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New Day for Reform

Barack Obama's impending presidency and the heftier Democratic majorities in both houses of Congress create not only important new opportunities, but also potential challenges for supermarket pharmacy. The possible downside is the concern by some that the new administration will tilt toward tighter and more burdensome regulation of the industry, as well as higher taxes and labor policies, all of which

Barack Obama's impending presidency and the heftier Democratic majorities in both houses of Congress create not only important new opportunities, but also potential challenges for supermarket pharmacy.

The possible downside is the concern by some that the new administration will tilt toward tighter and more burdensome regulation of the industry, as well as higher taxes and labor policies, all of which could drive up costs for pharmacies and other businesses.

But for retail pharmacy, those challenges could be more than outweighed by the prospect of meaningful reform of the nation's health care system, expected to be led by Tom Daschle, who began the confirmation process last week to become Health and Human Services secretary.

For their part, pharmacy's Washington representatives are openly optimistic about the new administration and Congress.

Food Marketing Institute President and Chief Executive Office Leslie Sarasin called Obama's election victory a “historic” event that “signals our need to welcome new opportunities and forums” for addressing the nation's problems.

Officials at the National Association of Chain Drug Stores expressed similar sentiments, vowing to work with the new administration “to enhance the quality, affordability and accessibility” of health care, while representatives of the nation's independent pharmacies hailed Obama's victory as “exciting.”

Calling the president-elect “a strong candidate for health care reform,” National Community Pharmacists Association Executive Vice President Bruce Roberts said his group “is especially excited to participate in the health care reform debate that will play out in the days and months ahead.”

Behind organized pharmacy's enthusiasm for the upcoming health reform initiative is the industry's experience during the last serious effort by Washington to recalibrate health care during the Clinton administration.

Even before Obama's election, representatives from FMI, NACDS and NCPA joined with leaders from other pharmacy groups to hammer out a series of “Pharmacy Principles for Healthcare Reform” to be used in fashioning legislation during the year ahead.

Those principles specifically call for coverage of not only prescription drugs, but also a variety of pharmacist-provided patient care services, including immunizations, medication therapy management services and medication therapy reviews.

Additionally, pharmacy leaders are seeking assurances that pharmacists will receive “appropriate reimbursement” for these services, as well as for their dispensing activities; that patients will have freedom to use the pharmacy of their choice; and that there will be no “artificial impediments or barriers” to the dispensing of “the most appropriate cost-effective” medications, including generic drugs and biologicals.

Perhaps the most far-reaching change sought by the pharmacy groups involves the creation of an “interoperable electronic health record system” that would link community pharmacists with hospitals and physicians and would give pharmacies “electronic access to critical patient health care information, including diagnosis and laboratory values.”

How much of pharmacy's health reform wish list will make it into the final legislation is far from certain, but the timing of the administration's new health reform initiative could work to the industry's advantage.

Although Obama has vowed not to allow the deepening economic crisis to sideline his health reform drive, congressional leaders who will be shaping the administration's proposals into legislation admit that a delay may be inevitable.

House Ways and Means Health Subcommittee Chairman Pete Stark, D-Calif., predicts that Congress won't get around to serious action on health care reform legislation before 2010 — a time frame that may give pharmacy government affairs specialists additional time to iron out wrinkles in the plan, such as reimbursement ceilings for prescription drug providers.

For his part, the president-elect has shown a clear willingness to address the concerns of pharmacy practitioners. While in the Senate, Obama not only supported several pharmacy-backed bills to require prompt reimbursement by state Medicaid drug programs, but also helped to overturn President Bush's veto of Medicare improvements that were championed by pharmacy.

Moreover, Obama has already endorsed at least some of the key health reform objectives supported by organized pharmacy. In a letter to NCPA leaders last fall, then-candidate Obama praised pharmacists for their key role “in the development and implementation of medication therapy management, which has dramatically improved quality and reduced costs.” Obama said his health reform plan “will build and expand on these and other initiatives, in partnership with community pharmacists.”

