Pediatricians and family physicians who regularly purchase and administer vaccines to children pay widely varying amounts to manufacturers for those vaccines, resulting in a drastic financial strain for some practices, particularly smaller ones in rural areas.

 

That's the conclusion of researchers who have studied the impact of vaccine costs on practices' bottom lines. Their research was prompted by a flurry of complaints from doctors in 2006 and 2007, which triggered widespread media coverage and a call to action from the American Academy of Pediatrics.

 

"It was unclear whether or not the issues that were raised regarding vaccine financing in physician practices were issues that were affecting lots of practices or whether there were only a minority of practices being affected yet being very vocal in their concerns about the issue. We wanted to get a better understanding of the magnitude of the problem and how common it was among practices," explained Gary L. Freed, MD, MPH, professor in the Department of Pediatrics and Communicable Diseases at the University of Michigan Health System. In December 2008, Freed published the industry's first findings on the subject.

 

He discovered that while some practices were hit hard by vaccine costs, others were doing just fine. "The issue had much more to do with business practices," he said. "Some practices were paying more than twice as much for the same vaccine as other practices were. … There's actually a huge range of prices and a huge range of what they're reimbursed. We're hoping that this information will help physicians be able to negotiate better prices for their own practices."

 

The art of the deal is indeed at the heart of the matter, according to Jon Almquist, MD, a retired pediatrician and a nationally recognized expert on immunization policy. A member of the National Vaccine Advisory Committee and AAP's Immunization Subcommittee, Almquist said he has reviewed three other studies, too soon to be published, that confirm Freed's findings.

 

"In the past, this was less of a problem because vaccines were cheap. If you lost 10 percent on $5, you forgot it," he said. "Yet, when it's 10 percent of $100 that you're consistently losing, well, you're killed, man. It's a fast way to go out of business. You can't keep it up." Compounding the problem, he added, are federal programs like Medicaid that don't cover the cost of administering the vaccine and third-party payers that drag their feet on coding for new vaccines.

 

The real danger, Almquist and Freed agreed, is that family physicians in rural areas may decide to eliminate pediatric vaccination from their list of services. "Family physicians, because they give fewer vaccines, have less of a rationale for staying in the immunization game, and we need to do what we can to make sure especially that those physicians continue to provide vaccines. In our study, they were the ones most likely, if anyone, to stop giving vaccines," Freed said.

 

Added Almquist, "That would be a disaster for our country. In general, you could say that general practitioners are the backbone of immunizations in the rural areas, and if they are a small practice, they have less chance of buying vaccines at a significant discount."

 

So, what should smaller practices do to ensure they are getting the best deal possible? Two things, according to Almquist. First, negotiate with third-party payers for the best reimbursement rate for vaccine purchase and administration. After all, childhood vaccinations improve health, saving payers money in the long run.

 

Second, haggle with manufacturers to get the best vaccine price possible. "Almost all manufacturers are now altering their selling practice contracts, so that they offer incentives. You need to ask the manufacturer for those incentives," Almquist said. For example, most manufacturers offer a discount if the buyer pays within 30 days. Yet, they just might approve the discount for payment within 90 days – if the buyer asks for it. "Manufacturers are all aware of this issue, and they want you to buy their product," Almquist said. That's particularly true if there's a competitor in the marketplace for a particular vaccine. Some manufacturers also are giving smaller practices the discount usually afforded a bulk purchase if the practice commits to buying a certain amount of the product over a certain amount of time.

 

Manufacturers also are offering to take back expired product or to replace a dose that's legitimately lost, say, a nurse drops it or a patient decides at the last minute not to be vaccinated, yet the dose is already prepared. "Manufacturers are making changes that offices need to investigate. They need to push those manufacturers in that way," Almquist said.

 

While he acknowledged that physicians are rightly frustrated by the time and trouble it takes to negotiate, Almquist said, "Well, you're going to go out of business if you don't haggle some, or at least if you don't use common business sense."