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Saying No to Choice

Kim Bellard, January 6, 2011

I read one of the most astounding articles last week.  It appears that the Ohio Board of Pharmacy doesn’t think much of consumers opting to shop pharmacies.  In rules that went into effective January 1, Ohio consumers will only be permitted to transfer prescriptions once a year, except for transfers within a pharmacy chain using a centralized computer system.

The Board’s rationale is that transfers can result in errors, thus making the new rules a patient safety issue.  They also note that these rules are more consistent with DEA rules on transfers of prescriptions for controlled substances.  Critics of the rule suspect that pharmacists did not like the time and paperwork associated with the transfers, much less the competition brought about by various retailers offering discounts or other incentives for such transfers. 

Consumers can switch pharmacies within the same pharmacy chain or can obtain new prescriptions from their doctors in order to go to a new pharmacy.  Staying within one pharmacy chain may miss the point of the consumer’s desire for a change, while forcing the doctor to write a new prescription simply shifts the burden to the physician, and also makes it more difficult for PBMs and insurers to monitor utilization.  And it’s not just price-conscious consumers who may be impacted; snowbirds, college students, or other individuals who have more than one residence during the year may also be out of luck. 

So much for being consumer-focused.  Rather than focusing on true patient-safety solutions like better ways to electronically enable such transfers, the Board of Pharmacy is just telling consumers “too bad.”  We should keep in mind that pharmacy has long been the envy of the rest of the health care world due to its decades-long ability to get online claims, benefits, and eligibility information.  One would like to think they could solve something like prescription transfers in a more elegant manner.  It strikes me a little like when the mobile phone companies used to tell consumers they’d have to change phone numbers if they switched carriers.  I’m sure there were some record-keeping headaches with transferring phone numbers to a competitor as well, but somehow the phone companies survived once they were forced to allow the transfers.  Telling patients they can’t take their prescriptions elsewhere just seems paternalistic; pharmacists should worry more about why consumers want to take their business elsewhere and then address those reasons.

Can anyone imagine something like this happening in any industry other than health care?  Historically, consumers have consistently rated pharmacists as one of the most trusted type of health care providers, such as in a recent Gallop survey.  It’s hard to see how this action will help pharmacists continue to earn that level of trust.  The Board of Pharmacy comes off more like a Soviet Board of Central Planning, and our health care system once again reveals that it doesn’t quite grasp the concept of consumer-focused. 

Meanwhile, the New York Times reports that drug companies are using coupons and co-payment cards to reduce the effective cost of brand names for consumers (although not to PBMs or insurers).  Consumers have been following the money these past few years, especially since more have copayments or coinsurance that encourage use of less expensive drugs, and the result has been an increase in generic drug use.  No wonder consumers are changing pharmacies.  With the coupons, consumers can get brand names as cheap or cheaper than generic, so from their point-of-view, why not?  It’s not surprising that the drug manufacturers are fighting back to regain market share, nor is it surprising that we have yet another perverse financial incentive for health care consumers. 

One wonders how the Board of Pharmacy will react to the coupons.

Still, perhaps lacking a regulatory option that pharmacists in Ohio had, some health care providers are finding their own way to limit choice.  The past fifteen years have seen waves of consolidation in hospital markets, creating effective or actual monopolies for hospital care in many markets.  According to William Vogt, Ph.D. of the RAND Corporation, 90% of the U.S. lives in “highly concentrated” hospital markets, and that hospital consolidation raises hospital prices.   The Robert Wood Johnson Foundation raised concerns about this back in 2003, noting both the trend and the impact on costs, and the trend hasn’t stopped since then.  It doesn’t even have to be a true monopoly.  Last year the Massachusetts Attorney General found that health insurers paid significantly more to hospitals and physicians with market leverage than can be accounted for by quality of care, severity of illness of patients served, or cost to deliver the care for these institutions.   These “must have” provider systems are able to dictate contractual arrangements with insurers that help assure better financial results for their system, but also help drive up the overall cost of health care and health insurance in those markets. 

Health care reform in 2010 created the specter of even greater consolidation, such as reported by Bloomberg and others.  To have even greater control of the health care delivery system, hospitals are also acquiring physician practices.  As reported by the Wall Street Journal, 55% of practices are now owned by hospitals, up from 30% five years ago.  It doesn’t take too much imagination to envision some markets where, for all intents and purposes, there comes to be only one monolithic health system, including doctors, hospitals, labs, imaging, and other services.  It could make cable service look like a hotbed of competition.

More horizontal and vertical integration may indeed be good in many cases.  Increased clinical integration between providers is going to be necessary to improve care.  The need for increased investments in Health Information Technology (HIT) is likely to be costly and is more affordable for larger organizations.  These reasons certainly provide some solid rationale for more consolidation and integration.   However, the risk is that we’ll get the reduced choice without offsetting improvements in cost-effectiveness and quality.  The goal shouldn’t just be “bigger,” it needs to truly be “better.”

Consumers should have choices in health care, as in anything else.   Reforms in the health care system should encourage competition and consumer choice, and should help make those choices be based on measurably better performance, both clinical and financial.  We should be saying “no” to actions that don’t serve that purpose. 

Reader Comments (3)

Wow! 55% of physician groups owned by hospitals? That could aid in terms of less fragmented care and better data. On the other hand, do any studies show whether these physicians have higher rates of hospital confinements or O.P.testing?

While better data will create some informed consumers (and many confused ones), the key to lower health costs, and better outcomes, seems to lie in replacing our pernicious system of fee-for-service payments. Will the trend toward larger, integrated health systems make this more feasible?

February 7, 2011 | Unregistered CommenterJim Lundberg

The real purpose of this legislation to cut down on prescription drug abuse. It's impossible for the state to keep up with how many refills and where you have open prescriptions for narcotics if you get your meds from multiple drugstores. Once your allowable amount if filled, you just move it to a new drugstore and start all over. Pharmacies don't share patient prescription information.

February 7, 2011 | Unregistered Commentermkb

Yesterday the Columbus Dispatch reported that the Ohio State Board of Pharmacy is reversing their ruling that limited prescription transfers…perhaps MCOL Blog can claim some credit!

March 31, 2011 | Unregistered Commenterkim

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