What is going to happen to my prescriptions?
The cost of your prescription program may go way up. President Trump announced that he may levy 200% tariffs on prescription components that come from foreign suppliers.
His goal is to drive manufacturing back to the United States.
But that would take time.
Such a tariff would drive up prices because the production costs and supply chain disruptions would have a negative impact on profit for manufacturers.
This is not unlike the unintended consequences of the Biden administration’s $2,000 cap for seniors on their Medicare prescriptions which drove some companies out of the market, tightened the formularies (the list of drugs offered by plans) and cut agent commissions like local offerings from Aetna/CVS/Silverscript and Wellcare did. Well-intended ideas often cause problems that were unforeseen by the politicians.
The Pharmaceutical Research and Manufactures of America estimated that even a 25% tariff on drug imports would drive up cost by $51 billion annually.
President Trump’s 12-18 month “grace period” for relocating manufacturing back to the US is a tall order for an industry that usually requires 4 to 5 years to scale up a new plant.
Americans have a trifecta of forces working against their wellbeing.
As the science of pharmaceutical remedies advances, so does the opportunity by prescription drug plans to profit off those advances. This is why brand drugs are pushed 24/7/365 on your television and you never see advertisements for generics.
In addition to politicians and tariffs, we are also stuck in the unmerciful grip of a drug plan management system for all of our health insurance programs: individual, group Medicare and Medicaid.
Of course, manufacturing costs are passed onto the consumers, but they also are putting the squeeze on pharmacies, especially rural independent pharmacies. Georgia’s Rural Center reported in 2004 what was about to happen to rural pharmacies because of drug management programs like Ambetter’s contract with Express Scripts.
The practices of pharmacy benefit managers (PBMs) are being scrutinized nationwide. The Federal Trade Commission recently reported that PBM practices are financially damaging to independently owned pharmacies. PBM practices that favor chain and other corporate pharmacies and financially squeeze independent pharmacies will disproportionately impact rural counties where the pharmacy market is dominated by independent pharmacies.
A personal friend has already experienced decisions by pharmacies not to stock his insulin and the inability to fill his prescription anywhere in Americus before he ran out.
Our local Pharmacist Lee Pinnell, Co-owner of Clinic Drug Store in Americus summed up the situation this way:
“President Trump recently announced that he is planning a 200% tariff on pharmaceuticals. Retail Pharmacies are already struggling with balancing high inventory prices with very low reimbursements. Eight retail pharmacies close every day in America. Large chains such as Walgreens and Rite-Aid and independents are struggling equally to deal with profit margins that are not sustainable. Large pharmacy deserts are occurring in poor urban and rural areas where access to healthcare is already limited. Proposed tariffs will only increase the number of pharmacies closing every day by increasing our cost of goods sold. Proposed tariffs will hurt the consumer the most. American consumers already pay more for their medicine than any other country in the world. We need to be looking at ways to lower drug costs instead of raising them.
America definitely needs to produce more of its own medicine, but tariffs are the wrong way to incentivize it. We need to be looking at other ways to encourage manufacturing medicine in America other than tariffs.”
What can I do to protect myself?
Work closely with your doctor to find generic alternatives whenever possible.
Work with a local agent who has the software to input your prescription list to see which insurance plan will have the best annual cost.
Ask your agent to provide you with a formulary so you can discuss options with your doctor. Prescription plans are not required to carry all prescriptions. When my friend learned he needed insulin, I printed out his plan’s page on insulin from their formulary so he and his doctor could identify a safe, effective plan to meet his unique needs.
Work with a local independent pharmacist who can see all of your prescriptions and offer counselling about side-effects, drug interactions and best practices.
Shop around if you find yourself with an expensive prescription to see which pharmaceutical company will give you the best price.
Perhaps most importantly is to adopt healthy lifestyle practices and nutrition. We know it is often easier said than done, but a lot of chronic illnesses can be mitigated with good choices. Genetics and environment often work against us, but regular exercise and good food choices can certainly help many of us.
Finally, lobby your political representatives and tell them what you are experiencing and what you are fearful of. Here’s a link from our friends at Georgians for a Health Future.
Thank you for your continuing partnership and we promise to keep you informed with updates as we learn them.
Sincerely,
Kirk Lyman-Barner, President
Client First Insurance Solutions, LLC
