Adventures in health care reform, via the Angry Pharmacist, who is very angry, and a wee bit profane:
Usual reimbursement from MediCal is our drug cost (give or take a few percent to account for wholesaler markups, etc) plus a dispensing fee of a single digit number (less than 10 bucks for those drunk at home). If I dispense, say, Fukitol, with a ballpark (yet entirely reasonable) price of $200, I can expect to make about $210 bucks. Those slow out there may be saying "HOLY SHIT, YOU GOT $210 BUCKS FOR THAT PRESCRIPTION! PHARMACY IS A GOLD MINE!" For those who think this, go work for the State of California, because you are a fucking retard. Yes, we did get reimbursed by the state a whopping $210 dollars, but unless I can wave a magic wand and make drugs out of thin air, my wholesaler wants $200 out of that $210 so he can pay HIS bills. So I get $10, which really is fucking good.
So California; despite having Silicon Valley, Google, dot.millionaire companies, San Francisco and LA (that combined pay more taxes in one second than we will all make in a lifetime) is broke. Go fucking figure. They decide to whack the MediCal reimbursement for drugs by 10% to stem the bleeding of throwing the baby out with the bath water. This first was voted into effect on June 1st. Us pharmacy and medicine peeps said "HOLY SHIT, YOU CANT DO THIS" and did what Americans typically do, tie it up in the courts (read on and you'll see why). Well, recently they lost the injunction, so the cuts happened.
Now you may be thinking "gee TAP, 10% cut in your fee isn't so bad, thats only like a buck". Therein lies the problem. MediCal didn't cut our dispensing fee, they cut THE WHOLE FUCKING REIMBURSEMENT.
Quick and Dirty:
Drug costs 200 bucks. We get paid 210 bucks. Take 10% off of that 210 bucks and you're left with 190 bucks. The drug still fucking costs the pharmacy 200 bucks. We make a whopping -10 dollars. Thats right, the pharmacy LOSES 10 dollars (in this case) with EACH FUCKING HIGH DOLLAR TRADE NAME FILL. Throw in some chemo drugs like Xeloda that costs the pharmacy THOUSANDS or HIV drugs at 600 bucks each, and you have yourself a closed pharmacy.
It is, of course, absolutely true that you can save a great deal of money by forcing providers to sell things below their cost of goods. It is not necessarily true that this is a sustainable long-term strategy.