could. A family of four could make $67K a year and still be eligible.

If you hand out almost "free" drugs to that much of your population then a lot more drugs are going to be consumed than otherwise would be. It's a plan that the big pharmacetical firms can wholeheartedly support.

With 98 million prescriptions for prozac family drugs alone each year, America is over-medicated. Bob Dole famously asked "where's the outrage?" A population in a drug-induced calm won't feel outrage, even when they should. That way your politicians can continue to mortgage your children's future with outrageous spending and you won't care.

Wake up America.


Anonymous Anonymous said...

Your description of the Arkansas Rx is misleading, at best. (I hope you simply misunderstand the program, and aren't purposely distorting it.)

Arkansas Rx allows Arkansas residents to purchase a prescription drug card for $25 per year. Through this card, Arkansas residents are entitled to purchase some drugs at a lower costs, due to rebates negotiated with big drug companies. The rebates are passed on to local pharmacists, who are required to pass them on to consumers.

These are not "handouts." Residents pay for the cards. Drug companies provide the rebates, if they want (they aren't forced to, though most will, because if they don't it will shut them out of a larger customer base). The cost to Arkansas taxpayers is through the administration of the program. Arkansas does not buy any drugs through this program.

Arkansas residents who are within 250% of federal poverty level (yes, about $65,000 for a family of four), who aren't on another drug plan like Medicare Part D, qualify.

So here's my question -- what the hell is wrong with a program like this? It uses market forces (negotiation of lower prices through rebates) to lower the price of drugs for lower-income families. Why do you ridicule it?

8:54 AM, December 27, 2006  
Anonymous Mark Moore said...

If all the program is doing is something that a private company can do with the free market, then why not let the free market do it? If the government is not really subsidizing this program then why can't private companies or groups of citizens like AARP or the NRA or whatever do the same thing?

What is misleading is to say that it is not a handout program. There is funny accounting at work here. I can hold my breath between radio commercials for this program for two weeks and still live. Tell me that does not cost anything.

What the government is doing is shifting all marketing, administration, and necogociation costs onto the taxpayers and then pretending this is not a subsidized program (i.e. more welfare).

Maybe next you can have a plan where the government will necgociate lower car prices for us, then lower grocery prices, and who knows what else. None of this "free" stuff is free, and when true costs are assigned, the market can do it better than the government every time.

4:15 PM, December 27, 2006  
Anonymous Mark Moore said...

"The rebates are passed on to local pharmacists, who are required to pass them on.."

So my question to you is how would you like it if the government set your prices and "required" you to sell at a bare minimum profit? Does it bother you that this program will make pharmacists into virtual slaves?

Does it bother you that small rural pharamcies and pharmacies that want to give the value added personal touch will be driven out of business by this program? The advantage will go to high-volume chains where you are just a number.

Some people are willing to pay more for better service, especially at a time when they have a changing medical condition. But this plan is going to help (along with Bush's plan that does the same thing for the elderly) drive those guys out of business and consumers will be denied that choice. Why, because the market dictated it? No, because the goverment jumped in on the side of the big chains and the pharmacetical companies.

The whole thing stinks and is grossly immoral. And it is the worst kind of immorality- immorality trying to pass itself off as compassion and righteousness. That is the kind the Huckster excels at.

5:35 AM, December 28, 2006  
Anonymous Mark Moore said...

and 15 years from now we will wonder why we can't get good people to become pharmacists. I guess their solution will be for the "workforce education centers", formerly known as schools, to ID bright 16 year olds and slot them as pharmacists, then narrowly train and educate them so that they would have difficulty doing anything else.

We won't give diplomas at graduation then, just a collar and chain to formally emphasize that we are cradle-to-grave goverment slaves.

5:38 AM, December 28, 2006  
Anonymous Anonymous said...

