Transparency Disparities – Let the Games Begin

Disparity (dĭ-spăr‘ĭ-tē) n.

1. The condition or fact of being unequal, as in age, rank, or degree.
2. Unlikeness; incongruity.

Alright, I couldn’t resist. After writing recently about transparency within healthcare, I thought I would try to highlight some of the major incongruities that currently exist within our healthcare environment. These differences and inequalities are shocking, and show what happens when market forces are not allowed to operate with a free flow of information. It also highlights how simply “stepping out” with the transparency initiative can lead to an incredible “stepping up” in value.

Image from MyFloridaRX website (Nexium Case Study)

First, last week I wrote about a new prescription comparison tool that was being offered by the Attorney General of Florida to healthcare consumers in the state. The tool allows an individual to select a county, a city, and the drug they wish to compare (the drug list was not exhaustive, but had enough to allow one to quickly understand the potential impact of making this information available). Knowing a few things about the relative costs, I selected Nexium (a leading proprietary proton pump inhibitors from Astra-Zeneca), which is used to treat esophagitis and other inflammatory conditions of the stomach. It turns out that the pricing disparity of different pharmacies offering this drug was nearly $150. Even more interesting, the two pharmacies with this pricing disparity are only 6.8 miles apart – less than 10 minutes drive apart (thanks Google maps!).

Shows distance from most inexpensive (San Jose Pharmacy) 30 day supply of Nexium
to the most expensive (Condominium Pharmacy). A distance of 6.8 miles!

So how to explain this difference?

Well, I called Condominium Pharmacy. The woman who answered the phone was very hostile, said she doesn’t do anything on the internet, and hung up on me when I began to explain that Florida was publishing this information on the internet to consumers. I next called Medicine Shoppe, a national pharmacy retailer. The Pharmacist on the phone had no idea what I was talking about, had never heard of the site, and was surprised that this type of information is now being made available to consumers. I informed her that her pharmacy pricing was nearly 2X the price of another pharmacy less than 10 minutes away. She stated that the price sounded inaccurate as she believed it was more like $150 for a 30 day supply (calls into question the accuracy of the Florida data). She also stated that the listed price didn’t matter because all of her customers are old people with insurance and no on asks her or cares about pricing.

Perhaps that last comment is the most telling phrase that informs us of how far culturally we have to go to improve our healthcare system. Perhaps the pharmacist didn’t realize that the days of complete price insensitivity, due to third party payers, is going away. Perhaps she didn’t realize that she was subsidizing the price insensitivity through her own insurance premiums (which are rising at about 10% annually). Perhaps she doesn’t understand that the current course is unsustainable. Perhaps she didn’t consider that consumers will very shortly be paying alot of attention to the pricing disparities because there is a new formula in the healthcare equation: