A Dangerous Drug Problem

I remain a big fan of generic drugs and plan designs which encourage their utilization. There are however situations where generics do not work and can be quite dangerous. Yesterday I saw a client who had a successful lung transplant several years ago and what she had to say was quite alarming. It seems that after several years clients blood work was not quite right. Client was having bloodwork often to monitor and meds were being adjusted. Last week client went to pharmacy where anti-viral and anti rejection medicines were filled with generics. Client noticed some pills seemed heavier than others. Pharmacist agreed and they opened several capsules to find some were completely full and others were just half full. Pharmacist broke a seal on a different container and guess what? Same scenario with varying doses.

Imagine being a transplant recipient and finding yourself in a position where your bloodwork is varying and then discovering your anti rejection and anti viral generic medicines are displaying dosages that vary? That would be the time to ditch the generic. I have never done so in the past but I might also be tempted to see an attorney in this situation.

The generic drugs in question are acyclovir and tacrolimus and for the record the pharmacist found the varying dosage issue with both generic medicines and alerted the manufacturers.

Lies, Damn Lies and Statistics

I guess I have just been too busy to expose any PBM abuses lately but this article by Neal Lerner in Drug Benefit News does a nice job in reminding folks it does not really matter if your PBM says they are transparent if they lack a systematic process and plan design which moves your members to lower cost in class generics as appropriate.

Check here or here for my prior posts on PBM's.

I may be busy but Iam still watching you untransparent PBM's.

Wal-Mart Expands $4 Generics Program

Wal-Mart has expanded its $4 prescription drug program it include a 90 day supply for $10 and OTC drugs have been added. Lot of drugs are included here folks.

I wonder when PBM's are going to figure out their business model is in trouble?

The Drug War

The National Community Pharmacy Association (NCPA) commented on a "bogus"
study released by The Pharmaceutical Care Management Association (PCMA)
in a spin war designed to garner support for H.R.971, the Community Pharmacy
Fairness Act of 2007. See if you can detect the hatred here;

The study paid for by the prescription middlemen lobby claims
that one of the main provisions of H.R.971, which allows
independent community pharmacists to join together in
negotiating lower prescription drug prices,would increase
health care costs.
In response, National Community Pharmacists Association(NCPA)
Executive Vice President and CEO Bruce Roberts, RPh, issued
the following statement:"Pharmacy benefit managers are
continuing to post record profits while many independent
community pharmacists are being driven outof business due
to anticompetitive PBM business practices. The nation's giant
PBMs are the subject of a slew of investigations and
prosecutions for deceptive business practices, but oppose state
and federal efforts to reform their business
practices and bring transparency to the PBM industry.
The statistics cited in the self-serving, self-funded report
are particularly questionable in light of the fact that PBMs
keep their business operations, upon which the conclusions are
based, a closely guarded secret. In fact, the giant PBMs
make much of their profits by taking kickbacks from drug
companies and through interest earned by delaying reimbursements
owed to community pharmacies.
"The report's figures are nothing more than an attempt by PBMs to put
Congress and the public on notice that they intend to hold American
taxpayers hostage if attempts are made to reform the PBMs'
anti competitive business practices.

The NCPA left out price spreads on generics--hey they want in on that action too.
But the NCPA is correct to call out the PBM's for keeping their reimbursement levels to retail pharmacies a secret even from the employers for whom they purportedly work as vendors. There ought to be a law against that and in short order I sincerely hope there is.

So I applaud the NCPA for pointing out the record profits PBM's are enjoying while telling their clients to shut up and take the pain. Employers all have a huge stake in this fight. By the way Iowa has passed a new law which awaits the governors signature which would regulate PBM's.

Dr Spin Medicine Woman

Kudos to Matthew Holt from The Healthcare Blog for turning up this Daily Show Episode where Dan Bakkedahl delves into the the wonderful world of pharmaceutical sales and interviews Miss Florida, who you guessed it, is in pharmaceutical sales

PBM Mail Fails Employers

For the last decade PBM's have actively engaged employers to move maintenance drugs to mail ostensibly for the lower costs available via that channel.