If confirmed, Daschle will be responsible for fleshing out Obama's proposal and exorcising the inevitable devils from the details.

One of those details still up in the air involves Obama's plan to reduce overall health care expenses by using the government's muscle to lower prescription drug costs. Revisions to the Medicare Part D drug program appear to be a likely starting point — Democrats have long argued for ceilings on prices charged by pharmaceutical manufacturers under that program — but it's not clear whether pharmacies will be asked to share in the cost-containment efforts.

As one NACDS staffer put it, “political momentum can build behind counterproductive policies at any time.”


Beyond the health care reform area are several other serious questions looming for pharmacy in Washington:

  • Obama's pledge to address the economic crisis, provide access to health care for 45 million uninsured Americans and reduce taxes for middle-income families will almost certainly require tax increases for pharmacies along with other businesses.

  • Congressional Democrats, as well as the president, will be under pressure from organized labor for regulatory and legislative changes that could increase pharmacy payroll costs sharply. In addition to indexing the national minimum wage to provide automatic annual pay increases, union officials will be pushing for new rules allowing them to bypass current requirements for secret balloting in union representation elections.

  • New leadership chosen by Obama to run Washington's alphabet soup of regulatory agencies will almost certainly reverse the Bush administration's often laissez-faire approach to rulemaking and leave pharmacies and other businesses facing new regulations covering everything from environmental issues to product safety requirements.

  • The most dramatic regulatory changes undertaken by the new administration are likely to occur at the Food and Drug Administration. Congressional Democrats are already calling for a top-to-bottom housecleaning at FDA, an agency many of them consider to be far too chummy with pharmaceutical manufacturers and other regulated industries.

For pharmacy, the result could be a further slowdown in the agency's already lead-footed new-drug approval process. FDA failed to meet the statutory deadlines for reviewing the safety of 75% of the new drugs approved during 2008, and there is every indication that the new administration will press for an even more cautious drug approval strategy this year.

Another concern for some pharmacists is that Obama may reverse federal “conscience clause” rules allowing pro-life pharmacists to refuse to fill prescriptions for contraceptives. The controversial rules, issued by President Bush late last year and scheduled to take effect just two days before Obama's inauguration, reinforce laws already in force in a number of states that empower pharmacists to decline to dispense drugs that conflict with their ethical or religious beliefs.

Although Obama had not announced plans to rescind the new federal rules as of last week, the new president does intend to review and reconsider all “eleventh-hour regulations” issued during the closing weeks of the Bush administration.

Community pharmacy groups will be working to keep some Bush policies, seeking to convince the Obama White House to build on a number of policies embraced by the previous administration, including the encouragement of electronic prescribing; a more streamlined approval process for generic drugs and biologicals; and a continued crackdown on rogue Internet pharmacies.

Those same pharmacy leaders are also hoping that the incoming Obama regulatory team will reverse course on some particularly prickly rules adopted by their predecessors.

Case in point: the Drug Enforcement Administration's proposed new rules on electronic prescriptions for controlled substances — a regulation that FMI Pharmacy Services Vice President Catherine Polley said would impose “significant burdens and costs on prescribers and pharmacists without adding apparent benefit” to DEA's diversion control efforts.

Among other things, Polley has asked DEA to drop a proposal that would force pharmacies to undertake “unprecedented” real-time DEA registration number checks for controlled substance e-prescriptions, and to reconsider plans requiring costly new outside third-party audits of each pharmacy's e-prescribing system.

On another regulatory front, lobbyists for the nation's chain and independent pharmacies will be looking forward to top-echelon changes at the Centers for Medicare and Medicaid Services that may resolve their legal skirmishes with the agency over a controversial “Average Manufacturer Price” rule that would have produced sharp reductions in pharmacy Medicaid reimbursement.

Lawyers for NACDS and NCPA successfully obtained a preliminary injunction halting the CMS rule last year, but the legal and regulatory battling has continued strong into 2009.