A conundrum of regulatory issues and decisions in coming months threaten to stifle community retail pharmacy’s goal of advancing patient access to health care services designed to lower overall costs.
These include anticompetitive practices of third-party pharmacy benefit management (PBM) companies, federal and state cuts to pharmacy reimbursement rates, drug safety issues and access to Medication Therapy Management services.
First off there is the $29 billion Express Scripts-Medico Health Solutions merger decision by the Federal Trade Commission. That deal has been vehemently opposed by retail pharmacy organizations, including the Food Marketing Institute, consumer advocacy groups and others.
If approved — a decision could come down within the first quarter — the merged mega-PBM entity will capture 35% of all prescriptions and will cover six of the 10 largest employers. It would leave just two PBMs — Express Scripts and CVS Caremark — to fight over 80% of the national prescription drug plan market for large employers, noted Cathy Polley, vice president, health and wellness, at Arlington, Va.-based FMI.
“Our members are very concerned about the potential for decreased reimbursement and network exclusions and forcing patients to mail-order providers,” she told SN.
However, some feel the FTC decision at this point is out of their control. “We are probably paying more attention to that than anything else,” said John Norton, a spokesman for the National Community Pharmacists Association, Alexandria, Va. “In many ways while we can generate as much opposition as possible, the ultimate decision will be out of our hands.”
While the industry anxiously awaits the FTC’s decision on the PBM merger, retail pharmacy advocates will continue to press federal and state legislators to change what they see as anticompetitive business practices of PBMs.
“We support legislation and regulations that would level the playing field between PBMs and neighborhood pharmacies such as contracts clearly defined, pricing methodologies and pricing programs. We are in favor of fair and honest network design,” said Carol Kelly, senior vice president of government affairs and public policy for the National Association of Chain Drug Stores, Alexandria, Va.
She noted that PBMs have forced consumers away from retail pharmacy through mail-order mandates. “Mail order is clearly an important option for the beneficiary patient, but patients shouldn’t have to use that as their only means of access for their prescriptions,” she said.
NCPA supports the Pharmacy Competition and Consumer Choice Act, H.R. 1971 and S. 1058.
The bill would increase PBM transparency, provide protections from certain abusive and burdensome audit practices by PBMs, and allow any willing pharmacy to participate in a network, so long as it is eligible to participate in a federal or state health plan.
“PBM practices have produced artificial barriers to competition in the delivery of pharmacy services that increase costs, reduce choice and unfairly compete against small pharmacies. This bill will start to break down some of these artificial barriers,” said Norton.
It would do so by providing a basic level of protection to consumers regarding their choice in where they obtain their prescription medications; saving money by making the inner workings of PBMs more transparent to plan sponsors so they know whether they are getting a good deal; and curbing burdensome audit practices and strengthening fraud protections.
When it comes to maintaining a level playing field for community pharmacies, NCPA also supports the Preserving Our Hometown Independent Pharmacies Act of 2011 (H.R. 1946), which would create a more competitive marketplace for pharmacy services by enhancing the ability of independent community pharmacies to negotiate with PBMs by leveling the playing field for independent pharmacies to provide similar leverage that much larger chain pharmacies have when negotiating their third-party contracts; and by allowing independents to form negotiating entities representing no larger than 25% of all retail pharmacies in a Medicare Part D prescription drug plan region.
Another decision, which has the potential to change the course of health care reform, is the Supreme Court’s ruling on the constitutionality of the Obama administration’s Affordable Care Act. The retail pharmacy community made sure its voice was heard in many of the act’s provisions.
Oral arguments are expected late February or March, with a ruling by June, sources told SN.
More Flexibility Required
However, a provision that the retail pharmacy industry would like to see amended in the health care reform law is the requirement for consumers to obtain a prescription in order to purchase over-the-counter medicines with a Flexible Spending Account (FSA) debit card.
“We believe this provision is counter to the goal of increasing access to affordable health care options and has made FSA redemptions more complicated and costly for businesses and consumers. The changes [in the Affordable Care Act] also omitted about one-third of the estimated 40,000-plus FSA-eligible items that can be purchased in a retail grocery store with an FSA debit care without a prescription despite significant investments recently made by the industry in store technology and infrastructure to continue selling FSA-eligible items,” explained Polley.