Yet a study published in The Journal of Managed Care Pharmacy reveals mail relative to community pharmacy;

1. Generated lower generic utilization rates (37.7% Mail versus 49% Community Pharmacy);
2. Produced higher costs in roughly half the top 20 generic categories;
3. Plan sponsors were found to make higher payments per day of drug therapy for prescriptions dispensed via mail order for many therapeutic categories.
4. One plan sponsor paid higher net costs for generic drugs secured through mail
   

This study was conducted from claims data from two public entities in Texas covering over 637,000 members and 8.7M pharmacy claims. In other words it is we taxpayers in The State of Texas who get to pay for "failed mail". I call it failed mail simply because implementing a process that moves members who desire the low cost in therapuetic class generics could easily take the overall generic utilization rate at least to 49% and likely into the 70% range for some employers.

Assuming mail order is less costly may prove to be an expensive mistake.

Employers with a $250,000 annual drug spend can request a 12 month claim file from their PBM with the right data elements below and know with certainty whether they are getting the best deal.

Would it not make sense to bend your pharmacy trend into a negative direction before all the specialty drugs hit the market?

Hearts or Minds

I have written about the hiring practices of Pharmaceutical Companies in A Picture is Worth 1000 words and Prilosec OTC, Wine & Cheese.

A Hat tip to Joe Padua at Managed Care Matters for providing details on a 21 year old pharmacy rep in South Florida without a degree yet but with the title of Miss FHM 2006 whose picture I have included here.

So now I have another image for use in enrollment meetings to illustrate how certain drugs come to be commonly prescribed and trust me the employees get the picture immediately as to what is really happening.
You really cannot make this stuff up.

The Big Lie

I ran across this explanation last week from the Kaiser Foundation on pharmacy trend and am reprinting it in full below to expose its true nature as pure cow dung.

Daily Health Policy Report

Prescription Drugs | Prescription Drug Spending Growth Rate Expected To Increase, Report Finds

[Apr 26, 2007]

Prescription drug costs increased at a slower rate in 2006 than in 2005, but the growth rate is projected to increase in 2008 and 2009 because of fewer generic drug releases and higher spending on specialty drugs, according to Express Scripts' annual drug trend report, the St. Louis Post-Dispatch reports. The report, released on Wednesday at the company's annual Outcomes Conference in St. Louis, examines data from its three million members to estimate national prescription drug costs. Express Scripts found that drug prices rose 8.2% in 2006, compared with 9% in 2005. The report projected that prescription drug spending would increase at higher rates in 2008 and beyond, according to the Post-Dispatch. Express Scripts attributes the future higher growth rates to fewer blockbuster drugs losing patent protection in 2008 and 2009. In 2006, several blockbuster drugs went off patent and lower drug spending resulted from patients switching to generics. In addition, because companies have launched aggressive campaigns to encourage patients to use generic drugs, much of the costs savings already have been realized, according to Tim Simpson, a principal at Mercer Human Resource Consulting. The report also found that certain drugs had higher levels of cost growth in 2006, including medications to treat diabetes, which experienced a 15.5% growth -- the second year of double-digit increases. Express Scripts expects the costs of diabetes medications to continue to grow at double-digit rates for the next four years, according to Julayna Meyer, vice president of trend management for the company. Spending on specialty medications -- high-cost, often injectable drugs -- is experiencing the fastest growth rate. Spending on those drugs is expected to reach $99 million by 2010, nearly double the $54 million spent in 2006. One in four dollars of prescription drug spending will go toward specialty drugs by 2010, Express Scripts predicts. Express Scripts CEO George Paz said employers could use the same cost-control measures on specialty drugs as are used on traditional drugs to limit spending (Feldstein, St. Louis Post-Dispatch, 4/26).

