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Pharmacy says low-cost formula means low prices for the uninsured
by Jeff Horwich, Minnesota Public Radio
May 20, 2004

FairCare Rx is a new chain of low-cost, cash-only pharmacies opening in the Twin Cities. The first five locations are in St. Paul, West St. Paul, Roseville, Crystal, Burnsville. (MPR Photo/Jeff Horwich)

Government-types have had lots of ideas lately on the cost of prescription drugs, including revamping Medicare, drug discount cards, and a website from the governor pointing people to Canada. One Twin Cities pharmacist looks at the situation and sees a business opportunity. He thinks the idea could have appeal for just about anyone with a big drug bill. But the customers he's going after are the very ones most neglected by the current system.

West St. Paul, Minn. — Walk into one of the FairCare Rx pharmacies in the Twin Cities, and you'll wonder if they've moved in yet. You'll find a few chairs, some scenic photos on the wall, and a long counter with a pharmacist behind it.

Pharmacist Dan Lannon owned and ran a traditional drugstore in West St. Paul for a decade before rolling out his first five FairCare Rx locations. "Every step of the way where we can cut costs, we've done that," he says.

	Founder and President Dan Lannon

There are no greeting cards here, no shaving cream; not even a bottle of aspirin. One other big thing missing from FairCare Rx is insurance. They don't take it. Their target customers are the estimated 800,000 Minnesotans without prescription drug coverage.

"What we tried to do was take a step back and say, 'How can we get the drug from the large, wholesale manufacturers into this uninsured person's hands for as little cost as possible?'" Lannon says.

Cutting out insurance cuts loads of paperwork and hours which pharmacy staff might spend on the phone. But Lannon says it also cuts out routine price discrimination against the uninsured. HMOs and other insurers use their clout to negotiate lower drug prices with traditional pharmacies. Lannon says the result is that pharmacies often raise their prices to cash-paying customers to make up the difference. With no insurance in the mix here, there's no need to do that.

The chain cuts costs in other ways. They sell only maintenance medications for chronic conditions -- no short-term meds like antibiotics or Viagra. They sell only full bottles as they come from the wholesaler, so no time is spent counting out pills. And FairCare Rx pharmacists steer customers toward generic drugs whenever possible.

"Say you're on Lipitor, 20 mg for cholesterol," Lannon says, by way of example. "A lot of people take that drug. If you go to Gov. Pawlenty's (MinnesotaRxConnect) Web site, they'll say you can save 40 percent on your Lipitor. What they're not telling you is that if you go and switch to Mevacor, which is another statin (drug), it does the exact same thing. You can switch to that and save 40 percent off the Canadian price, and then walk into FairCareRx and save another 40 percent off what the chains are charging."

According to the governor's Web site, the cash price for 100 Lipitor from Canada is $190. One-hundred generic Mevacor, a drug known as Lovastatin, costs about $130 locally, or $94 ordered from Canada. The FairCare Rx advertised price is $65.

Lannon says compared with major chain pharmacies in the Twin Cities, FairCare Rx prices on average come out 60 percent lower. They also often beat the 50 or so Medicare prescription drug discount cards now offered in Minnesota.

The Minnesota Senior Federation runs a program to connect seniors with Canadian pharmacies. Executive Director Pete Wyckoff was skeptical at first about the FairCare Rx deals. We asked him to check out the company's Web site and the 12 common generic drugs for which FairCare Rx has published prices.

"We did do some work against our own prices, and in many cases these are lower than Canadian prices -- on generics," Wyckoff says. "It's a neat attempt to get the power of competition to work, where it works. This an interesting attempt and we hope they succeed." Wyckoff says it remains to be seen how FairCare Rx prices will compare on newer, brand-name drugs, whose patents still prevent generic alternatives.

Months and years will tell if FairCare Rx can draw customers, keep its stripped-down cost structure, and still turn a profit. A number of CEOs and other local business-people have signed on as financial backers. Radio, TV, and newspaper ads began running this week.

FairCare Rx hopes Minnesotans will at least be curious enough to check them out. Right now they're just one more in a growing and sometimes bewildering set of choices for those trying to keep their drug bills down.

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