Tuesday, March 08, 2011

The Crazy Battle to Outlaw Mail Pharmacies

Here’s the newest anti-mail strategy from pharmacy owners: If you can’t beat mail, just make it illegal in your state!

Friday’s New York Times describes anti-mail legislation in Pennsylvania and New York that is being marketed under the banner of “freedom of choice.” See Pharmacists Fight the Rise of Mail Order, which features comments from yours truly.

In reality, these bills would prohibit just about every tool available to plan sponsors and governments to manage dispensing and distribution costs. If the law passes, say goodbye to differential co-payments for mail-order pharmacies, preferred networks, and just about anything else that could possibly make a retail store-based pharmacy compete for a payer's business.

In addition to raising costs for payers, the bills would hurt Pharmacy Benefit Managers (PBMs) and at least two major pharmacy chains. Manufacturers of specialty pharmaceuticals should care because your limited distribution strategy would become illegal in Pennsylvania. See my comments below for the unpleasant details.

How are these bills anything more than a self-interested and anti-competitive attempt by pharmacy owners to protect their profits at the expense of taxpayers and employers?

THE KEYSTONE KOPS STATE

Let’s take a quick look at Pennsylvania Senate Bill No. 201, which was recently introduced here in my home state. I’m not a lawyer, but my plain English review of this bill suggests that almost every current commercial benefit design would be invalid if it became law.

Of course, mandatory mail-order is out. But so are preferred networks such as Restat’s Align, Walmart's (NYSE:WMT) Access Based Network Design, and even the Humana Walmart Preferred Rx Plan in Medicare Part D.

What else? Lower co-payments for mail-order would be gone. (Sorry, consumers!) Express Scripts (NYSE:ESRX) can say goodbye to consumerology and the use of behavioral economics in Pennsylvania. CVS Caremark’s (NYSE:CVS) Maintenance Choice program would also have to end in the state.

The bill also brings “any willing provider” to commercial plans, which will open up specialty networks just like Medicare Part D and Medicaid. See Who Pays For Specialty Drugs? (And Why It Matters) for an explanation of how this happens.

I wonder if NACDS will lobby against this bill because it would devastate the retail strategies of two large association members?

NOT COMMON WEALTH

Naturally, the Pennsylvania legislation is very careful not to require that a retail pharmacy offer the same discounts to payers as a mail pharmacy. Thus, it dodges the uncomfortable reality for retail pharmacies that mail pharmacies charge less to plan sponsors for filling a prescription than a retail pharmacy.

The bill also goes far beyond the retail-friendly “level playing field requirements” within Medicare Part D by prohibiting anything that limits the “right” of a consumer to choose any pharmacy, regardless of cost to the payer.

Of course, this "right" ignores the fact that consumers pay very little out of their own pocket. (See Who Paid for Prescription Drugs in 2009?)

If you ask someone else—such as your employer or the American taxpayer—to pay for your drugs, why shouldn't they want you to save them some money? George Van Antwerp expands on this point in Who Should Decide Rx Location – Payer Of Course.

I’m personally appalled at this brazen legislative overreach. It is unnecessary and wasteful to drive up health-care costs by protecting the profits of local pharmacists.

So, what do you think? (Shields up! Fire away!)

20 comments:

  1. “What we are asking is to make mail order an option, not mandatory,” “We are not opposed to mail order as a convenience to the patients. But right now, they don’t have a choice.”
    This is quote from the article.

    No one is mandating retail only; no one is saying that differential co-pay should go away only that they are offered at both retail and mail order equally and for a 90 day supply.

    We have an online pharmacy service, when cost to payer and cost to consumer are equal, which they are thru our model, less than 5% of consumers choose mail order, usually retirees who moved out of state. That is now based on ~1,000,000 claims per month.......... the vast majority of these clients we obtained from previous mail order only accounts. Real world numbers not a meta-analysis. Times they are changing

    ReplyDelete
  2. http://www.legis.nd.gov/assembly/62-2011/documents/11-0576-02000.pdf

    Freedom of choice for pharmacy services was expanded to include all health care services.