On the surface you get the distinct impression that there is absolutely nothing which can be done to mitigate rising drug costs and for corroboration we have evidence from Express Scripts' annual drug trend report as well as from Tim Simpson, a principal at Mercer Human Resource Consulting.

Since no big drugs are moving from brand to generic in 2007 we all just have to suck it up and take it. What is worse we are told is that by 2010 specialty drugs will account for $1 out of every $4 spent on prescription drugs. Well BOHICA! Think of employers across America struggling to manage their health care spend while standing up, because the pain when they sit is too great. What an utter load of excrement. There is quite a bit employers can do to whip this problem.

• The truth of the matter is that employers with a drug spend of at least $250,000 annually can adopt a plan design which encourages members to request the low cost in class generic because if they do the co-pay is zero.
  
• You need a PBM with a bullet-proof process to move your population into the low cost generic in therapeutic class.
  
• You need to negotiate the right to audit claims to make sure you are not subsidizing a huge generic mark-up like those I mentioned here.
• You need to understand plan design can change behavior which can reduce cost and higher admin fees for a truly transparent PBM are more than offset by lower claims costs as I wrote about in Lowering Rx Co-pays Produces Big Savings.
• You need to internalize that project driven consultants are transactionally oriented and in many cases may be using the same PBM RFP Template in Word and doing a find & replace all for your companies name and emailing it to CareMark, Express Scripts and MEDCO.
• If you let your PBM set your formulary you might not sit comfortably for some time.
• If your experience relative to pharmacy trend is reminiscent of Bill Murray's Groundhog's Day Movie you may need a new PBM or a new consultant or both.
  

The big lie IMHO is that some PBM's and Consultants enrich themselves while purportedly acting in the best interest of the employers which pay their bills. Unfortunately, the application of standardized project plans and workflows coupled with the insatiable quest for billable hours at transactionally driven consulting firms produces this behavior. Throw in overworked analysts skilled at data mining but lacking in specialized pharmacy experience familiarity or real world experience interacting with employees--you see consulting firms do not do enrollment meetings, they have call center and online web enrollment personnel for the transactional work that does not pay $500 per hour--and there you have it. Finally, if you ever really solved the prescription drug trend problem where would new revenue for PBM's or all the new projects for consultants come from?

At a deeper level, astute HR and Benefits personnel may want to ask whether you can ever obtain solutions to employee benefit cost problems from employees at a consulting firm. In the US market for professional services, the best professionals are principal owners not employees and this is true of attorneys, physicians, geologists, engineers, bankers and employee benefit consultants. As owners they can focus on working for their customers not on growing their departments fee revenue by 20% annually to meet Wall Street's earnings expectations.

Price Swings for Generic & OTC Drugs

Yesterday driving to an enrollment meetings I notice the Claritin advertised for $17.99 for a 30 day supply at Walgreens. A Froogle search after stopping shows a 600 day supply is available for $32.70 with shipping included.

The WSJ Health Blog recently pointed out the wide swings on the generic version of Ambien.

A Rite Aid spokesman tells Health Blog that generic Ambien will be available chain-wide today. A 30-pill supply of both the 5 milligram and 10 milligram doses will retail for $124.99. That’s a hefty markup over the wholesale prices–ranging from $9.74 to $25.01 for 100 tablets–that Health Blog found Tuesday. The margins on generics make them among pharmacies’ most-profitable lines of business.

Drugstore.com will be offering the generic sleeping pills as early as next week. The Web site partners with Rite Aid and handles the pharmacy chain’s online prescriptions. Prices are likely to be in line with store prices, the Rite Aid spokesman says.

For those not too exhausted to hunt for a bargain, online pharmacy RxUSA.com is offering a 30-day generic supply of the 5 mg dose for $15; the 10 mg dose is $19.50.

Obviously it pays not to be too exhausted to search for lower costs.

Rx Plan Design & Diabetes

An interesting story from The Chicago Tribune on employers eliminating co-pays for diabetes medications is here.

