Profit motive lowers Rx prices, politicians don’t
May 21st, 2008 | by Brian T. Schwartz |
In February the Denver Post reported that
Coloradans using a new state prescription program for lower-income people will end up paying more for most drugs than they would at chain pharmacies, according to a Denver Post cost comparison.
Meanwhile, last week the Associated Press reported that Walmart
would expand its discounted prescription drug program to offer 90-day supplies for $10 and add several women’s medications at a discount. It also said it would lower the price of more than 1,000 over-the-counter drugs.
The move marks the third phase of a company program that began in 2006 to provide a 30-day supply of generic prescription drugs for $4. (hat tip, Paul Hsieh )
As this Wall Street Journal Health Blog entry notes, Walmart claims this program has saved consumers $1 billion as of March 2008, and have also pushed other retailers like Target, RiteAid, and Kroger to offer similar deals.
Alas, some people would not consider saving people money via affordable medications to be a moral activity if the providers also profit from it. I’m grateful. After all, another government program, Medicaid, increases the costs of prescription medications:
The Puget Sound Business Journal reports that
that nearly 9 percent of what employers pay in insurance premiums a year goes to subsidizing Medicaid and Medicare rather than to covering employee medical expenses.
Further, Michael Cannon points out in his excellent policy analysis, Medicaid’s Unseen Costs ,
Medicaid’s drug price controls … effectively increase the price of non-Medicaid prescriptions by 13.3 percent over and above what they otherwise would be. Thus, if a regime of medications costs a private payer $1,000 per year, over $117 of that cost is effectively a hidden tax attributable to Medicaid.
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