And a survey by Stephen W. Schondelmeyer, a professor of pharmaceutical management and economics at the University of Minnesota, found in the first two weeks of the plans' rollout that Medicare plans' prices did not differ much from those of typical retailers, at least in one Minnesota ZIP Code.
Costco executives say the warehouse keeps its prices low because storewide policy prohibits markups of more than about 15% above acquisition costs, possible because of lean overhead with few frills.
Charles Burnett, Costco's senior vice president of pharmacy, said many Costco customers are choosing not to enroll in Medicare. "They buy two-thirds of their drugs [the generics] from us, and the rest from Canada," where brand-name drugs typically are cheaper because of government price caps, he said.
Other pharmacies have an incentive to charge higher cash prices because it helps them to receive higher reimbursements from insurers, he said. But because 60% of Costco patients are uninsured, "we're not going to do that to penalize the person who pays cash," Burnett said.
Joining Costco costs $45 per year, although membership isn't required to buy from the pharmacy.
In general, seniors who opt to join Medicare's plans may find that the best buy is not easily discernible.
Even pharmacists can't tell what a plan's so called "negotiated price" is until the order is run through the computer. Prices differ substantially according to a host of variables -- such as which plan it is, whether a drug is on a plan's preferred list, whether it's obtained via mail order and whether it is generic.
Some plans' co-pays alone are more than Costco's price -- and occasionally the retail price -- of the drug.
Ralph Saroyan of Stockton, a former president of the California Pharmacists Assn., thought he had selected a Cadillac plan for his mother, who needed some expensive name-brand drugs. But the plan's affiliated pharmacy claimed its reimbursement under the plan wasn't sufficient to cover name brands, so he had to accept generic versions.
Then Saroyan discovered he would have to shell out co-pays of $18 for each monthly maximum of 30 pills. The cost for 100 pills outside the plan was $25.
He took the best deal.
The writer can be reached at Valerie.Reitman@latimes.com.
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About Medicare sign-ups
The deadline for purchasing a Medicare Part D prescription drug plan is May 15. Those who enroll later face a small, permanent penalty for each month of delay, calculated at 1% of the average national premium (now $32) atop regular monthly premiums. Those opting to buy at the start of the next open enrollment in November, for example, would face a permanent surcharge of about $2 monthly.
* To enroll or get more information on available plans, call (800) MEDICARE (633-4227) or go to www.medicare.gov where an online tool is available to help sort out the available plans offered by private insurers under Medicare's auspices.
* Free individual counseling about the Medicare Part D prescription benefit is available in every county in California through the state Department of Aging's Health Insurance Counseling and Advocacy Program. For appointments, call (800) 434-0222 or go to www.calmedicare.org/counseling/counseling.html.
Los Angeles Times