After years of raising co-payments and deductibles for prescription pharmaceuticals, some employers are taking an unorthodox approach to lowering health-care costs in an experimental program by -- get this -- paying for diabetes drugs and consultations.

For patients the savings could amount to $2,000 a year.

If the program proves successful it could be expanded to include other common diseases and chronic conditions such as asthma, depression or arthritis and extended beyond its one-year pilot phase, according to the Midwest Business Group on Health, a Chicago-based coalition of employers that is coordinating the program.

Nationally, more than 30 employer groups are rolling out similar programs this year in cities including Milwaukee, Pittsburgh and Los Angeles.

I have written on the Black Hole of STD as well as Lowering Rx Co-pays to reduce costs so here is a related item which focuses on the connection.

Results from a model project launched in 1997 by the city of Asheville, N.C., show a 50 percent reduction in sick days and no worker's compensation claims filed by the diabetes patients in the program between 1997 and 2003.

Asheville has expanded its program to people with asthma and high blood pressure.

So far, Chicago-area employers Pactiv Corp., the City of Naperville and the Jewish Federation of Metropolitan Chicago have agreed to participate in the program.

"Employers are beginning to realize that cost-shifting by itself will not change behaviors," said Larry Boress, chief executive of the Midwest Business Group on Health. "This is not just an isolated incentive where you are giving away trinkets or dollars but is part of a change in employee-benefits strategy to move people away from an entitlement mentality. The idea is that in order to change employee behavior and change the attitude in the way employees manage their health, employers are moving to value-based benefit designs."

Direct and indirect costs of diabetes to the U.S. health-care system are more than $130 billion a year, including emergency room visits, extended hospital stays and absenteeism, the Chicago group said, citing national studies. Some 20 million people have diabetes, including 600,000 in Chicago.

Follow the Money at The FDA

Very interesting documentary about the FDA's funding sources in Pharma done by Gary Null of The Nutrition Institute of America is available here. The video is 90 minutes long and features very significant insights on the lack of institutional safety oversight the FDA provides.

video documentary features contributions of respectful professionals, such as FDA scientist Dr. David J. Graham, who addressed the prescription of Vioxx (a very dangerous drug presently withdrawn from the market) before the US Senate Finance Committee and firmly believes the FDA is "letting people down".

Here is more from the interview transcript available here

MANETTE: Dr. Graham, it's truly a pleasure to have the opportunity to interview you. Let me begin by asking you how long you've been with the FDA and what your current position is?

DR. GRAHAM: I've been with the FDA for 20 years. I'm currently the Associate Director for Science and Medicine in the Office of Drug Safety. That's my official job. But when I'm here today I'm speaking in my private capacity on my own time, and I do not represent the FDA. We can be pretty certain that the FDA would not agree with most of what I have to say. So with those disclaimers you know everything is okay.

MANETTE: On November 23, 2004 PBS Online News Hour Program you were quoted as making the following statement. “I would argue that the FDA as currently configured is incapable of protecting America against another Vioxx. Simply put, FDA and the Center for Drug Evaluation Research (CDER) are broken.” Since you've made that statement, has anything changed within the FDA to fix what's broken and, if not, how serious is the problem that we're dealing with here?

DR. GRAHAM: Since November, when I appeared before the Senate Finance Committee and announced to the world that the FDA was incapable of protecting America from unsafe drugs or from another Vioxx, very little has changed on the surface and substantively nothing has changed. The structural problems that exist within the FDA, where the people who approve the drugs are also the ones who oversee the post marketing regulation of the drug, remain unchanged. The people who approve a drug when they see that there is a safety problem with it are very reluctant to do anything about it because it will reflect badly on them. They continue to let the damage occur. America is just as at risk now, as it was in November, as it was two years ago, and as it was five years ago.

