At the start of the new year, UPMC Health Plan began limiting coverage of a number of pharmacies where patients can purchase medicine. This move has effectively shut out some of the smaller pharmacies in the region while inconveniencing an untold number of residents.
But what if you didn’t need to worry about the insurance company when you fill prescriptions? One small pharmacy in the West View Plaza shopping center in West View has chosen a business model that bypasses the whole in-network/out-of-network issue.
Blueberry Pharmacy cuts insurance companies completely out of the equation while also making its pricing transparent and much less expensive for customers. Kyle McCormick, a Somerset native and University of Pittsburgh graduate, who currently lives with his family in McCandless, opened the pharmacy with partner Ravi Patel in March 2020.
While working at an independent pharmacy in Indiana, Pa., he says he became frustrated at how pharmacies priced drugs and was further disheartened to see patients paying 10 to 10,000 times the price the pharmacy pays the manufacturer. He read about cost-plus pricing at food stores, a pricing strategy by which the selling price of a product is determined by adding a specific fixed percentage onto the actual cost.
He decided it made sense for selling drugs, too.
“We take the price we pay and add on a dispensing fee,” he says. In Blueberry’s case, that’s $3 for its members and $10 for nonmembers. (More about membership later.) The price is the same for everyone purchasing the drug because the insurance company is not involved.
“Every other pharmacy bases prices off a made-up number called the average wholesale price, or AWP. This number is made up by the manufacturer and has no correlation to the price the pharmacy actually pays for the drug,” McCormick said.
For example, the AWP for a 90-count bottle of generic Lipitor is $519.63. Most pharmacies will set a price at some percent off the AWP. Walgreens has a cash price of $371. Blueberry can buy that drug for under $3 for 90 tablets.
“What we do differently,” he says, “is throw the AWP out of the window. We take the price we pay … and add on a dispensing fee.”
The business offers memberships. Like Amazon, a membership is not required, but it results in extra savings. According to McCormick, customers pay $60 a year or $18 a quarter then receive $7 off each 30-day script, or $10 off each 90-day script, along with additional perks such as free shipping/delivery every 90 days and 15% off all over-the-counter medications, gifts and supplements at the store. McCormick says becoming a member is worthwhile if the patient has more than one chronic condition requiring a prescription.
While he agrees some of the drug pricing in this country is out of line, he says the cost for generics isn’t. According to McCormick, this country has some of the cheapest generic drugs worldwide because of a very competitive generic marketplace.
Things change when it comes to brand-name drugs. “For brands, [the price] is definitely high. We help subsidize the costs of drugs for other countries, but [prices are also] high due to rebates that are passed on to the middlemen and not the consumer. … In fact, even brand net prices have fallen over the past few years,” he says. But those savings are not passed onto the consumer.
Since many insurers own the pharmacy and doctors, he says, there is no impetus for them to be transparent about drug prices or even negotiate lower prices. Once again the consumer gets the short end of the stick.
Such a scenario played out for a local couple, who asked that we don’t publish their names due to the personal nature of the information.
The wife explained in an email, “For the past several months while we grappled with a new prostate cancer diagnosis for my husband, we were also burdened with trying to select medical and drug coverage. (I had just separated from my company insurance a couple of weeks before his diagnosis.) Although our Medicare broker was extremely helpful, she was the first to say she had not seen a similar situation where the cost of the meds were so high. With the supplemental drug plan we selected, for around 10 drugs, we were looking to pay around $14,000 annually. I was stunned.”
She started to investigate other options, such as CostPlusDrugs, GoodRx and SingleCare, but none had all the meds they needed. Then the financial counselor in her husband’s oncology office referred them to Blueberry Pharmacy. She went to the Blueberry website, plugged in the medications, then signed up for an annual membership.
“I was stunned the next morning when we got a text that all his meds were ready to be picked up. … I had to go there for myself — to make sure this was legit.”
She did, and the pricing was correct. They paid only $11.39 for a 90-day supply of 2.5-mg methotrexate.
“Today I got a call from my previous pharmacy who tried filling this order with his new insurance,” she says. “They quoted $330.40 for a 30-day supply. I told them we won’t be needing them to fill any future orders.”
Perhaps the only drawback to Blueberry is that it deals only in generic drugs. “Until brand-name drugs can be purchased at net price (i.e. without rebates to middlemen), it is too costly [to offer them for sale],” he says. However, over time he believes that will change. Although his pharmacy only sells generics, McCormick can often help customers find and/or qualify for financial help to get brand-name drugs.
Right now Blueberry is the only brick-and-mortar pharmacy offering cost-plus pricing in this area, but McComick has been helping others get started. He sees a great benefit from buying scripts from someone local. He agrees that you can find cheap prices through the mail but points out that “It can take five to seven days to get medications, which is not good for acute meds and very concerning with any delays/late fills.”
Perhaps the best benefit he sees from buying in your neighborhood is that the pharmacist can develop a closer relationship with the care provider and patient with direct contact.
“With a fuller picture of the patient, the pharmacist can optimize care.”
Drugs can be priced on the Blueberry Pharmacy website at blueberrypharmacy.com.