Philly sets surcharge to keep some workers away from tobacco-selling pharmacies

The city of Philadelphia has new health coverage rules for workers who don’t belong to a union.

Starting Jan. 1, nonunion workers will pay an extra $15 if they fill a prescription at a pharmacy that also sells cigarettes. That new fee will be tacked on to the usual co-payment for prescription drugs.

The change will affect several hundred retirees and about 5,400 city workers — just a portion of Philadelphia’s 22,000 employees.

The change was the idea of James Startare, the city’s deputy director of human resources, who is leading a push to keep health costs down and city health benefit strong.

“The fact of creating a narrow exclusive network is not a novel idea, the idea of wrapping a public health good around it is innovative and a first of its kind,” Startare said.

“It promotes shopping at businesses that do not sell tobacco products, primarily independent pharmacies. And it allows the city to manage health care costs and forgo larger more widespread benefit changes,” he said.

In addition to all the chain CVS stores, which ceased selling tobacco products last month, 77 percent of the city’s independent pharmacies don’t sell cigarettes. Startare said there are plenty of options and the tobacco-free pharmacy network won’t keep employees from getting the medicine they need.

CVS Caremark gave Philadelphia a price-break on premiums in exchange steering business to drug stores that don’t sell cigarettes.

“That’s been going on since there’s been managed care,” said Andrew Sfekas a professor in the Department of Risk, Insurance and Healthcare Management at Temple University’s Fox School of Business.

“Managed care really started in the ’70s. And it really hit its stride in the ’90s when limited networks were sort of a key to controlling health care cost. And people did, in fact, rebel against them,” he said. “People don’t like to have their choices curtailed.”

A word to drugstore chains that do sell tobacco: Philadelphia says those stores can get back on the city’s preferred list as soon as they give up the tobacco-selling habit.

The city also plans to charge an additional $500 each year to provide health benefits for any nonunion worker who smokes or uses tobacco products.

“Are our health care costs going to drop in one month, two months, three months because of this initiative?” said Startare. “No.”

But he’s taking the long view. Philadelphia’s new policies may improve health and help people kick the tobacco habit, he said. For now, the city will use the honor system to police that policy.

Sfekas said the extra fee for smokers has become common, and might push people to quit. He’s less convinced that the pharmacy-benefit change will be a good deterrent.

“That could really only be effective if you think that people are picking up cigarettes when they go for their medication. I’m not sure that part of it is going to be closely linked to a drop in smoking,” he said.