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Robert F. Atlas, The Role Of PBMs In Implementing The Medicare Prescription Drug Benefit, Health Affairs Web Exclusive, October 28, 2004 [Abstract] [PDF] [HTML Version] [Reprints & Permissions]

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Innovator Of Prescription Drug Benefits: Correction

Sydney Aronson   ( 26 October 2009 )

Innovator Of Prescription Drug Benefits: Correction 26 October 2009
Sydney Aronson, Retired Send comment to journal: Re: Innovator Of Prescription Drug Benefits: Correction saronson{at}fea.net Sydney Aronson	This article includes the following: "Prescription drug cards. In the 1960s companies emerged to offer add-on prescription drug benefits to private health insurance plans—most notably, those for unionized workers. Card holders could fill prescriptions at participating pharmacies for nominal copayments. Pharmaceutical Card System (PCS) is commonly identified as the innovator of this concept." In fact, the first company that conceived and implemented this procedure was Paid Prescriptions, which was incorporated on August 11, 1963 in California as California Pharmaceutical Services, Inc., a nonprofit corporation sponsored by the California Pharmaceutical Association. I was the president of that corporation. The name of the plan offered was Paid Prescriptions and the corporate name was subsequently changed to Paid Prescriptions, Inc. PCS was formed later by an employee of Paid Prescriptions in Phoenix, Arizona, where Paid Prescriptions, Inc. had its data processing facility. Paid Prescriptions was initially an insurer which assumed the risk for reimbursing covered prescriptions to participating pharmacies. This arrangement was challenged by the Antitrust Division of the Justice Department, and Paid Prescriptions changed its role to that of administration only for insurers and other providers of prescription drug plans. It also eventually changed its nonprofit status to a for profit-status as Paid Prescriptions Inc. Eventually the company was sold to Bergen Brunswig in 1970 which subsequently sold it to Computer Sciences Corporation. It finally was acquired by Merck. I left the company as an officer and director in 1970 with a consultant agreement. I am currently retired. The concept was placing an Addressograph machine in each participating pharmacy nationwide using the procedure found in gas stations at that time where oil companies provided customers with a plastic card which was swiped in the individual gas station on the Addressograph machine and submitted by the gas station for a single payment for a group of claims. The uniform procedure allowed automated processing by then IBM computer facilities. The first national contract for Paid Prescriptions was with John Hancock Insurance Company for the hourly employes of Ford Motor Company for the prescription drug benefit negotiated by the UAW in 1964. Paid Prescriptions cooperated with others at that time to help establish an industry as a result of its experience with the antitrust issues. As the entity that conceived and implemented the first such third-party payer for prescription drug claims, it is important that its historical role be accurate as all of the current companies and related activities started here.