Pharmacist Philip Baker opened the doors of Good Shepherd Health more than a year ago to provide free or at-cost prescriptions to uninsured people in Memphis.
Baker quickly found that people covered by Medicare needed the services of the nonprofit pharmacy. He discovered that even people with insurance too often couldn’t afford the high cost of drugs.
Now, he’s set his sights on revolutionizing the way self-insured employers pay for their employees’ medicines. Good Shepherd plans to provide its at-cost model for prescriptions to chop employers’ drug costs, competing with for-profit pharmacy benefit mangers such as Express Scripts Inc.
“I have a vision to completely revolutionize the entire industry and that is by making PBMs, pharmacy benefit managers, obsolete,” Baker said.
Employer are paying the full price for prescriptions and the mark-up on those drugs can be breathtaking, according to Baker.
Plavix, a drug used to prevent blood clots and one of the most commonly used, is his favorite example.
“Thirty generic Plavix at a regular pharmacy would be anywhere from $50 to $250 with no insurance”,” Baker said. “We get that for $1.75. The mark-up is criminal, really criminal.”
Big drug companies get a bad rap, and they should, for pricing brand-name drugs too high, he said. However, the vast majority of drugs on the market are generic and he said for-profit pharmacies and pharmacy benefit managers are marking those up
By removing the profit and providing its medication management service for employers for a fee, Baker said “just initial numbers we’re looking at we can reduce the company’s drug costs by 30 or 40 percent right off the top.”
Good Shepherd hasn’t sold the idea yet, but is in talks with several companies, said Baker, 40, a University of Tennessee Health Science Center College of Pharmacy graduate and former rehabilitation hospital director of pharmacy.
With a half dozen employees and headquartered in the Hickory Ridge Towne Center mall, Good Shepherd has provide $1.3 million worth of free medicines and served about 1,000 since opening in September 2015, Baker said.
Despite nationwide efforts to help uninsured people with the cost of prescription drugs, charity pharmacies like Good Shepherd have sprung up to help meet the need in the last decade, said Chris Palombo, chief executive of Dispensary of Hope in Nashville.
Dispensary of Hope is a nonprofit drug distributor that receives donated drugs from manufacturers and physician practices and supplies them to free and federally qualified clinics across the country, including Good Shepherd, Palombo said.
With estimates of more than 30 million uninsured people nationwide, the need is massive and uninsured and low-income people also suffer more chronic illnesses, he said.
Help with prescriptions is falling short for millions, despite the Affordable Care Act, a separate federal program known as “340B” that provides steeply discounted drugs to many hospitals and federally qualified health centers, and drug manufacturers’ patient assistance programs.
Baker is critical of the federal programs and said Good Shepherd doesn’t participate in Medicare or any insurance program.
High deductibles that must be met before insurance pays under coverage available through Affordable Care Act leaves some patients unable to afford their drugs, he said. And he called the 340B program “corrupted,” used as a profit-center for hospitals and health centers that want to treat it as one.
By providing free prescriptions to those with incomes that qualify, at-cost drugs and tapping in to manufacturers’ patient assistance plans, Baker said Good Shepherd stitches together plans for both the uninsured and the insured. Patients with chronic conditions have become the organization’s major niche.
In July, Good Shepherd began providing medications for Church Health patients, a long-planned natural fit for two organizations focused on health care for the working poor, Baker said.
Another group he said he’d like to target with services includes Memphis city government police and fire department retirees who lost drug coverage.
People with Medicare coverage who must pay their own drug costs during the “donut hole” coverage gap emerged as major customers last year, he said.
That need prompted the membership model designed to cover the nonprofit organization’s costs of doing business.
Memberships are $30 a month for individuals and $50 a month for families. With about 400 members and growing, Good Shepherd needs about 850 to break even, Baker said.
A new grant by the Baptist Memorial Health Care Foundation for $50,000 will help and television advertising is providing a boost, he said.
Good Shepherd’s vision for offering services to employers and revolutionizing the industry also will help subsidize its charitable work and other ventures.
Baker said Good Shepherd is set to begin an on-the-job training program for pharmacy technicians. He’s also planning a drug recycling program, beginning with a push next spring to change Tennessee law to allow individuals to donate their unused drugs.
“We’re getting away from even saying we’re a pharmacy,” Baker said. “We’re a medication management program.”