Pharmacy Drug Costs Could Drop Discounts May Be Part Of Price-Fixing Settlement

Retail pharmacies could get discounts on prescription medicines just like HMOs under a revised settlement of a price-fixing lawsuit that received a judge’s preliminary approval on Wednesday.

While it is uncertain how the deal would affect consumers, one possible outcome is a system in which pharmacies mimic HMOs, banding together to provide discount drug benefits programs, some industry experts predicted.

“Here’s where the new frontier is,” said David Melnick, an attorney who represented pharmacies in the pricefixing lawsuit against drug manufacturers.

Melnick predicted that pharmacies will offer benefits programs to insurance companies and major employers that insure themselves and want the convenience of a maximum number of retail outlets.

That could qualify the druggists for discounts from the pharmaceutical manufacturers, as agreed to in the lawsuit settlement.

Melnick helped broker the new deal with the drug manufacturers when U.S. District Judge Charles Kocoras rejected a $408.9 million settlement last month because it didn’t address discounting practices.

The new deal would pay the druggists $351.3 million, the decrease due in part to the refusal of Ciby-Geigy Corp. and Abbott Laboratories to go along with 11 other defendants in the new deal.

But more importantly from the pharmacies’ perspective, manufacturers have agreed to offer the discounts they now grant to health maintenance organizations, hospitals and mail-order pharmaceutical concerns, based on the pharmacies’ ability to persuade their customers to shift brands of drugs.

Manufacturers had argued that the discounts were justified for HMOs and others - but not pharmacies - since the HMOs can control which drugs their patients use.

Pharmacies, they had argued, must stock all types of prescription drugs, making it difficult to control which brands patients buy.