Controlling Prescription Costs: An Interview with Phil Baker from Good Shepard Pharmacy

I’m very pleased to share an interview with Phil Baker from Good Shepard Pharmacy as another post in our series of controlling health care costs. Prescription drugs costs are rising rapidly, and Phil has truly found a unique way to help employers and individuals save money on their prescriptions.

PM:  Tell me about Good Shepherd Pharmacy…how you got started and your mission.

PB:  I opened Memphis’s first independently funded Charity Pharmacy in September of 2015. We had about 250 medications that we could dispense for free to low income uninsured patients. Which was great- for people who were uninsured- but we quickly realized that there were just as many people WITH insurance who couldn’t afford their medicine as there were without. (Especially people in the Medicare Donut hole). It was then that I realized the ridiculous amount of mark up on prescriptions. It is still not uncommon to find a prescription that CVS charges $250 for only costs the pharmacy $1.50. When we started pricing these folks’ meds out at cost, we consistently took them from $600/month down to $60. We realized we could add a membership fee to keep our doors open and still save people hundreds of dollars per month. 

PM:  Your model is really different than traditional pharmacies.  Can you describe your unique subscription-based approach?

PB:  The fundamental difference between us and traditional pharmacies is this: we do not accept prescription insurance. Our members may have prescription insurance- we just don’t use it.  Everyone understands that insurance can limit the maximum price of a prescription, but few realize they also set the minimum price. You cannot accept insurance (Medicare/Medicaid being the biggest insurers) AND sell prescriptions at cost, or you will violate your insurance contract and commit Medicare fraud. By not accepting insurance we are free to be as transparent as possible. 

Our members pay $40/month for an individual or $70/month for an entire family to get all of the prescriptions for free or at cost. We are familiar with every assistance program under the sun to get as many meds for free as possible. When we can’t get them for free, we order them like any other pharmacy would and sell them at the same price we paid for them. All of our “profit” is made on membership fees- not by marking up medicine. 

This is based on our fundamental belief that the value the Pharmacist provides is completely independent of the value of the prescription. Whether the prescription is $1000 per pill or $.01 per pill the pharmacist provides the same value.  

PM:  My understanding is you are primarily a mail order pharmacy.  Is that correct?  Do you have walk-in customers as well?

PB:  We are primarily a mail-order pharmacy. 10% of our members prefer to pick their medicine up at the pharmacy, but most get the prescriptions through the mail. 

PM:  Do you work only with individuals, or do you have corporate programs available as well?

PB:  We just started working with fully insured employers this year. We previously had only worked with individuals. We plan to continue to work with both moving forward. 

PM:  If an employer is fully insured, how could your pharmacy help them to control cost?

PB:  Our fastest growing market is people on high deductible plans. Many of these plans do not cover any prescriptions until a $5000 deductible has been met. Very few people spend over $5000 on meds every year, but many spend upwards of $3000-$4000 and are EFFECTIVELY uninsured.  By becoming members of our pharmacy these folks save thousands per year. Benefit advisors are our biggest source of referrals for people in trouble on high deductible plans. 

PM:  If an employer is self-insured, how could your pharmacy help them to control cost?

PB:  Working with self-insured employers is beautiful because they own their own data. Many prescriptions are one time fills (like antibiotics or pain meds after an injury) but the bulk of the most expensive medicines don’t change much. They are the cholesterol or blood pressure medicine that the employee is going to be on for the rest of their life.  We look at the last 12 months worth of prescription data and determine what they spent, then price those same medications out at cost to see what those meds would have cost through Good Shepherd Pharmacy, then agree on a fee that makes it a win-win for both parties. 

One employer spent over $1.1 Million on 15,000 prescriptions the previous year. Our cost on those was less than $700,000. There was plenty of room to make it a win-win. 

However, being transparent about the true price of the medicine is not the only way we save money.  We’ve found that PBMs are often charging $5-$10 per prescription in transaction fees. So they make more money when the patient gets their prescription filled every 30 days versus 90 days. We sync all of our members prescriptions up so they are all filled at the same time once every 90 days. This reduces PBM fees by as much as 66%.  We also jump on clinical opportunities to switch patients from brand name meds to cheaper generics as they come available. 

The best part is the fact that our program works in tandem with the existing plan- so the company does not have to wholly switch everything over to a new plan. The employees are told “You still have your insurance and you can still go to Walgreens if you choose, however, if you fill your prescriptions through Good Shepherd everything is free (no copays) and your meds will arrive at your door every 90 days.” There is no disruption in care. They can use their insurance whenever they need something right away, which is what they would have done anyway, but every prescription filled through Good Shepherd saves the employer 30-50%  

PM:  How can an individual, covered by an insured or self-insured health plan, save money by using your pharmacy?

PB:  We tell everyone, “It doesn’t cost you a thing to give us a call and see if we can save you money” We have a form on our website ( called the medication review form. You list your medications and your email and we will email you a detailed price quote. We will not sign a person up unless we can save them money. If you also give your household size and income level (just a range) then we search every available program to see what assistance programs you might qualify for. 

PM:  What is the profile of the person that would benefit most by using your pharmacy?

PB:  Anyone who is struggling to pay for their prescriptions. Think of us as the Pharmacy Help Desk. We won’t sign you up unless we save you money but we also will tell you what your best options are- whether it is a coupon for a great price at a chain store pharmacy, an assistance program that has nothing to do with Good Shepherd, or suggesting a cheaper medication your doctor should try as an alternative. We exist to help people with the prescription problems. 


I hope you enjoyed this interview.  If you’d like to chat about ways to control prescription drug costs or health care costs in general, feel free to call us at (866) 724-0008 or click the link below.


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