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Drug price disparity compounds burden for the uninsured

Lack of negotiating power means Americans without health insurance pay more than others to fill their prescriptions.

By Joel B. Finkelstein, amednews staff. Aug. 4, 2003.

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Washington -- The higher prescription drug prices paid by uninsured Americans often means that even if physicians' services are discounted or free, health care remains out of reach for those without coverage.

Uninsured patients pay an average of 72% more for their prescriptions than the government pays for the same drugs for federal health plan enrollees, according to a survey in 19 states conducted by the U.S. Public Interest Research Group.

"When the 41 million uninsured Americans go it alone at the drug store, they pay the price -- sometimes more than double what government agencies pay to buy the same drugs in bulk for large groups of consumers," said Ed Mierzwinski, the group's consumer program director.

The survey analyzed price data on 10 common prescription drugs, mainly those used to treat patients with such chronic illnesses as AIDS, hypertension, high cholesterol, arthritis and heart disease.

For patients with chronic disease "the percent difference between the retail and discounted prices quickly adds up," the report stated. For example, a year's supply of Zocor in the most inexpensive market surveyed would cost an uninsured patient $1,671, compared with $814 paid by the government.

The survey also showed that drug prices were highest in the Northeast and Middle Atlantic states, slightly cheaper in the Midwest and Mid-South, and substantially less along the rest of the South.

Among the cities surveyed, Baltimore; Washington, D.C.; Philadelphia and Boston had the highest prices, while New Orleans; Denver; Grand Rapids, Mich.; Houston; and Tampa, Fla.; had the lowest prices.

Drugs only part of the problem

This pricing disparity reflects a broader trend in which uninsured patients face financial obstacles to obtaining health care, whether primary care or follow-up for serious illness, said Carol Pryor, senior policy analyst at Brandeis University's Access Project in Waltham, Mass.

She cited research showing that 47% of uninsured patients have trouble paying their medical bills.

"The problem of paying for care, which includes prescription drugs but also includes health services, is very widespread," she said. "The notion that free care is easily available, charity care, to anybody who needs it, is something of a misperception."

Uninsured patients often face steep medical debt that keeps them away from doctors and hospitals until their conditions are so severe that they can no longer avoid seeking medical attention, according to studies published by the Access Project.

Congress is getting into the act with a new investigation of the higher hospital prices charged to patients without coverage.

"The uninsured seem caught in the middle of the sophisticated and complicated forces driving health care financing, including government entitlements, managed care, rising costs and shrinking public funds," according to a letter from the House Energy and Commerce Committee to several hospitals across the country.

A survey conducted by the Denver Sun Post showed that hospitals in Colorado charge uninsured patients, on average, four times more than they charge insurance companies.

Pryor noted that when these bills go unpaid, hospitals often resort to aggressive collection methods. More than a quarter of people earning less than $25,000 a year reported being contacted by a collection agency in the past year because of medical bills, according to a survey by the Commonwealth Fund.

Looking to the states

The report from the research group calls for the states to develop purchasing pools from which uninsured patients could buy their prescription drugs.

States are facing problems paying the increasing cost of prescription drugs for the patients they already cover through Medicaid and the State Children's Health Insurance Program. As a result, 15 states are in the process of designing and launching bulk purchasing pools to help cut the cost of covering these groups, according to the National Conference of State Legislatures.

"There are some states ... focused on serving a larger group," said Richard Cauchi, senior policy specialist with the NCSL's health care program.

Massachusetts was the first, back in 1999, to pass legislation to develop a program that would include state workers and Medicaid enrollees as well as the uninsured and others without drug coverage.

A closer look shows that 13 of the 15 states plan to eventually expand their purchasing programs to allow the uninsured to participate in the savings negotiated by the state.

However, some of these states have faced difficulties, forcing them to scale back the scope of the programs. Even Massachusetts has had problems getting bulk purchasing initiatives off the ground. But the state's Legislature recently reaffirmed the goal of providing discounted drugs to the uninsured with language in its fiscal year 2004 budget.

It "is still very much on the agenda," Cauchi said.

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