The drugs are in the mail

Stephen Wiley remembers his competition with mail-order pharmacies every time his business gets questions about mailorder drugs.

"The irony is that patients still call you if they have questions," said Wiley, president of Wiley's Pharmacies, which has locations in Lancaster, Millersville and

Retail pharmacies worry about more insurers and employers turning to mail-order pharmacies in an attempt to lower employees' prescription-drug costs. This anxiety was highlighted in early September when Rite Aid Corp. in East Pennsboro Township lowered its sales and income expectations for fiscal-year 2005. The Cumberland County company blamed the popularity of mail-order pharmacies.

Retail pharmacies are far from extinct in Central Pennsylvania. In fact, Wiley said his business continues to grow However, supporters of retail pharmacists said they fear that could change, especially if area businesses start requiring employees to use mail-order pharmacies. "We would have a lot more new patients if it weren't for mail-order," Wiley said.

Mail-order pharmacies generally offer employees drugs for a lower price than what they would pay at retail pharmacies. Patients who use mail-order systems often have lower co-pays for those drug purchases.

For example, a person who has a $30 drug co-pay will pay a mailorder pharmacy $60 for a threemonth supply of a prescription instead of paying $90 at a retail pharmacy The arrangement is especially attractive to patients who must take a medication indefinitely

The largest mail-order pharmacy programs nationwide include those offered by Franklin Lakes, NJ.-based Medco Health- Solutions Inc., St. Louis-based Express Scripts Inc. and Nashville, Term.based Caremark Rx Inc. These companies can offer lower prices to consumers because they do not have the overhead of retail pharmacies, said Michael W. Rausch, manager of prescription-drug contracting and sales for Highmark Inc. The insurer is based in East Pennboro Township and Pittsburgh. Mail-order companies also save money by buying drugs in bulk from pharmaceutical companies, he said.

Insurers can lower costs if members use the lower-cost, mailorder drugs, said Mohit Ghose, spokesman with America's Health Insurance Plans. The industry trade group is based in Washington, D.C.

He said mail-order pharmacies play a role similar to that of a formulary, which is a list of the medications for which an insurance company will pay Insurers use formularies to steer members toward less-expensive drugs.

"They're tools that insurers use to keep costs down," Ghose said.

Although more insurers are offering their members mail-order options, many members are not embracing them yet.

About 8 percent of the prescriptions Highmark helps to pay for each year go through a mail-order company That figure is growing by about I percent per year, Rausch said.

Mail-order pharmacies fill between 10 percent and 12 percent of the prescriptions covered annually by Health America Pennsylvania Inc. and HealthAssurance Pennsylvania Inc., said Jim Giardina, the insurers' director of pharmaceutical services. The insurers have offices in Swatara Township, Dauphin County

Those numbers could jump if employers start forcing employees to use mailorder pharmacies, said John Rector, general counsel for the National Community Pharmacists Association in Alexandria, Va. In August and September 2003, Lincolnshire, Ill.-based Hewitt Associates surveyed companies nationwide about their prescriptiondrug coverage. Twenty-one percent of respondents reported that they had or planned to start a mandatory mail-order program. An additional 48 percent were considering the idea. Hewitt Associates' report did not discuss how much money companies save by using mandatory mail-order programs.

A primary disadvantage of mail-order pharmacies is that they cannot provide consumers with the same personal service that a retail pharmacy can provide, Rector said. Problems can arise if a mailorder consumer does not get a prescription on time or gets the incorrect prescription, he said.

Consumers can take legal action against mail-order pharmacies, but Rector said such action could be difficult because consumers, the facilities where prescriptions are filled and mail-order pharmacy companies often are in different states.

"What happens if something goes wrong?" Rector asked. "Who do you go to at the mail-order pharmacy?"

Giardina acknowledged that patients must be educated on how to use a mail-order pharmacy properly For example, patients must know to order a prescription refill far enough in advance so they do not run out of their medication.

"With that convenience comes a responsibility," Giardina said.

Providing education to consumers is one way retail pharmacies can continue to compete with their mail-order counterparts, Wiley said. His pharmacies provide educational services to customers on topics such as diabetes and asthma.

Mary Sammons, Rite Aid's president and chief executive officer, told analysts in a September conference call that the company is looking at how it can compete with mail-order pharmacies.

Rite Aid's options include offering 90-day prescriptions and developing its own pharmacy-benefits management company, Sammons said.

Such companies administer prescription-drug benefits for insurers and employers.

The future popularity of mailorder pharmacies will hinge on how many employers decide to start mandatory mail-order programs, Rausch said.

Rector said his organization would continue to fight the spread of such programs.

Even if mail-order pharmacies become more common, there always will be a demand for retail pharmacy services, Rausch and Giardina said.

Retail pharmacies remain far more practical for patients who are taking medications temporarily They also are useful when patients try various types and dosages of medications to find out which one works best.

"I think each channel has its place," Rausch said.