MANETTE: In that same PBS program, you were also quoted saying, “The organizational structure within the CDER is currently geared towards the review and approval of new drugs. When a serious safety issue arises at post marketing, the immediate reaction is almost always one of denial, rejection and heat. They approved the drugs, so there can't possibly be anything wrong with it. This is an inherent conflict of interest.” Based on what you're saying it appears that the FDA is responsible for protecting the interests of pharmaceutical companies and not the American people. Do you believe the FDA can protect the public from dangerous drugs?

DR. GRAHAM: As currently configured, the FDA is not able to adequately protect the American public. It's more interested in protecting the interests of industry. It views industry as its client, and the client is someone whose interest you represent. Unfortunately, that is the way the FDA is currently structured. Within the Center for Drug Evaluation and Research about 80 percent of the resources are geared towards the approval of new drugs and 20 percent is for everything else. Drug safety is about five percent. The “gorilla in the living room” is new drugs and approval. Congress has not only created that structure, they have also worsened that structure through the PDUFA, the Prescription Drug User Fee Act, by which drug companies pay money to the FDA so they will review and approve its drug. So you have that conflict as well.

Interdependent Benefits Need An Integrated View

Aetna (NYSE:AET) today announced that employee assistance services will be a standard part of the servicing of fully insured health plans for all small group employers.


Here is a very useful study of Depression in the workplace--warning funded by Pharma--so make sure you have therapuetic infusion baked into your Rx & DM plan design.

Can't you smell that smell? Follow The Money

60 Minutes ran its episode today titled Under the Influence about the incestuous and corrupt influence of the Pharmaceutical Lobby and the full text and video are here.

The episode has been well covered at Pharmalot.

I have never been a big fan of 60 Minutes but have to admit they got this story right.

Prepare yourself for non-stop media coverage of all things pharmacy and PBM related through the 2008 elections. Have no delusions this attention will leap the firebreak into employer sponsored plans and be a featured part of The Healthcare Debate, as well it should. Employers should not have any illusions they fare any better via their formulary/rebate driven PBMS. Psst, they are doing it to you as well. Quick somebody find me a Physician on the Board at Express Scripts, MEDCO, or CVS CareMark.

Spring is here and 12 months from the 2008 primaries we have 60 Minutes airing a story that will be whipping Seniors into righteous indignation. It is interesting how 60 minutes waited 3.5 years after the vote to run the story though--just had to wait for the 1st candidate to promise free health care. Imagine what was talked about in retirement communities all over Florida tonight? I bet it had to do with this;

"You push this bill through that produces a windfall for the drug companies. And then a short time later, you go to work for the drug lobby at a salary of $2 million. That doesn't look good," says Kroft.

"There was nothing I could've done in my life after leaving Congress that wouldn't have had — I didn't have some impact on in 25 years in Congress … If that looks bad to you, have at it," Tauzin says. "That's the truth."

In fairness to Tauzin and former Medicare chief Tom Scully, they weren't the only public officials involved with the prescription drug bill who later went to work for the pharmaceutical industry.

Just before the vote, Tauzin cited the people who had been most helpful in getting it passed. Among them:

John McManus, the staff director of the Ways and Means subcommittee on Health. Within a few months, he left Congress and started his own lobbying firm. Among his new clients was PhRMA, Pfizer, Eli Lilly and Merck.

Linda Fishman, from the majority side of the Finance Committee, left to become a lobbyist with the drug manufacturer Amgen.

Pat Morrisey, chief of staff of the Energy and Commerce Committee, took a job lobbying for drug companies Novartis and Hoffman-La Roche.

Jeremy Allen went to Johnson and Johnson.

Kathleen Weldon went to lobby for Biogen, a Bio-tech company.

Jim Barnette left to lobby for Hoffman-La Roche.

In all, at least 15 congressional staffers, congressmen and federal officials left to go to work for the pharmaceutical industry, whose profits were increased by several billion dollars.

"I mean, they — they have unlimited resources. Unlimited," Burton says. "And when they push real hard to get something accomplished in the Congress of the United States, they can get it done."