Um, have you talked to any pharmacists about Arkansas Rx program, Mark? The state pharmacist associated SUPPORTED Arkansas Rx when it was passed during the 2005 session (and this association includes mostly locally owned smaller pharmacies). They LIKE this plan, because it lowers the price of prescription drugs for their customers. Talk to a pharmacist, and it's not the government they complain about (although for a while it was Medicare Part D). It's the private Pharmacy Benefit Managers, who they really want regulated. Pharmacists, like most professions, love government regulation of a certain type. Go down to the State Capitol during the next session, and you'll see a legion of pharmacists lobbying for state regulation of PMBs.

I hate to say, because I almost always disagree with you but enjoy your website, but you have no idea what you're talking about on this issue. Yes, it costs money to promote the Rx program -- I believe the appropriation was about $1 million in the DHHS budget -- but the state isn't buying drugs and isn't setting prices. It's acting as a pooling agent, to negotiate on behalf of thousands of low- to middle-income Arkansans who have no organization to negotiate for them. If you are doctrinaire, and believe that all government is bad no matter what, then you won't like any new state program, regardless of the merits. Your rhetoric about "government slaves" is ridiculous, over-the-top, and discrediting, especially as it applies to this basic good-government program.

7:16 AM, December 28, 2006  
Anonymous Mark Moore said...

First of all, yes I have talked to pharmacists. I am tying this from the office of a drug store right now. I have been in pharmacies working on Part D plans for over a month. The pharmacists HATE that they can't negociate drug prices- the exact feature the "Arkansas RX" plan shares. The plan is turning them into underpaid goverment workers unless they are big impersonal chains or unless they accept only the plans that pay them the best.

In that way Ark RX is even WORSE than part D, because at least under Part D there are companies that bargin for various rates between the drug companies and the pharmacies and the pharmacies can exclude the plans that pay the puniest. Not so when the power of the state comes in, sets prices, and "requires them to pass on those savings".

So yeah, I think I have some idea of what I am talking about since I have been on the frontlines every day seeing how the program is really impacting people.

I don't know what to say about the association backing the plan, except that it could be the "chamber phenomenom" at work. That is where Chambers of Commerce support public spending that the majority of their members individually would oppose because the program monies will benefit a few influential members of the chamber.

"but the state isn't buying drugs and isn't setting prices. It's acting as a pooling agent, to negotiate on behalf of thousands of low- to middle-income Arkansans who have no organization to negotiate for them"

And I say again for possible penetration why is the STATE needed to do that? Why is the STATE a better necogciator than a private business? They can't get a truly better deal, but they can shift costs and conceal them so the taxpayers don't know the real bill. You say they "are not setting prices" but you also say the pharmacies are "required to pass the savings on". You ARE setting prices on the pharmacy end. Will you at least admit that?

The pharmacetiacal firms are all for this because it strengthens the prozac nation.

It is a typical liberal to think that those who agree with them are "doctrinaire" while never understanding that they are even moreso. They have a bias that government is the answer to every problem. I don't think government is "always bad". There are things that government is suppossed to do- defend God-given rights of citizens, and it should be strong and well-funded in every area where it is the best agent. This is not one of them.

As for my rhetoric about "government slaves" or "serfs" being ridiculous, it is just a case of the man who sees farther ahead will always be accused of having halucenations by those whose vision is not as clear. You can't see where the programs you are advocating are leading us. Government setting the profits for pharmacists will lead to a shortage of them. The statist mind WILL respond by "workforce training" to educate a bunch of them narrowly in an effort to solve the state-created problems.

9:44 AM, December 28, 2006  
Anonymous Anonymous said...

"Why is the STATE a better necogciator than a private business? They can't get a truly better deal, but they can shift costs and conceal them so the taxpayers don't know the real bill."

No private company that I am aware of is willing, for $25 per family per year, to negotiate prices for them at this level. It's taken state government to do that. Yes, I admit that the pharmacists can't take the savings created by Arkansas Rx and keep it for themselves -- they must pass it on to consumers. The funny thing about that argument, though, is that you are implicitly admitting that Arkansas Rx actually saves money and creates value for SOMEBODY. You just think pharmacists ought to get to keep the money, and not their customers!

