According to the agreement the city signed in July 2010 to provide the residents Coast2Coast Discount drug cards, more than 20 percent of the prescriptions filled through the program are “low-cost generics.” For those orders, Augusta receives no share of the profits to put toward the cost of city services.
For pricier prescriptions, however, the city is awarded between 50 and 75 cents of each transaction.
Coast2Coast Discount will observe its fourth anniversary in Augusta next week, and pharmacy professionals criticized the program, which provides an incentive to the city for residents paying substantially more to get brand-name prescriptions filled.
“There are just not too many benefits I have seen or can tell you about concerning these discount cards,” said Barry Bryant, the owner of Barney’s Pharmacy in Augusta. “Usually, they’re set up to where whoever is behind them or responsible for managing the card is making the money.”
In Augusta, the benefactors appear to be the city and the company with whom it contracts to market and operate the discount prescription program – Financial Marketing Concepts.
Under the terms of Augusta’s deal, discounts are secured with pharmaceutical companies through an outside broker; FMC keeps a small fee to market and operate the program; and the majority of the remaining profits are put back into local coffers.
In Augusta’s agreement, which is automatically renewed each year unless 30 days’ written notice is given to terminate, compensation is awarded based on how many prescriptions are filled.
The contract states that FMC pays Augusta 50 cents for each prescription filled each month. The rate increases to 60 cents if the city fills 3,000 prescriptions; 70 cents for 4,000 prescriptions; and 75 cents for more than 6,000 monthly prescriptions.
City finance records show Augusta received royalties of $795 in 2010; $10,393 in 2011; $14,797 in 2012; $15,341 in 2013; and $3,768 so far in 2014. Each of the yearly collections was deposited into the general fund, said Finance Director Donna Williams.
Jeff Lurey represents independent drugstores statewide through the Georgia Pharmacy Association and said he was unaware that such a royalty exists. In general, he said discount cards are fairly popular among customers but not to the 500 pharmacists in Georgia, because of their prevalence.
“There is not a lot of transparency with discount cards,” he said.
The Coast2Coast prescription card is now available in 21 Georgia counties, and program officials say more are joining each month through the encouragement of the Association County Commissioners of Georgia.
Nationally, the program has been endorsed by seven other states, is accepted at more than 59,000 pharmacies and includes 60,000 drugs in its formulary.
Lurey said that the program’s discounts eat into already-lean profit margins for homegrown pharmacies but that the small businesses have no choice but to honor the cards to stay competitive.
“I understand people want to get the best price they can and we certainly support that, but our entire reason for being in business is to help our patients, and I don’t know how much lower you can go and still operate a business,” Lurey said. “You can offer competitive prices without breaking the bank, and generics, which we strongly encourage pharmacies prescribe, are one of the best ways to do that.”
In its first four years of using the Coast2Coast discount drug card, Augusta residents have bought more than 60,620 prescriptions, with an average savings of 71 percent, said Alexandra Miller, the director of communications for FMC.
Though the mark is greater than the 60 percent national average for prescription savings, Augusta pharmacists say that those who benefit most are the ones who market the card; not the 6,439 residents who participate in the program.
For example, Bryant said his business, which has seven stores in Augusta, would normally collect $10 from the customer and $30 from insurance companies to fill a $40 cholesterol prescription.
With the discount, though, he said that the prescription is reduced to $23 and that his pharmacy only gets $8 for the order, with the rest going to the card company for marketing the program. Other pharmacists said the company uses profits to collect data to resell to manufacturers.
“A lot of times, they’re making more money than we do for filling the prescription,” he said. “That cholesterol drug may cost me $1 to fill, but I’m only making a $6 margin, compared to the $15 profit that the discount card company is making. That’s not right.”
The Association County Commissioners of Georgia, which has endorsed the Coast2Coast program on behalf of state leaders, praised the program this week, saying discount cards have saved residents $4.6 million on their prescriptions.
In Augusta, which was the first community to join the program, residents have saved more than $1.5 million on prescriptions, the association said. That tops both Chatham and Cobb counties in Savannah and Atlanta, each of which had savings of $1 million.
“Providing cost-effective county programs to citizens is a significant goal for Georgia’s county officials,” said Ross King, the executive director of the Association County Commissioners of Georgia. “The (association) partnership with Coast2Coast has allowed our organization to assist them in meeting that specified goal.”
Fueled by his distaste for royalties, Bryant said his pharmacy started its own discount program to sell $4 generics and a list of common heart failure and diabetes medications for $10 to $20 to customers. He said the program costs $15 for individual customers and $25 for families annually.
“I am all about helping the patient and saving money for the customer, but to do it for the benefit of these companies, it leaves a bad taste in my mouth,” he said.