Jim O'Leary

Waverly Star

By Jim O'Leary

An e-mail newsletter for and about Waverly people, used with permission in the HLW Herald and on this web site.

 Oct. 14, 2002

Heath care costs ­ from the front line

Continued from last week's Waverly Star

By John O'Leary, MD

You will recall I started out saying I'm an old doctor buying pills for old soldiers.

I have become one hell of a good pill buyer. Not that I'm so good personally, it's that I'm working for the VA and in the year 2001, the VA was buying pills at 56 percent off the average wholesale price (See data PRIME Institute Stephen Schondelmeyer, U of M School of Pharmacy, available on the web at www.picprogram.org.

This price break I am now enjoying resulted from legislation passed by Congress in 1992 in the form of a joint powers agreement entitled Health Care Sharing Agreements Between Department of Veteran's Affairs and Department of Defense.

This agreement established price control for these two branches of the federal government. As a result, in our Brained Outpatient Clinic, I can buy just as cheaply as Canada is buying.

Not only that, but I don't have to buy any of the highly advertised but overly expensive drugs. Our VA/DOD purchasing group has access to drug evaluation data from all over the world and, in my experience, they invariably buy the best drugs at the best price.

So here is my recommendation: To my way of thinking, adding a prescription drug entitlement to Medicare Part B would not be a good step to take right now, because there would be no way to eliminate drugs which are highly advertised but overpriced. Entitlement would mean that every doctor's prescription would have to be filled by any drug store.

When you look at the prices of some of those pills, you are looking at some big bucks. Not only that, but entitlement would have to include buying pills for some rich old people because there is no mechanism for means testing the whole United States, thank God!

Instead of adding a drug entitlement to Medicare Part B, which would result in a massive increase in spending on pharmaceuticals, it makes more sense for our federal and state governments to review suggestions of the experts in those schools of pharmacy and those in institutes devoted to a study of the problems of health care around the world.

High drug prices are not a problem isolated to the United States. They are just one little, albeit important, part of health costs around the world.

I am not suggesting inaction. Politics, after all, is the art of the possible. From my vantage point, I can envision at least one possible step we might consider as our next course of action. The step I am suggesting isn't new, and some portions are already in place.

For example, the states of Vermont and Maine have been granted waivers by HFCA to extend their prescription drug benefit to state residents who would otherwise be ineligible for Medicaid benefits.

This is a window of opportunity. While the average public purchase price reduction from wholesale for most state programs runs 15 to 40 percent, our DOD/VA purchases have been 56 percent.

At present, the largest government payor of drugs is the Medicaid program (basically a joint powers agreement between states and the federal government). In the year 2001, 11 percent of purchases at retail pharmacies were paid by Medicaid (see the web at aspe.hhs.gov).

Seeing veterans and their wives coming in to our clinic for drugs during the past two years has made me aware of a group of people who are hurting badly over the rising costs of prescription drugs, namely the wives of our least affluent veterans.

They are most often from a family which has so little money coming in that means-testing makes them eligible for no co-payment on any and all drugs supplied by the VA.

The veteran is lucky. He gets all his drugs free of charge but, unless she is eligible for Medicaid, the wife is left out in the cold.

There are two very tough problems when it comes to adding any sort of a VA benefit for wives. The first problem is that the VA is already chronically short of funding.

VA programs already in place have been hurting badly for several years. The basic problem has been related to year-to-year budgeting. VA health benefits are not an entitlement, and attempts to change the funding mechanism to an entitlement have ended in failure.

It wouldn't make sense to try to add an entitlement to a program which already has no entitlement. Any such action would depend on enabling legislation at a national level.

The need for this enabling legislation became critical when President Bush refused to release $275 million in veterans healthcare supplemental funding for fiscal year 2002. This came at a time when there were already more than 30,000 veterans on long waiting lists.

In July, 2002, Rep. Chris Smith (R-NJ), chairman of the House Committee on Veteran's Affairs, introduced an act to change the VA healthcare budget from discretionary funding to a mandatory entitlement.

Even if that bill passes, there could be a second, more intricate obstacle which relates to the clout of the international pharmaceutical manufacturers.

While any purchaser may negotiate a good deal on a purchase (the VA/DOD 56 percent-off wholesale in the year 2001 is a good example), any drug manufacturer would also be free to refuse to submit a bid.

Would they refuse to submit bids when they feel a major threat to their profits? Who knows? As they used to say in the Army, "That's up where the elephants make love."

These are really tough problems, but it is my belief the present high-priced drug situation has become so miserable for so many people that those problems could be overcome. If so, it would have to be done somewhere up above, with grunts and groans, where the elephants are making love.

John B. O'Leary, M.D.


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