BTW, how do you feel about regulation of PBMs? Go over and ask your pharmacist buddy about it. Start telling him about the value of a free market when it comes to PBMs and see his reaction.

"The pharmacetiacal firms are all for this because it strengthens the prozac nation."

That is exactly wrong. The drug companies fought Arkansas Rx, and its predecessor, Maine Rx. Drug companies kept Maine Rx tied up in federal court for years, before finally losing the battle. They fought it because it creates a huge and influential negotiator for lower prices -- the state of Arkansas.

Bottom line: Arkansas Rx is lowering drug prices for low-income Arkansans. I understand that you don't really like that -- that you think either drug companies or pharmacists ought to get to keep the money of low-income families -- but I guess I just have an honest disagreement with you there.

12:54 PM, December 28, 2006  
Blogger Mark Moore (Moderator) said...

You have every right to disagree, but use honest accounting and see if you still disagree. The reason that "No private company that I am aware of is willing, for $25 per family per year, to negotiate prices for them at this level" is because $25 is not the true cost. The program is mistating and concealing costs by taking them out of the taxpayer's pocket's instead of crediting that as an expense of the program. If the costs were properly accounted for, you WOULD see a private company or organization willing to do it. That is the free market. I believe that somewhere private organizations are already doing it- medicare part D plans are doing it.

The problem with the state getting into the charity business is that no matter how well intentioned it starts out, it always winds up one power block using their influence to leverage dollars from the less organized and less powerful. I don't care who the winners and losers are, pharmasists, drug companies, taxpayers, program participants, the fact that the government is using the coercive power of the state to pick who the winners and losers are makes it immoral. Free people serving one another as they make free choices should determine who the winners and losers are.

You have every right to disagree, but use honest free-market realities in your reasoning and see if you still disagree. The way you see it, under the current freedoms either pharmacists are making "too much" or drug companies are making "too much". If you use the power of the state to step in and take away the level of money either group has earned through service to others then there will be consequences. You will have trouble attracting the next generation of quality people to become pharmacists. Drug companies will be less inclined to spend the millions needed to develop new drugs. In the long run this will cost lives. Perhaps 15 years from now you will be calling for government subsidies to attract new pharmacists and help companies develop new drugs.

Bottom Line: You are only looking at the short-term bottom line. I am seeing far beyond your field of view and telling you that the feast you are enjoying eating your seed-corn is going to hurt people later. It is not that one of us is uncaring and the other is not. One of us is caring and short-sighted, the other is caring and understands the law of unintended consequences.

1:59 PM, December 28, 2006  
Anonymous Anonymous said...

"The way you see it, under the current freedoms either pharmacists are making "too much" or drug companies are making "too much"."

You are correct -- I think drug companies are making too much. They are not subject to a true marketplace because they are, de facto, subsidized by taxpayers through Medicaid Part D, federal research, and other taxpayer-supported programs that amount to corporate welfare. I think they are hurting poor people. I don't think Arkansas Rx or similar programs will significantly hurt their profits, but will help the poor. I know that Medicare Part D was largely written by drug company lobbyists and their right-wing enablers -- written by and for the pharmaceutical industry. Yes, I do believe gov't should use its leverage to help people. In this case, it's the downtrodden who are being helped.

2:49 PM, December 28, 2006  
Blogger Mark Moore (Moderator) said...

If you are arguing that the government should not have made deals that favor big pharmacies, then you are right, but you are also jumping over to my side. Welcome aboard.

Unfortunately the answer is not MORE goverment interference in the market to correct for PAST interference, but rather to end the unfair practices you speak of.

Now we are getting somewhere so let's think this through and arrive at what the Hindu's called "Satya", a way of looking at righteousness that emphasized "conformance with reality".