    ReplyDelete
  3. Aren't the patients the ones who are ultimately footing the bill? They are the ones who have been paying through wage deductions and monthly premiums their entire lives. You say the payer should be able to choose, the patients are the payers, so why can't they choose where to go?

    ReplyDelete
  4. Great post—one quick point: Medicare Part D preempts state law with respect to benefits and networks and thus the state cannot invalidate Part D networks.

    ReplyDelete
  5. This had to be edited:
    ftp://ftp.cga.ct.gov/2011/fc/2011SB-00013-R000010-FC.htm

    General Assembly
    File No. 10
    January Session, 2011
    Senate Bill No. 13


    Senate, February 22, 2011

    The Committee on Insurance and Real Estate reported through SEN. CRISCO of the 17th Dist., Chairperson of the Committee on the part of the Senate, that the bill ought to pass.

    AN ACT CONCERNING COPAYMENTS FOR DRUGS.

    Be it enacted by the Senate and House of Representatives in General Assembly convened:

    Section 1. Section 38a-510 of the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2012):

    [(a)] No health insurance policy issued on an individual basis, whether issued by an insurance company, a hospital service corporation, a medical service corporation or a health care center, [which] that provides coverage for prescription drugs may: [require]

    (1) Require any person covered under such policy to obtain prescription drugs from a mail order pharmacy as a condition of obtaining benefits for such drugs;

    (2) Impose any copayment, reimbursement amount, number of days of a drug supply for which reimbursement is allowed under such policy or any other payment or condition for prescription drugs obtained from a retail pharmacy that is more restrictive than that imposed on prescription drugs obtained from a mail order pharmacy; or

    (3) Impose a monetary advantage or penalty under such policy that could affect an insured's choice of pharmacies, including, but not limited to, a higher copayment, a reduction in reimbursement or promotion of one participating pharmacy over another by such methods.

    [(b) The provisions of this section shall apply to any such policy delivered, issued for delivery, renewed, amended or continued in this state on or after July 1, 2005.]

    Sec. 2. Section 38a-544 of the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2012):

    [(a)] No medical benefits contract on a group basis, whether issued by an insurance company, a hospital service corporation, a medical service corporation or a health care center, [which] that provides coverage for prescription drugs may: [require]

    (1) Require any person covered under such contract to obtain prescription drugs from a mail order pharmacy as a condition of obtaining benefits for such drugs;

    (2) Impose any copayment, reimbursement amount, number of days of a drug supply for which reimbursement is allowed under such contract or any other payment or condition for prescription drugs obtained from a retail pharmacy that is more restrictive than that imposed on prescription drugs obtained from a mail order pharmacy; or

    (3) Impose a monetary advantage or penalty under such contract that could affect an insured's choice of pharmacies, including, but not limited to, a higher copayment, a reduction in reimbursement or promotion of one participating pharmacy over another by such methods.

    [(b) The provisions of this section shall apply to any such medical benefits contract delivered, issued for delivery or renewed in this state on or after July 1, 1989.]



    This act shall take effect as follows and shall amend the following sections:

    Section 1
    January 1, 2012
    38a-510

    Sec. 2
    January 1, 2012
    38a-544



    INS
    Joint Favorable

    ReplyDelete
  6. The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

    OFA Fiscal Note


    State Impact: None

    Municipal Impact:

    Municipalities
    Effect
    FY 12 $
    FY 13 $

    Various Municipalities
    STATE MANDATE - Cost
    Potential
    Potential



    Explanation

    This bill results in no fiscal impact to the state because the current state employee health plan and pharmacy benefit manager permit plan members to fill a 90-day prescription at either their local retail pharmacy or by mail for the same copayment.

