Government gets big drug discounts you can’t get: 50 to 4,000% off – VA prices make Canada look expensive

Charleston Gazette (West Virginia)

The U.S. Veterans Administration negotiates drug prices that make Canadian prices look downright expensive.

“We buy so many drugs,” said Karen Fedele, spokeswoman for the national VA. “We can negotiate good prices.”

That’s an understatement. On average, the prices the VA pays for drugs are more than 4,000 percent lower than the price the cash-paying West Virginian pays at the pharmacy for the 13 drugs on the Gazette-Mail list.

Because the VA gets such low prices, they can offer veterans free or very low-cost drugs. After a veteran signs up for VA Health Care, he or she can fill prescriptions for combat-related injuries or illness free. Other prescriptions cost $ 7 a prescription, no matter what the original cost is.

The state’s veterans have signed up in droves. Sixty-seven percent are enrolled.

The VA can offer this great deal in part because they do a great job of negotiating the prices they pay for drugs. On the low end of the Gazette-Mail list, a 30-day supply of Lopressor costs the VA thirty cents, compared with the $43.80 an uninsured person pays at the drug store.

How can a pharmaceutical company offer such prices? “Don’t be fooled. They make money,” said Mike Valentino, one of the VA’s pharmacy benefit managers. “It only takes a couple of cents to make one of these tablets. If their commercial price is $2 and, let’s say, for example, we’re getting it for $1.50. They’re not losing 50 cents. They’re making the difference between the amount that it cost them to make that product and the amount they’re charging us.

“We buy the best value we can,” Valentino said. “We want to do the best we can while allowing the companies to continue their business practices.”

The VA does not carry every drug. They eliminate those they feel are high-priced, but deliver no more therapeutic value than a lower-priced drug, Valentino said. Five patented drugs on the Gazette-Mail list are not available through the VA, for instance. “But a drug of equal therapeutic value is available,” Valentino said. “And if the drugs we carry don’t work for a veteran, we make sure he gets what he needs.”

Jerry Flanagan of The Foundation for Taxpayer and Consumer Rights said veterans deserve low prices. The VA has shown what kind of low prices are possible when the federal government negotiates, he said. “But surely, the government can do a better job of regulating the price for everybody else,” he said. “All consumers deserve lower prices.

“The pharmaceutical manufacturers are saying out of one side of their mouth that they’ll go out of business if Americans get Canadian prices,” he observed, “while on the other hand, they offer deeper discounts to many millions of other Americans.”

The VA started the prescription drug program four years ago. As drug prices zoomed ever-upwards and veterans discovered the program, enrollment boomed.

By 2002, 4.5 million veterans had signed up. In the past nine months alone, 2.3 million more vets have signed up. There is a national waiting list of 83,000.

In West Virginia, the four VA hospitals have scrambled to keep up with demand. The Huntington VA has added 65 people to its staff this year alone, said J.B. Finlay, Assistant to the President.

“We’ve worked overtime. We’ve opened up a contract site in Williamson, contracting with an existing provider, and we’d like to do the same thing in Logan. Most of the people we’ve added are clinical staff – doctors, nurses and so forth.”

The overwhelming success of the unadvertised VA program is a warning sign of the desperate need, said Dr. Alan Sagar, Professor of Health Services at Boston University.

“These programs are safety valves, and they will not be big enough for the need,” he said, “and, worthy as they are, they will not solve the underlying problem.”

In some cities – worst-case scenario – there is a three-to-six-month wait.

“The VA up here is going crazy,” Sagar said. “People are signing up and flooding the doctors’ offices, because you’ve got to see the doctor and get him to write you a prescription before you can get the $ 7 drug. There’s a huge wait to see a doctor in Boston right now.”

As prescription drug prices rise, the steady stream will become a flood, he predicts.

In West Virginia, 53,000 veterans have signed up for the program. Two-thirds of them have no billable insurance, said Debbie Bramer, spokeswoman for the Huntington VA hospital.

There are 79,000 veterans in the state. So 26,000 – one third – are not signed up. Some may make too much money, Fedele said.

In February, the national VA -swamped with new enrollees – imposed income criteria. For now, veterans in “higher income” brackets cannot sign up, she said. In West Virginia, higher income is defined as above $ 24,644 for single veterans and $ 29,506 for a veteran with a single dependent.

Many younger vets may not need the program. Others may simply not know about it. The VA is not allowed to advertise the program, Finlay said. “We really rely on word of mouth and veterans organizations to get the word out.”

Veterans who want to sign up can find information at: http://www.va.gov/elig/ Click on the Enrollment button.

Three categories of veterans are automatically eligible, no matter how much money they make:

(1) veterans whose injuries have been rated at least fifty percent service-connected;

(2) veterans who have been out of the service less than a year, who have illness or injury incurred in the line of duty, but have not yet been “rated” by the VA, and

(3) veterans who are seeking care from the VA for service-connected medical problems only.

A veteran can keep his or her family doctor, but must have a prescription from a VA doctor, to get the free or low-cost prescriptions. So some veterans go to both doctors.

A primary care visit to the VA in West Virginia costs $15, and specialty visits cost $50.

There are 25 million veterans in the United States. What will the VA do if 5 or 10 million more sign up next year?

Fedele hesitated before she answered.

“I guess we’d have to figure out some way to take care of them,” she said.

If that happens, Valentino sees a potential financial problem. “We may represent 3 percent of a pharmaceutical company’s sales right now,” he said. “So it’s a little easier for them to offer deep discounts in small markets.

If all of the sudden, this were 20 to 30 percent of their sales, then we might see a different reaction from the pharmaceutical companies.

“We don’t know what might happen. All we can really tell you is what’s happening in our system today.”