As this story gets legs, and it will, quite a few HR/Benefits People may be answering questions about how they know with certainty they are getting the best deals on Drugs from their PBM? Prudent employers should be prepared with data for the phone call. It is time to get ahead of the snowball before it becomes an avalanche.

Follow the Money III

According to Jacob Goldstein of The WSJ Health Blog federal investigators are looking into possible conflicts of interest for over 100 National Institute Of Health Scientists with financial ties to larger pharmaceutical companies details are here.

Pharmaceutical Trade Secrets Revealed

Despite state laws requiring disclosure of payments made by pharmaceutical companies to physicians in 5 states and the District of Columbia, very little information about who receives and in what amounts is actually revealed according to Reuters reporting on a study in The Journal of The American Medical Association. Two states, Vermont and Minnesota require disclosure to the public.

The analysis included data from January 2002 to December 2004 in Minnesota and from July 2003 to June 2004 in Vermont.

The researchers found that obtaining the payment information was not easy. In Vermont, extensive negotiation with the Office of the Attorney General was needed, while in Minnesota, manual photocopying of individual disclosure forms at the State Board of Pharmacy was required.

Missing disclosure information was common in both states.

In Vermont, 61% of payments were not released to the public because the drug companies classified them as revealing trade secrets and 75% of disclosed payments lacked information to identify the recipient.

A study by a professor at UCLA medical school found physicians only discussed costs, co-pays, re-fills, insurance and money saving alternatives 1/3 of the time with their patients. The patients only ask questions 2% of the time of their doctors on these subjects. The study notes patients need to engage their doctors with questions about the low cost alternatives and many of the patients on multiple medications for chronic conditions cannot afford to comply with their maintenance drugs.

But those trade secrets being discussed between pharmaceutical manufacturers and physicians so proprietary they result in payments never do seem to translate into conversations with patients about the available drug options 2/3 of the time. Think about that for a minute, no make it two minutes. This is precisely how formulary driven PBMS drive serious Profit.

So here in a nutshell is the trade secret revealed for the entire pharma-PBM industry for the very first time; patients do not ask about cost and doctors do not tell. There is nothing insidious this is a product of behavior which can change with the appropriate incentives. The good news is this problem is fixable for employers by plan design (going to $0 co-pay for low cost in class generics) and a cost + administrative fee PBM model that has no price spreads on generics, no rebates and an evidence based formulary. Many insured(see link to BCBS no-pay co-pay) and self-funded plans plans with a good group guy have already figured this stuff out.

This post is not intended to disparage physicians only to reveal how behavior produces the results which will create nuclear fallout by the 2008 election as the entire population of the US capable of sentient thought will know a dough-nut hole is found in Medicare not a bakery. If you think healthcare is expensive now just wait until John Edwards or Hillary Clinton make it free.

Where the Rubber Meets The Road

CALPERS lobbied The US Congress this week to preserve access to biogeneric drugs and to allow the FDA the discretion to accelerate the approval process for biogeneric drugs and the details are here.

Two points are interesting to me and enlightening for employers considering whether they need a specialty drug strategy.

...CalPERS' spending for biotech products is distressingly substantial and rising at a rate that is significantly higher than traditional pharmaceuticals. On average, spending for biotech products was at least $55 per day -- compared to traditional drugs at only $2 per day.

...the high cost of bio pharmaceutical products presents an unsustainable challenge to CalPERS and our entire health care system," said Mathur. "CalPERS supports providing the FDA with full discretion to make the ultimate decision about whether and when any prescription drug product -- be it brand or generic -- comes to market."

