Proposed bill would eliminate minimum markup on prescription drugs

MADISON -- If you purchase prescription drugs in Wisconsin, chances are, you pay more for them than consumers in almost any other state. A Wisconsin law forces drug stores to increase prices, but both Democrats and Republicans in the state are working to repeal "the medicine markup."

Carter Drugs on Milwaukee's north side sits on the corner of 24th and Burleigh. It's a local business hanging on in a rough neighborhood and even worse business climate. Pharmacist Lester Carter has owned the place for 45 years. In that time, he's seen most of the city's mom-and-pop pharmacies go out of business. "Stores like this are the backbone of the country. It makes it very difficult for them to compete, because they're competing in the same arena as the big chains," Carter said.

One of the things keeping Carter and other locally-owned Wisconsin pharmacies open is the state's 70-year-old minimum markup law on prescription drugs. When it was passed in 1939, the purpose was to prevent a business from running a competitor into the ground by temporarily cutting prices.

Republican State Representative Bill Kremer of Waukesha is sponsoring a measure that would repeal the law. He says minimum markup laws are both anti-competitive and anti-consumer. "A lot of things have changed since 1939, so I'm not exactly sure what the real reasons were. The reason it's still on the books is that a lot of people think it protects mom and pops. If Company A wants to sell something for $4 and Company B wants to sell it for $5.25, let them both do it and see who wins," Kremer said.

Carter says he gives his customers the best possible price, but he wants to see the minimum markup law stay in place, so that he can do business on an even playing field. "Our healthcare system, without a question, is falling apart because of political wrangling," Carter said.

The repeal proposal is co-sponsored by Democrat Jon Richards of Milwaukee. It is a rare bipartisan agreement in a contentious political climate. "People are looking at a common sense way we can bring down healthcare costs in a way that's already out there, and that's attractive to Democrats and Republicans," Richards said.

Richards says the law needlessly drives up costs for Wisconsin consumers. In 45 other states, people can buy more than 350 generic prescription drugs at a discount in several big retail chains. It's the "$4 Generic Drug Program" made popular by Walmart. In Wisconsin, that program costs twice as much because of the law. "Costs continue to go up, and people are more and more desperate to reduce those costs," Richards said. "Obviously, this law, as it pertains to prescription drugs, doesn't do any good, so the reason people say it exists? I'm not buying it," Kremer said.

At a hearing on the issue, Lynne Dittman of the Pharmacy Society of Wisconsin said repealing the minimum markup would not help lower the cost of prescription drugs - it would only devastate local pharmacies. "Legislation like this, you could be in deep trouble in a matter of months, potentially," Jeff Kirchner, president of Streu's Pharmacy Bay Natural in Green Bay said.

Walmart estimates Wisconsin consumers could save $35 million a year on drug prices if the law were to be revealed. "We urge you to vote 'yes' to get Wisconsin consumers access to the same prices to prescription medication customers in other states enjoy," Lisa B. Nelson with Walmart said.

One of the things a big-box retailer can do is offer products at wholesale prices, or near wholesale prices, because they purchase in massive amounts. The current law prohibits stores from selling "below cost," so it must be marked up by a minimum amount. "Walmart or Target gets a truckload of stuff, and each one is going to have a per unit cost. Is that your cost? Or do you have to include shipping? What about warehousing? What about overhead?" Kremer said.

The measure is being held up in the Senate, despite being sponsored by two of the state's most liberal and two of the state's most conservative lawmakers. "I think it's a little bit misleading to say that this bill is going to drive mom and pop pharmacists out of business, because it hasn't happened in other states," Richards said.

Back at Carter's, the 80-year-old pharmacist says he has a special relationship with his customers. He worries that small businesses can't compete with big boxes because he doesn't have the money or the muscle, or the lawyers or the lobbyists that Walmart does.