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Study Finds Mail Order Prescriptions No Bargain

February 28, 2007

Pharmacy Benefit Managers • Study Finds Mail Order Prescriptions No Bargain • Drugs by Mail: Money Saver or Rx for Disaster? • PBMs Come Under Tougher Scrutiny -- • Caremark • Express Scripts • Medco

Businesses that encourage employees to order prescription drugs through the mail may not be reaping the financial rewards they think they are. That"s the conclusion of a new study, which flies in the face of a report by the Federal Trade Commission.

A 2005 FTC study urged businesses to turn to mail-order pharmacies, owned by pharmacy-benefit managers (PBMs), as a way to cut the cost of employee drug benefits. The report supported the conclusion that overall, drugs purchased by mail cost a lot less than those bought from retail pharmacies.

Not so, according to a new study from the Creighton University School of Pharmacy and Health Professions in Omaha, which disputes the FTC report findings. The study appears in the January issue of Drug Benefit Trends.

"We found that brand-name drugs were slightly less expensive when purchased by mail, but generic drugs were more expensive by mail. When we combine the prices for brand-name and generic prescriptions, any differences virtually disappear," said Robert I. Garis, M.B.A., Ph.D., associate professor at the Creighton University School of Pharmacy and Health Professions.

Both the FTC report and the Creighton study were based on 2002 drug prices. Creighton researchers looked at pricing data for the top 50 brand-name and top 50 generic drugs by prescription volume.

The FTC based its report on aggregated price, and the Creighton study priced common drugs according to the terms stated by the FTC. While the use of 2002 data was necessary to compare the Creighton results fairly to the FTC analysis, Garis said the same pricing pattern continues today.

Given a continued increase in generic-drug use by both mail and retail pharmacies and the practice of high markups on generics by PBM-owned mail outlets, he added, retail pharmacies ultimately may offer the better value. He noted that recent reports show generic drugs account for more than 55 percent of all prescriptions dispensed through both mail and retail channels.

"Employers need to ask PBMs more questions about their markups on generics, just as they would when purchasing ink, paper or other supplies,” Garis said. "The truth is that PBMs are racking up record profits through an increased use of generic drugs and an increased use of PBM-owned, mail-order facilities.”

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