    The bill's provisions may increase costs to certain fully insured municipal plans which offer discounted copayments for prescriptions filled through the mail order pharmacy in comparison to the local retail pharmacy.

    The Municipal Employees Health Insurance Plan, (MEHIP) administered by the State Comptroller, is one example of a health plan which currently differentiates between prescription vendors, offering a 3-month mail-order supply for a reduced copayment; 30 percent less than a retail pharmacy. In cases where plan sponsors are able to secure more favorable pricing for prescriptions dispensed by mail rather than through retail, this mandate would prohibit plans from offering lower copayments to incentivize greater participant utilization of the lower cost option. Under current law, plan members cannot be required to obtain their prescription drugs from a mail order pharmacy as a condition of the benefit.

    The coverage requirements of the bill may result in increased premium costs when municipalities enter into new health insurance contracts if those plans are unable to control pharmacy costs by obtaining favorable pricing of prescriptions. It should be noted that employers currently are not required to provide a pharmacy benefit as part of their health coverage plan. Due to federal law, municipalities with self-insured health plans are exempt from state health insurance benefit mandates.

    The Out Years

    Many municipal health plans are recognized as “grandfathered” health plans under the Patient Protection and Affordability Act (PPACA)1. It is unclear what effect the adoption of health mandates will have on the grandfathered status of certain municipal plans PPACA2.

    Sources: Office of the State Comptroller, Municipal Employees Health Insurance Plan (MEHIP) Schedule of Benefits, State Employee Health Plan Subscriber Agreement.

    OLR Bill Analysis

    ReplyDelete
  7. The explanation above regarding self-insured plans is exactly my point:

    The bill's provisions may increase costs to certain fully insured municipal plans which offer discounted copayments for prescriptions filled through the mail order pharmacy in comparison to the local retail pharmacy.

    I also note that the CT bill is much less intrusive than the PA bill.

    Adam

    ReplyDelete
  8. My employer's plan has a ludicrously high copay for mail order 90 day generic fills. There are only a couple of cases (recently off-patent drugs) in which it is not cheaper for me to fill generic 90 day scripts locally. The plan I was in previously provided real incentive to go generic - 90 day fills were $10 and brands had a $200 copay ceiling. All scripts could be filled locally. PBMs have outlived their usefulness.

    ReplyDelete
  9. I think that I see a loophole in these bills. PBMs set reimbursement prices along with co-pay prices. All that they have to do is decrease the reimbursement amount to retail pharmacies to at or below cost. Do this for awhile and put your competitor out of business.

    ReplyDelete
  10. Same kind of “take away all tools” anti-PBM legislation is pending here in Missouri, too – the home state of Express Scripts! It’s being pushed by the “community pharmacists” group.

    ReplyDelete
  11. Adam, I am a community pharmacy owner. We know the PBMs offer a lower copay to the patient for a 90 day supply of medication at mail order than is offered the patient at the local pharmacy. We also know the PBMs charge the employer or the insured group a larger price for the cost in excess of the copay than they pay the local comunity pharmacist. The patient is getting a better price but the actual cost of the drug, on average, is higher through mail order.

    ReplyDelete
  12. So if Mail is order is such a great option for the consumer, costs are reduced to the payer (i.e. the patient), and most patients prefer the convenience of getting their medicine through the mail, then why do pbm's have to force people into mandatory mail order! Give patients and healthcare providers back the choice that they have earned. PBM's have more control over what medications a patient takes, than the healthcare providers whom have personal relationships with them. I guess preserving profits is more important, than preserving health.

    Adam, you should ask some of these community pharmacy owners that you believe to be money hungry how many times they have provided a much needed medication to a patient at a financial loss (sometimes substantially below cost) because a pbm did not adequately re-imburse the pharmacy, and denied any request to consider a price increase. It's certainly hard to pad your pockets as you believe we do, when we are forced to hand out several prescriptions a day only to receive a check 2 months later that paid us less than what we had to pay for the medicine. God forbid they actually ever pay us for the counseling and professional services we provide that helps the patient properly take their medicine and potentially avoid hospital stays! If you don't believe that community pharmacists provide an invaluable service to healthcare, then you have never been in the right pharmacy!

