Why Sam’s Club Pharmacy’s new deal is a win for patients
When the company announced a new deal with Sam’s club last month, it made some important decisions about its pricing structure.
It lowered the price of its drug mix to reflect a move away from a price structure where it pays out a percentage of the retail price of each drug to every pharmacy.
And it expanded its pharmacy network.
But the big changes were to pharmacy benefits and pharmacy pricing.
The price of Sam’s drug mix has been frozen for at least a year, but the company’s benefits are expected to go up.
“It’s a huge shift,” said Joseph Luszczyn, senior vice president of pharmacy strategy at Avalere Health, a pharmacy consulting firm.
“And it’s not going to be sustainable.”
And that means the pharmacy benefit plans are likely to lose out on a bigger share of the pharmacy market.
What’s more, the pharmacy price hike also comes on top of a broader increase in health insurance premiums and co-pays for some Medicare beneficiaries, who are increasingly struggling to pay for the care they get from Medicare.
“I think it’s a significant price hike that’s going to hurt some patients,” said Dan Toth, chief executive of the National Federation of Independent Business, which represents more than 2 million small businesses.
“But there are many other businesses who are going to get hit.”
Sam’s Club, based in New York City, has long offered a low-cost, no-surcharge drug mix.
That’s been a success for the company, which has been a leading provider of prescription drugs in the United States for years.
The drug mix is so low-priced that it has helped to drive up pharmacy spending and sales, according to a recent report from the pharmacy consulting group Avalere.
But as the industry has shifted toward more expensive drug products, it’s faced pressure from the pharmaceutical industry to increase prices.
The companies have been forced to raise prices on many other medications as well.
The price hikes are part of the broader price hike strategy that the companies have pursued over the past year, including in the cost of health insurance for seniors, a move that has driven up premiums for many Medicare beneficiaries and pushed some of the companys larger Medicare businesses into bankruptcy.
Sams Club also is looking to improve its performance on a number of fronts, including by improving its pharmacy benefits, increasing its pharmacy access and improving its pricing.
While the pharmacy plans have been struggling, other pharmacy benefit programs are making significant progress, according the National Association of Pharmacy Benefit Administrators.
Last month, the organization reported that the number of Medicare beneficiaries in the US who can afford to shop at the big-box retailers Walmart and Target has increased by about 2 million.
And in March, the association reported that about 40% of all pharmacies in the U.S. had enrolled in the Medicare Advantage program, the program that provides prescription drugs to older people.
Avalere Health’s Luszy said that in general, the industry is doing well.
He said that with the rise in co-payments and the fact that the industry as a whole has been able to reduce the cost, it seems that pharmacy benefits are continuing to do well.
“Avalore has been an important player in the industry for a long time,” Luszik said.
“We know that they’re trying to bring that to the next level.”
The Sams Club price hikes come at a critical time for the industry, said Andrew Gierl, vice president for pharmacy policy at the National Small Business Association.
In recent years, pharmacies have faced growing competition from big-ticket retailers such as Wal-Mart and Target, which have also been expanding their reach in pharmacies and providing lower prices.
Many smaller pharmacies have struggled to keep up.
For example, Luszi said that while Wal-mart and Target’s pharmacy benefit agreements are not as expansive as Sams Clubs, many smaller pharmacies are still able to provide the same benefits and have the same pharmacy benefits as Sam’s clubs.
“You don’t have to have a Sams club pharmacy to be a Sam’s,” Lusszi said.
One thing that Sams does well, Lussz said, is offer its members a free, no cost pharmacy check-up.
Another aspect of the Sams’ club strategy that has been particularly important to its pharmacy benefit customers, Luchz said is to provide discounts for certain types of patients.
Luszz said that some pharmacy benefit users like retirees, for example, may be better off getting an extra 10% off of their prescriptions because Sams doesn’t offer a discount for seniors.
It’s unclear how Sams will handle this new pricing structure, Luchs said.
The company did not immediately respond to a request for comment.