No-insurance pharmacy a prescription for success
Austin’s 10-year-old MedSavers keeps drug prices down with low overhead and the personal touch.
An experiment birthed 10 years ago when Austin pharmacist Chris Johnson founded an indie drugstore to sell discounted medicines to needy Central Texans was more than a crazy idea. It was a crazy idea that had legs.
MedSavers Pharmacy — a rare drugstore that doesn’t take insurance — is still dispensing lower-cost generic drugs, still growing and still fun, said Johnson, 44.
It’s a business, he told the Statesman a year after it was launched, that inspired him to take a drastic pay cut so he could offer cheaper options to brand-name drugs, forge deeper connections with his customers and spend more time with his wife and two children. It was a personal statement against obscenely high drug costs, he said.
“People told me to my face I was crazy, but I just signed another five-year lease,” Johnson said, looking like someone who’s having the last laugh. “When you see the pricing in the marketplace and see that I’m still making a profit, you see the true travesty of what is going on.”
In between greeting customers and answering questions from his pharmacy technicians on a recent morning,
Johnson said he’s managed to stay in this unusual business because he doesn’t have the high overhead costs taking insurance would require. He even moved to a larger location five years ago, from a tiny space on Medical Parkway to 1800 W. 35th St., next to Things Celtic.
He supplied a list of 35 drugs that cost less at MedSavers than at three national chain stores. In some cases, MedSavers price was half of the next lowest price. In six instances, MedSavers was at least five times cheaper.
That’s a big deal to customers paying out of pocket.
Johnson said about 80 percent of his estimated 4,000 customers lack insurance, down from about 95 percent when he opened in 2005. The remaining 20 percent can try to use their insurance, but they’ll have to submit the bills themselves.
“When 80 percent of your phone time is taken up by insurance, it takes staff to do that,” said Johnson, a 1995 University of Texas graduate.
A decade ago, MedSavers had one pharmacy technician and one part-time pharmacist. Today, it has seven technicians — three of whom are full-time — and three part-time pharmacists. Johnson says his salary is comparable to what his peers make in Austin, where median pay was $115,631 last year, according to the Texas Workforce Commission. It took him about 3½ years to earn an annual salary comparable to what he made before MedSavers, he said.
Experts estimated 10 years ago there were fewer than a dozen pharmacies nationally that shunned insurance. Today, that number remains small, said Kevin Schweers, senior vice president for pub- lic affairs at the National Community Pharmacists Association.
“It does seem to be relatively rare,” Schweers said.
Neither his organization nor the American Pharmacists Association had data on the number of such pharmacies.
Schweers voiced a concern about customers who get medic ations from more than one loc ation and forget to tell the pharmacist, saying that while patient safety can be an issue, he did not want to give an opinion on MedSavers.
In shopping around, consumers “shouldn’t forget there are a lot of community pharmacies out there that offer heavy discounts on drugs,” he said.
Neither Schweers nor Johnson knew of any similar pharmacies in Texas.
For his part, Johnson said his approach gives him time to talk to customers, get a full history and speak with their doctors, some of whom call him for advice on medications, he said. About 50 of his customers are physicians, he added.
Although the high prescription drug costs have been an issue nationally and online discount pharmacies have sprung up, several changes in the health care arena could explain why there are few discount and noninsurance pharmacies. Those changes include the introduction of Medicare drug coverage in 2006 and the Affordable Care Act, also known as Obamacare, which has covered mil- lions of previously uninsured Americans.
Bridgette Beinecke, 63, of Austin saw her insurance canceled when her husband died about a decade ago. She became an early customer when a nurse told her about MedSavers.
“I didn’t know how I was going to afford my meds,” she said. “This was serendipitous.”
Although she has coverage now, she still uses MedSavers because her deductible is high. “I just come here and I know I’m getting the best value,” she said.
She also likes that Johnson knows her.
He estimated that he knows between 40 percent and 50 percent of his customers by name.
Another familiar face, Echo Beyer, said she found MedSavers about nine years ago when she moved back to Austin from Kansas City and suddenly had health problems. “It was very comforting to come here,” she said.
Interacting with the customers is a joy, MedSavers intern Sarah Hallowell, 24, said.
“I feel incredibly lucky, and I get to learn from Chris,” said Hallowell, a UT pharmacy student. “We know that for every prescription we fill , they might not have gotten it otherwise.”
Johnson said MedSavers has the capacity to serve many more people, but spreading the word has been “the hardest part” for a business that lacks an advertising budget. He started a mail-order option three or four years ago and has plans to begin compounding — mixing medications to meet an individual patient’s needs — to diversify the business.
Asked if MedSavers will be around 10 years from now, Johnson didn’t hesitate. “Absolutely,” he said.
Pharmacist Chris Johnson fills a prescription at MedSavers, a drugstore he founded 10 years ago. MedSavers offers discounted, no-insurance prescription drugs to customers and has expanded its consumer base outside the Austin area.
MedSavers owner Chris Johnson keeps his costs down by not accepting insurance. “When 80 percent of your phone time is taken up by insurance, it takes staffff to do that,”said Johnson, a 1995 University of Texas graduate.
Johnson says 35 drugs cost less at MedSavers than at three national chain stores. In some cases, MedSavers’ price was half of the next lowest price.