She noted the inconvenience factor with the new rules sending shoppers unnecessarily back to the busy pharmacy counter to fill over-the-counter prescriptions instead of going directly to the front end.
“Legislation to fix the treatment of FSA OTC purchases has been introduced and has the potential to move as part of a larger vehicle this year,” said Polley.
But, she noted, “Cost concerns in the current deficit environment continue to be the largest roadblock.”
Pharmacy advocates recognize the challenges of getting favorable passage of important bills in a presidential election year where the focus is on deficit reduction.
Two reauthorization bills on the docket could see action, however.
As Congress prepares to reauthorize The Prescription Drug User Fee Act, effective through September 2012, the prospect of tracking raw materials and increasing inspections in foreign manufacturing facilities is being explored. The initiatives are being considered as a means of helping to address recurring problems with prescription drug diversion and quality.
“We don’t think track-and-trace really enhances safety and security in the drug supply system. We do oppose that as overly burdensome to our members,” said Kelly of NACDS.
NCPA said it wants to assure that community pharmacists can continue to serve their patients under reauthorized PDUFA, which may include provisions to address risk evaluation and mitigation strategies (REMS), to promote supply chain security, to regulate Internet pharmacies and to implement a strategy to address current and prevent future drug shortages.
Tricare, the Department of Defense’s managed health care program for the military and their families, also is up for reauthorization for 2013.
FMI said it would continue to advocate for the ability of retail pharmacy establishments to fill prescriptions for military beneficiaries on a level playing field with DOD pharmacies and mail order facilities.
“We are advocating for equality in copayments and that beneficiaries are not steered or forced into mail order run by Tricare or within their onsite facilities. Many military retirees and their extended families live in communities and not on a military base so they would like to continue to using their corner supermarket pharmacy to fill their prescriptions,” explained Polley.
Call for Final Rule
With Medicaid reimbursements representing a significant portion of a pharmacy’s profit, all retail pharmacy organizations are waiting for a final rule to be put in place as created by the Deficit Reduction Act of 2005 (DRA) and later the health care reform act on how reimbursement rates are set. These laws state that the average manufacturer price (AMP) is used to set the Federal Upper Limits (FUL) for generic drugs in the Medicaid program.
The intent of Congress was to pay pharmacies accurately for their costs to purchase prescription drugs and dispense them to Medicaid beneficiaries.
“We are concerned with the FULs released in September, October and November contain flawed data that is not reliable for reimbursement. We will continue to urge CMS [Centers for Medicare and Medicaid Services] to discontinue publishing draft FUL lists until a final AMP rule is in place,” said Polley.
“We think it is critically important these rules be published and generally understood by the manufacturers for their reporting to CMS because if they aren’t reporting in a consistent manner and consistent with the statute it’s difficult to have FUL governing the maximum amount the federal government will match for state reimbursement. It’s difficult for that to be accurate. It’s our position there should be a final rule and there should be drafts of FULs that we could look at and analyze from public policy perspective,” said Kelly.
Meanwhile, state budgets are under pressure to cut Medicaid reimbursements to third parties as seen in California, which cut 10% in its reimbursements under its Medi-Cal program. NACDS and others filed a lawsuit challenging that decision. A federal district court has recently ruled against the cuts. A final decision is still pending.
While FMI was not a party in that lawsuit, Polley said, “Medicaid reimbursement issues remain a top priority for our members in all states. With the current economic situation it’s likely we will see additional states proposing cuts to reimbursement to many types of providers.”
Medication Therapy Management (MTM) is an important component in reducing health care costs in the Obama health care reform bill.
“The success of pharmacists providing counseling has been clearly demonstrated as MTM savings has been shown to far exceed program costs and to save the health care system tens of billions of dollars,” said Kelly.
This was demonstrated by a New England Healthcare Institute study that indicated poor medication adherence cost up to $290 billion a year in the health care system.
NACDS is supporting the Medication Therapy Management Empowerment Act that advances MTM services by amending Part D in Medicare.
“One of the main barriers is by statute the individual beneficiary has to have multiple chronic conditions before counseling can be provided. This particular legislation would state that if you have a single chronic condition then you are able to access these very important services,” said Kelly.