City officials announced Monday that Anniston is working with the National League of Cities and the pharmacy benefits company CVS Caremark to offer city residents a free card that would entitle them to a discount on medications for which they have no insurance coverage. Caremark makes no specific promises about discounts available through the card, but the League says the card will save customers an average of 23 percent on their prescriptions.
“We’re very excited to be offering this program to our residents,” City Councilman Seyram Selase said. “Especially with the rising costs in health care, it’s our responsibility to do whatever we can to ease the burden on our residents.”
City officials say many local pharmacies will accept the cards, which are available to anyone who lives in Anniston, regardless of age or income.
But wait. There's more.
If the news from Anniston sounds familiar, it may be because Calhoun County offered the same Caremark card to its residents, through the National Association of Counties, two years ago. The county also offers another card, called the Coast2CoastRx card, from a different company, which offers similar discounts. Cleburne County, too, offers a county-approved free drug discount card through Coast2CoastRx. All three jurisdictions have touted the cards in press releases or on their websites.
In fact, the state seems to be awash in discount cards, and the nation as well. A company called United Networks of America will give people an “AlabamaRxCard" just for being a resident of the state. Endorsements by municipal and county governments — some companies list dozens of government endorsements on their sites — seem to be a marketing strategy for many card companies.
Officials at the card companies say the cards work because the card companies negotiate with drug companies to get a discount on drugs that aren't covered by insurance — in much the same way that insurance companies negotiate the price of insured drugs.
"The price you pay at the pharmacy is broken into three parts," said Kimmy Scotti, a spokeswoman for ScriptRelief, a discount drug card company based in New York City. Scotti said part of what the customer pays is the cost of the drug itself. Another part is the dispensing fee — a fee charged by the pharmacy to maintain its overhead. And another part is the adjudication fee — a fee that the pharmacy pays the insurer or card company to bring business their way. The card companies make their money through adjudication fees, Scotti said.
Scotti said the card companies do everyone a service by moving drugs that wouldn't otherwise be sold, bringing traffic to the pharmacy and giving people a break on the cost of medication.
"For elective medications that aren't covered by insurance, it's a great way to save money," she said.
But some pharmacists say it's almost like printing your own money.
"This is like going to your computer, printing up a coupon that says '$10 off a large pizza,' then taking it down the the pizza parlor and asking for the discount," said Patrick Devereux, the pharmacist at FMS Pharmacy in Bessemer. "The pizza guy doesn't know what you're talking about."
Faculty members at Samford University directed The Star to Devereux, a preceptor for the college’s pharmacy program, when asked for comment on the drug cards. Devereux said he often sees customers with drug cards endorsed by Jefferson County. But if he runs the cards, he said, he'll have to pay that adjudication fee, which could run as much as $18.
"So I give the customer a discount and then I pay the card company for the privilege of giving the customer a discount," he said. He said it’s typical to pay an adjudicating fee to an insurance company, but that fee is usually a matter of cents per transaction, not dollars.
Devereux said some chain pharmacies will accept the cards because they want to match the bargains at other chains. But for small pharmacies, he said, there’s little sense in honoring them.
His skepticism echoes the issues raised by some Cleburne County independent pharmacists when the county issued its drug discount card two years ago.
Devereux said he was also concerned because some card companies ask customers for their phone numbers in the card application. A phone number plus a prescription-buying history, he said, could be valuable data.
“It’s a marketing gold mine,” he said.
Caremark, on the website for its prescription drug card, states that it does not share personally identifiable information with direct marketers. Cleburne County officials told The Cleburne News in 2011 that information about users of their Coast2CoastRx is kept confidential.
Asked how the business model for the cards works, Auburn University pharmacy professor Salisa Westrick said she wasn’t exactly sure, though she believed the pharmacists might have an incentive to accept the cards to attract regular customers.
“They could come to fill a prescription that isn’t covered by insurance, and then bring their regular business there,” she said.
‘Almost … too good to be true’
Devereux said companies sometimes mail stacks of cards to pharmacies in hopes they’ll adopt them. Scotti, of ScriptRelief, said her company mails the cards directly to potential customers and promotes them to employees of companies that don’t offer their workers drug coverage.
But many companies seem intent on marketing through city and county governments, seeking out endorsements that announce the cards with an air of officialdom.
Selase, the Anniston councilman, praised the cards in his own words in comments to The Star last week. But in the city’s official release on the card, he gave a canned statement.
“Given the current economic climate, where many people need to watch what they spend, we are happy to partner with the National League of Cities to make this prescription discount card available to our residents,” Selase said in the release.
In releases elsewhere, the same quote, word for word, is attributed to city manager Mike Martin of Burien, Wash.; city council president Rod Hardin of Hermiston, Ore.; Councilman Kenneth Boudreaux of Lafayette, La., and at least a dozen other city officials across the country.
Asked about the similarity, Selase said he’d given quotes only in his own words. He said councilmen decided to offer the card after hearing about it at the National League of Cities convention earlier this year.
Ed Rahn, spokesman for Financial Management Concepts, the company that offers the Cleburne County and Calhoun County Coast2Coast Rx cards, said his company seeks endorsements from public officials because people find it hard to believe the offer is real.
“It almost sounds too good to be true, but it is,” Rahn said.
League of Cities spokesman Greg Minchak said the League has a licensing arrangement in which Caremark pays the League to use its logo. He said he wasn’t sure how much income the league gets from the agreement.
Selase said there was not, to his knowledge, a contract between the Anniston’s city government and Caremark. But Calhoun County Administrator Ken Joiner said the county does get a portion of every transaction conducted on its Coast2Coast Rx card.
“Our fees off of that is, at this very minute, a maximum of $145 a month,” Joiner said.