ANNAPOLIS – Removing price controls on mail order drugs – an often-touted device for reducing health care spending – would probably save Maryland consumers a modest $7 million a year, according to a study by the Maryland Health Care Commission.
“The impact in terms of savings is not dramatic,” said Ben Stephen, a deputy director of the Health Care Commission, who presented the findings of the study to a committee of state legislators last week.
Current Maryland regulations prohibit state-insured health care providers such as CareFirst or Aetna from offering their customers reduced prescription copays if they order discounted drugs through the mail.
Senator Thomas M. Middleton, D-Charles, proposed legislation last year that would remove the restriction. He said in an interview Tuesday that he proposed the bill to start a discussion about whether the restrictions should be removed.
In light of what he called an approaching “health care crisis,” he said the savings offered by removing the restrictions were “not insignificant.”
“I think everything should be on the table,” he said. “We now know there are potential savings there.”
The report said that at the high end savings could reach $16 million if the restrictions were lifted, but that level of savings would result only if all eligible drug buyers were to switch to mail order. The report’s authors said that was unlikely and that the estimated saving of $7 million was more realistic.
According to the report, sales of prescriptions drugs in Maryland increased by 10 percent to $4.1 billion in 2004, due in part to a recent boom in the drug development that has provided doctors with a host of new medicines for treating a wider range of ailments.
At the same time, Maryland’s senior population is growing rapidly. The Maryland Department of Aging predicts that by 2030 one-fourth of Marylanders will be over 60 years old and the number of people over 85 will have doubled.
“I think you’re going to see a rapid deterioration of health care,” Middleton said.
Other legislators are concerned, however, that removing the restrictions would have an adverse effect on consumers’ health and the business of local pharmacies.
Delegate Donald B. Elliot, R-Carroll, himself a retired pharmacist, warned that the personal guidance consumers receive from their local pharmacist is invaluable.
“To lose the expertise of the pharmacist when you are taking powerful drugs…it’s wrong,” he said “You’d be surprised by the people who don’t understand how to take their medication.”
He said people have been known to bring the medicines they ordered through the mail to their local pharmacist and ask for advice.
“They say ‘I got this from the mail order house . . . is this the same prescription I got from you before?’,” he said. “I’ve never said this to a patient, but the temptation is to tell the patient ‘Why don’t you go ask your mailman?'”
Stephen said part of the reason for the modest savings predicted by the study is that only about a quarter of prescription drug spending in Maryland is governed by the mail order restriction.
The study report concluded that the restriction has suppressed mail order sales so that they account for only 14 percent of prescription drug sales in Maryland, a rate four percent lower than the national average.
Stephen said in a separate interview that many experts believe mail order houses are more efficient than local pharmacies and thus can offer lower prices.
“They are able to reduce their prices by making large-scale purchases,” he said. “And the mail order pharmacist is filling prescriptions non-stop without having to answer questions from patients.”
The report estimated that under the most likely scenario Maryland pharmacies could expect to lose about $88 million in revenue per year if consumers ordered more drugs through the mail.
This equates to a loss in profit roughly equivalent to the predicted $16 million in consumer savings, according to Stephen.
But the report also suggests that the revenue pharmacies would lose would be offset by growth in prescription drug sales.
Middleton said he realizes that pharmacists are opposed to removing the restrictions, but that any possibility of savings had to be considered.
“At first blush I didn’t like it either,” he said. “But it is something we have to keep discussing and analyzing.” He said he had no plans to introduce a bill to remove the restrictions in the near future.