Triad Pharmacist Says Generic Drugs Could Cost Less

Larry McGuire is a regular customer at Marley Drugs on Peters Creek Parkway in Winston-Salem. Six months ago, he switched his mother's prescriptions to Marley Drugs. She's 59 and has MS. According to McGuire she has no health insurance and won't qualify for Medicaid until next year.  Her only income is a thousand dollars a month from Social Security.

“We were able to get those six drugs up here for three months for 120 dollars for 90 days," says McGuire. "We were trying to get the cheapest price between Rite Aid, Kmart and Walmart, but it would have cost me around $800. Now we got $300 dollars a month to buy food. She gets the same service and has money in her pocket.”

One of the drugs McGuire's mother takes is Gabapentin for nerve pain. The generic is Neurontin. A 90 day supply for 300 mg at Marley Drugs is $20. At Walmart it's $44.78, Costco charges $15.59 and Walgreens charges $15.00.

David Marley opened Marley Drugs in 2003. About seven years later, area Walmarts, including the one up the street from him, launched a $4 discount program for maintenance prescription drugs. To remain competitive, Marley and other pharmacists created similar programs.  Today, Marley offers more than 50 maintenance drugs at 20 dollars for a 3-month supply.

“If my acquisition cost is less than 12 dollars for 90 pills, it goes on the list," he says. "If I can't buy it for less than 12 bucks, it's my cost plus $30 for a 90-day supply.”

In 2011, Marley discovered there can be large price disparities of discounted drugs, depending on who's selling them. One evening, a breast cancer patient living in Greensboro called him. She was price shopping for Letrozole, a generic version of the drug Femera used in some breast cancer treatments.  “She said 'I lost my insurance because of the breast cancer, I lost my job. And I walked away from the counter at Walmart because they were going to charge me $436.00.' I said that's insane. At that point I set a flat fee $40 for 30 Letrozole. And she came in and gave me a really big hug and it felt good.”

People living in other parts of North Carolina can also take advantage of Marley's program through the company's website. Shipping is free for a 6-12 month supply. Currently, Marley Drugs out-prices several area Winston-Salem pharmacies including Walmart, Walgreens and CVS. Costco is competitive with several drugs, including Ambien and Actos, which cost $5 to $17 dollars less. Walmart's  corporate office declined an interview with WFDD for this story.  Walgreens and CVS did not return our calls. But Costco did speak with us.

Victor Curtis is Senior Vice President for Pharmacy Wholesale for Costco. He says Costco will not sell above a 15% margin on any item it sells, including prescription drugs. At the end of the day, Curtis says companies including Walgreens, Rite Aide, Walmart and CVS set their own prices for discount drugs.

“Ninety-five percent of prescriptions are billed to insurance; they're going to maximize the payout from insurance companies," he says. "So their cash price is, in effect, high-enough that they never default to the lower price when billing an insurance company.”

The Generic Pharmaceutical Association reports in 2011, consumers spent about $320 billion on generic drugs, for an overall savings of $193 billion. Claire Sheahan, Vice President of Communications for the organization, says while her group represents the makers of generic drugs, it has no influence on pricing.

“We are the very beginning of the supply chain," she says, "and by the time they get to the consumer they've passed through a lot of other hands and pricing decisions are made along the way.” Sheahan says it's still too early to tell how the Affordable Care Act will impact the pricing of generic drugs,

Another variable influencing generic drug prices is pharmacy benefit managers, the middle men between employers and employees. These third party entities process and pay employee prescription drug claims. Marley argues many PBM's practice 'spread pricing,' where they pay pharmacists less than what they charge the companies they represent.

“When I'm only being paid as a pharmacist $10.36 for a prescription but the employer gets a bill for the same prescription for $52.00 there's something wrong there," says Marley. "Most employers assume the amount paid to the pharmacy is the amount they're going to be billed. But because of crafty lawyers and creative contracts those numbers are significantly different.”

Curtis says Costco operates as a PBM for several companies nationwide, but the company does business differently.

“Basically any savings we get goes to the employer who we represent," he says. "We operate on a low member per month administration fee and no other revenue source, we don't keep a portion of the rebates that we get from pharma manufacturers, and if we get a lower cost from network pharmacy in terms of claims, we pass that through as well.”

Meanwhile, Marley plans to shop his own discount drug program to employers, offering them the same low prices he offers customers. 

“You take the drugs that we sell flat out to the consumer. Because it's cash on the barrel, no claim gets filed with the PBM, no bill to the employer. It becomes an instant win, win.” 

Marley says helping people get their prescriptions and save money has become his personal calling.

“When we've got people getting life-saving medicine who were going to go without for no other reason than the greed of the company selling it, I feel pretty good. I don't worry about the finances. It'll take care of itself. And if not, we'll figure something out.”

Right now, Marley is working to secure pharmacy permits in 18 states, which will enable him to fill and mail out-of-state prescription orders.