    ReplyDelete
  13. Why do so many of the comments in this article confuse Payer for Patient? How much of total costs do a patient's premium and copay add up to?

    It seems those who insist that the patient is the payor have flawed understanding of the US healthcare model in general.

    ReplyDelete
  14. I've been reading this blog for only a few months but Adam frequently rings the "mail order saves healthcare dollars" bell. I gather that part of this perspective has to do with previous heavy brand use & community pharmacies without concurrent "contracts" or kick-backs to keep acquisition costs down. Whether spurred by mail order or not, independents now use generics heavily. Some of his perspective no doubt results from research he has seen: I respect his thorough and knowledgeable approach to things. But. Most of the data I have seen showing $$ saved by mail order has been prepared from within the mail order world, which differs from what is found in actual patients' homes. As an example, we allow patients to bring in unused meds for disposal. In 2 such recent drop offs of Asacol & Buspar, we have disposed of over $3,000 worth of unused medication. That'd be our cost, not AWP. The Asacol was repeatedly mailed even after patient decease. This flagrant waste is invisible from the mail order side, so won't show in their stats or their analyses. Another thing that won't show is the amount of time and work our pharmacy has put in to resolve issues patients have due to mail order. I sure wish I could rely on my competitors to clean up my messes behind me without charging me for the labor. Mail order creates what are sometimes called "hidden costs" that don't seem to be addressed by Adam or rationally addressed by the rabid opponents to mail order either. Further, I know lives have been saved by community pharmacists catching or correcting a problem that was not visible to the mail order company. One elderly woman here was mixing her meds and double & triple dosing herself. If I had not intervened, where would she end up? Can we measure that somehow too?
    My basic points: 1. Straight dollars are 'wasted' by mail order that don't show in their stats.
    2. Hidden costs are handled by brick & mortar pharmacies who have to clean up or correct problems resulting from mail order.
    3. Patient safety & well being 'rescues' take place in community pharmacies on the heels of mail order service.

    ReplyDelete
  15. Correct me if I'm wrong, but aren't "hidden costs" not passed on to the consumer irrelevent? If you are allowing anyone to bring in unused meds for disposal, then you are providing a "value added" service for your customers - Good for you!!
    Competetive markets work everytime they are tried, and shame on anyone trying to thwart the free market built on competition. This sounds like another case of individuals that can't (or won't) compete trying to legislate prosperity for their business rather than actually providing what the consumer wants... great service and lower costs.

    ReplyDelete
  16. Joseph Somerville, RPhApril 05, 2011

    Some of the language in this Bill obviously won'y fly (e.g. - the insurance company can't use dispensed prescription information to advertise their services to consumers/patients; while it is annoying to get a letter from my insurance extolling the virtues of mail order every time I fill a script at a retail pharmacy, I can't imagine how it could be banned).

    However, the intent of this Bill is fairly simple: allow pharmacy consumers equal access to retail pharmacies and mail order pharmacies without imposing sanctions against them (higher co-pays, more restrictive formularies, refill limitations) for using retail.

    It also would seek to prohibit 'closed' systems. The example the author used was Medicare [D] plans, some organizations (Wal-Mart, for example) have sought to create a Medicare D plan that effectively restricts the participant to use of pharmacies within that chain only. The Medicare landscape is confusing enough for the elderly, without the addition of overly restrictive plans that predetermine the outlet at which they can fill their prescriptions.

    In the end, it is all about choice. Most of us contribute in some fashion to the cost of our healthcare; is it fair to be told where you can, or cannot, obtain prescription services? Medical HMOs and PPOs have existed for quite a while now and restrict members to participating institutions but you still have a choice; you are not restricted to a single doctor, or hospital, in another state, 400 miles away.