CalPERS will spend $5B on Healthcare and presciption drugs expenses will top over $1B this year. CalPERS also estimates if they did not have a well oiled generic substitution plan in place prescription costs would be $1.6M in 2007. So while having biogenerics readily available and expediting their approval will save CalPERS significant dollars it is simply one component of a successful strategy that gets a greater ROI than generic infusion but lacks the dollar impact associated with a successful therapeutic infusion strategy that targets all those drugs advertised on TV. You know I bet the real answer to CalPERS might no vote on the CVS-Caremark merger may have more to do with the impact of a retail-mail merger on its holdings in pharma as well as PBMS. Anyone up for some research?

On the other hand what is your company doing to assure aggressive therapeutic generic substitution and a sound biotech strategies are in place to keep drug spend in check? Do tell.

Drug reps

So how does big pharmacy convince doctors of their drugs efficacy?
There must be a mountain of data from the clinical trials right?

Fascinating story from eDrugsearch blog on where pharmacy companies recruit drug reps.

Do not miss the post on the all pharma cheerleading squad.

Check here for one Medrants reaction and bookmark it as its a great blog.

The War on Drug Costs

The WSJ has done a nice job of exposing the underlying reasons for high presciption drug prices as a product of questionable PBM business practices and Why Generic Doesn't Always Mean Cheap continues that trend Health plans have been moving members to generic for years but alas all generics are not created equal and the pricing varies widely especially when you compare retail pharmacy costs for generics which recently came of patent with prices being charged by Costco & Sams. Take Zocor for example;

Case in point: Zocor, one of the most commonly prescribed pills in the U.S., which lost patent protection last June. Multitudes of patients have switched to generic versions of the cholesterol-lowering drug, lured by lower insurance co-payments or the promise of a significant price drop for those who pay out-of-pocket.

To be sure, even for the uninsured, generics still typically cost less than their branded counterparts. And at big clubs such as Costco Wholesale and Sam's Club, out-of-pocket prices for generics do generally plummet. Simvastatin costs $6.97 for 30 pills of the 20-milligram dose at a Sam's Club for which the company provided price information.

At Costco Wholesale, whose Web site yesterday listed the common dose of generic Zocor at $11.96, the company says that even at such prices, Costco is making a profit. Charles Burnett, senior vice president of pharmacy at Costco, says the company can acquire the 30-tablet, 20-milligram dose of simvastatin for $2.71. He says the price on costco.com today will fall to $10.66. Patients are allowed to use the pharmacies of clubs such as Costco and Sam's Club, even if they aren't members.

Chain drugstores argue that their business model is different from a company like Costco or Sam's Club. CVS, Rite Aid and Walgreen Co. all say that about two-thirds of their revenues come from prescription drugs.

"We don't sell snow tires," says Mike DeAngelis, a spokesman for CVS/pharmacy. "The core of our business is the pharmacy."

Mr. DeAngelis wouldn't say how much CVS pays for generics but confirmed profit margins on generics are generally bigger than for branded drugs. On all drugs, Mr. DeAngelis says, CVS's prescription-drug profit margins are 2% to 3%. A spokeswoman for Walgreen gave a similar figure, and a spokeswoman for Rite Aid said the company's prescription-drug margins were very thin.

It strikes me that the WSJ would have recognized retail pharmacies are simply doing to consumers what PBMS have been doing to them; marking up a generic by an obscene factor and then citing the paper thin margins on drugs. The difference of course is the employer payors have no idea what the PBM actually reimburses retail pharmacy. And people wonder why CVS bought Caremark?

As I do enrollment meetings for my clients, employees are rapt with attention when you share specific ways to reduce their out of pocket expenses for maintenance drugs.

More employers need to start comparing what shows up on their bi-weekly PBM bill with the costs quoted on Costco and Sam's website for generic maintenance meds. There is absolutely nothing proprietary about generic prescription pricing. Prepare for outrage--the margins are even bigger than snow tires.

CVS raised their bid 3 times for Caremark and Express Scripts upped the ante once. Does anyone truly believe CVS would behave this way to acquire a business with 2-3% margins.

By the way Walgreens owns its own PBM and reported earnings up 25% last quarter. The company cited "brisk sales and a wave of new generic drugs that widened margins"