Wal-Mart Experiment Paid Off

[toppick08 (Premo)]

I love me some Wal-Mart........

[Bruzilla]

Originally Posted by LexiGirl75

Bruzilla, I'm glad your wife is doing so much better.

I am a little confused. Is it that the brand names cost so much that insurance only pays a portion or is it that insurance doesnt pay at all? Is the new (very) low price the prescription (co-pay? Can't think of the terminology)?

My Rx insurance has to be done online for ongoing/monthly meds so I may never get to see this but it's definitely good news.

Here's what I learned while working for Blue Cross Blue Shield. Drug companies make a new drug and have seven years to sell it without any competition. After seven years they'll usually release a generic equivalent and license the drug out to other companies. During that first seven years, the drug companies will supply doctors with giveaway samples to give to their patients to get them to try the drug, then when the doctor writes a script they get a kick-back or other reward. If the doctor writes a script for a generic they get nothing, so there's a strong incentive for them to write scripts for the latest and greatest brandname drugs on the market... which are also the most expensive.

The reason that WalMart and others started their programs was the Medicare Part D program. Under Part D, the government covered 75% of total drug costs up to $2,250 (that number goes up a little each year). After that, people had to pay 100% of most of their drug costs until they reached an out-of-pocket spending limit. Total drug costs are defined as the amount the government and the patient pays, so if someone is using an expensive brandname drug that $2,250 limit was reached quick. If someone used low cost generics, they could get drugs through the whole benefit year and never reach the $2,250 limit. Once people on Medicare had to start paying for their own drugs once they hit the $2,250 mark, they quickly lost the "only the best will do" mentality and started asking for lower-cost alternatives.

The result of this was a dramatic increase in demand for generics. Between 2005 and 2007, the number of the most commonly prescribed drugs for seniors available as generics went from 10% to over 50%, and has kept growing. Also, drug companies who used to wait seven years to release a generic now had to issue generics of their new drugs after only 2-3 years or loose market share. The result of all these new generics on the market increased the supply to the point where Wal Mart could start offering a huge number of generics for $4, and everyone can benefit.