You talked about the state as a "big buyer" who could necgociate lower prices, but are they a bigger buyer than Wal-Greens or Wal-Mart or USA Drug? No indeed. All of those can necgociate with drug companies at least as effectively as a state bureaucrat from Arkansas. Competition with each other and smaller chains and independents will cause them to pass those savings to the consumer.

So if you follow the money you will see that the real "savings" from this plan will be squeezed out of the pharmacies, not the drug companies. Especially the rural pharmacies with a low volume who need a higher margin to make a living, or the smaller chains who specialize in good service in exchange for somewhat higher prices.

The "leverage" the state is using will help the big machine chains by driving low-volume competitors out of business. People in our rural state will pay less for the drugs but have to drive to the closest big town to get them so they don't wind up ahead. The Wal-Marts of this world DO wind up ahead. That is OK with me if done in the market, but NOT when done by government "leverage".

3:26 PM, December 28, 2006  
Anonymous Anonymous said...

Medicare Part D certainly hurt smaller pharmacies more than Wal-Mart and Super D, but Arkansas Rx will have little or no effect on smaller pharmacies, any more than any insurance plan will. All it is an insurance card, similar to what insurance companies have been issuing and pharmacies have been accepting for years. Yes, the state subsidizes it by promoting it and allowing DHHS employees to do the negotiating. But the drug companies essentially pay for it. Which, in my opinion, is how it ought to be.

You can always tell the effect of legislation by who's for it and who's against it. The pharmacists supported Arkansas Rx. Lilly and Wyeth and Johnson & Johnson and Merck et al. opposed it, touting their voluntary programs (that aren't bad, but are more PR than anything and don't help a larger population of lower-middle class folks).

Pharmacies, like all health care providers in the country, are subsidized by the federal government (though pharmacists aren't as much as some other providers because the coverage of Medicaid and Medicare isn't as broad). Rural pharmacists frequently do as well or better than pharmacists in higher population centers, just like doctors. Go over the delta counties and you'll see family doctors making a fortune, because demand is high and supply low.

5:54 PM, December 28, 2006  
Blogger Mark Moore (Moderator) said...

"All it is an insurance card, similar to what insurance companies have been issuing and pharmacies have been accepting for years"

With one CRITICAL difference. And I want you to follow me very closely here because this is critical to attaining the enlightenment that I want for you. Each pharmacy can decide for themselves if they want to accept the prices paid by a given private insurance plan. With this one, it does not sound like they will have the same option. With Arkansas RX the state will necogciate the prices and "pharmacies will be required to pass those savings onto the consumer". Turning down a big insurer that wants to short-change them might hurt, but at least they have that option. Insurers have to respond to market realities because if too many pharmacies refuse to accept their low-ball prices then it could cost them business. The 800 pound state gorillia does not have that check and balance as it goes crashing through the landscape ordering folks about.

"Rural pharmacists frequently do as well or better than pharmacists in higher population centers" you say. Sometimes maybe. The key is volume. But if there is not enough volume to justify a drug store on the bare-bones prices the state will pay, then that small town will lose their pharmacy. If the store had been allowed a more reasonable margin they could keep their doors open and continue to serve people. Just because SOME rural pharmacies have as high a volume as big city stores does not negate this fact. In the small chain I am working, I assure you that the three small town stores are low-volume relative to the big city stores. Those towns are prime candidates to lose their pharmacies when the state decides what margins are "fair".

As for who is for it and who is against it, I repeat that it could be the "chamber of commerce effect". Plus, the drug companies probably understood the dynamics a lot better than the Arkansas Pharmacies. The small pharmacies may not get the picture yet- that you guys are going to aim a D60 dozier right at them. The bigger players in this state are the only ones that can afford to pay people to keep up with this stuff. It is OK with them if the rural folks get shut down so the area served will have to drive 20 more miles to their "Superstore" and get treated like a number.

Some of you don't want to admit that these heavy-handed government efforts to "help" people wind up hurting people too, but they do.

7:44 PM, December 28, 2006  

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