    The author has neglected to mention one huge benefit that mandatory mail order prescription services do provide: the lower overhead and reduced costs associated with filling prescriptions in a central location significantly reward the CEOs, Boards, and shareholders of the big companies with windfall profits, salaries and bonuses. The savings garnered through this practice generally don't result in lower co-pays or premiums for the participants.

    Retail pharmacies are in your neighborhood, providing personal service to you and your family; not an anonymous voice on a phone 400 miles away, explaining why your mail order prescription takes 10 days to get to your door.

    ReplyDelete
  17. It is quite obvious from the author's tone of the article that he places very little value at all on community Pharmacists. The average RPh in Tx makes $115-$120K working for a chain. The current level of reimbursement from some insurance carriers (for example not even covering the cost of the medication itself and often times not adequately covering a Pharmacy's cost to dispense ~ $10 in the USA)makes it impossible for rural independent Pharmacies to accept their contracts (AWP minus %15 or more) as they are not able to purchase medications cheap enough to perhaps break even. I would implore Mr Fein to attend Rph School as I am sure that we could muster enough in donations to pay for his 6 figure and 6 years worth of education.........

    ReplyDelete
  18. “What we are asking is to make mail order an option, not mandatory,” “We are not opposed to mail order as a convenience to the patients. But right now, they don’t have a choice.”
    This is quote from the article.

    No one is mandating retail only; no one is saying that differential co-pay should go away only that they are offered at both retail and mail order equally and for a 90 day supply.

    We have an online pharmacy service, when cost to payer and cost to consumer are equal, which they are thru our model, less than 5% of consumers choose mail order, usually retirees who moved out of state. That is now based on ~1,000,000 claims per month.......... the vast majority of these clients we obtained from previous mail order only accounts. Real world numbers not a meta-analysis. Times they are changing

    ReplyDelete
  19. I've been reading this blog for only a few months but Adam frequently rings the "mail order saves healthcare dollars" bell. I gather that part of this perspective has to do with previous heavy brand use & community pharmacies without concurrent "contracts" or kick-backs to keep acquisition costs down. Whether spurred by mail order or not, independents now use generics heavily. Some of his perspective no doubt results from research he has seen: I respect his thorough and knowledgeable approach to things. But. Most of the data I have seen showing $$ saved by mail order has been prepared from within the mail order world, which differs from what is found in actual patients' homes. As an example, we allow patients to bring in unused meds for disposal. In 2 such recent drop offs of Asacol & Buspar, we have disposed of over $3,000 worth of unused medication. That'd be our cost, not AWP. The Asacol was repeatedly mailed even after patient decease. This flagrant waste is invisible from the mail order side, so won't show in their stats or their analyses. Another thing that won't show is the amount of time and work our pharmacy has put in to resolve issues patients have due to mail order. I sure wish I could rely on my competitors to clean up my messes behind me without charging me for the labor. Mail order creates what are sometimes called "hidden costs" that don't seem to be addressed by Adam or rationally addressed by the rabid opponents to mail order either. Further, I know lives have been saved by community pharmacists catching or correcting a problem that was not visible to the mail order company. One elderly woman here was mixing her meds and double & triple dosing herself. If I had not intervened, where would she end up? Can we measure that somehow too?
    My basic points: 1. Straight dollars are 'wasted' by mail order that don't show in their stats.
    2. Hidden costs are handled by brick & mortar pharmacies who have to clean up or correct problems resulting from mail order.
    3. Patient safety & well being 'rescues' take place in community pharmacies on the heels of mail order service.

    ReplyDelete
  20. AnonymousJune 29, 2011

    Same kind of “take away all tools” anti-PBM legislation is pending here in Missouri, too – the home state of Express Scripts! It’s being pushed by the “community pharmacists” group.

    ReplyDelete

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