Despite letters and phone calls from your state representatives and senators, an intransigent Employees Retirement System has jumped on what they see as their only way to cover a budget shortfall by sticking it to pharmacists once again.

Although ERS is a problem, ERS is mainly Caremark's problem. To that end, American Pharmacies, the major contributing partner in the Texas Pharmacy Business Council, funded the initial legal opinion and related letter to Caremark and ERS. The attorney notified Caremark that "Caremark must compensate the pharmacies in accordance with the pre-settlement AWP rather than the reduced AWP or make the change revenue neutral: this is true even if ERS refuses to reimburse Caremark for the total. Caremark cannot selectively change one factor of the AWP-dependent formula, leave all other factors the same and thereby financially penalize the pharmacies...The failure by Caremark to abide by its contractual obligations will cause enormous financial damage to the member pharmacies."

ERS unabashedly admits they need the money they're taking away from pharmacy. And Caremark acknowledges they are keeping costs revenue-neutral in order to keep current prices in line with the original contracts for all its health plans except ERS.

On the legislative side, it's important for our lawmakers to know ERS is the only health plan in the nation that has not changed its reimbursement formula.

Caremark and ERS knew about the price/reimbursement inequity as far back as Sept. 26, but did not notify participating pharmacies the existing contract would not be honored. Caremark absorbed the 4 percent loss until they transferred the loss to the pharmacies.

Before many pharmacies had a chance to decide whether to try to keep serving their state employees and retirees, they were dropped from the ERS/Caremark contracts because they were members of a pharmacy services administration organization that chose not to continue with the ERS/Caremark contract amendment. Several major chains opted out and then back in. The Good Neighbor Pharmacies network is not participating, although individual pharmacies can contract on their own with Caremark. ERS/Caremark gave Access Health, another PSAO with independent pharmacy members, an extra 31 days to decide whether to stay or go, but denied that extension to anyone else.

A number of really big chains opted out; however, today (Monday) all but one are back in. We can only wonder whether they also received any special consideration.

Some of the independent pharmacies that opted back in sooner than the big chains reported to us that they are unable to process prescriptions for their patients (Monday) because they are "not in the system," despite being told they are by ERS. It has also been reported to us that the big chains' submissions are going through without any trouble. Also, we've received reports from our members that beneficiaries are receiving incorrect information about which pharmacy is or is not participating.

The confusion and poor handling of this situation is stunning in its scope. That's why many state representatives and senators sent letters or called ERS asking that the implementation deadline be extended beyond Nov. 1.

ERS thumbed their noses at these elected officials. I guess they think they can get away with such behavior while the legislature is not in session. One legislator was angrily asked by an executive at ERS, why he was calling when the independents in his district are participating (some had opted out and opted back in). In other words, why should the legislator be concerned that the tax-paying small businesses in his district could be severely harmed by this action while trying to continue to provide state employees with quality health care services?

In a response letter to legislators, ERS claims they are contractually obligated to keep the reimbursement percentage the same. Any contract can be amended when both parties agree, and that is the case with every health plan in the nation except ERS.

[Background: In two separate lawsuits, the top two organizations publishing average wholesale price data and pharmaceutical supplier McKesson Corp. were found guilty of manipulating the AWP. This benchmark is used to set prices for the majority of brand name drugs. As a result, pricing was rolled back by five basis points, from to . The markup over wholesale acquisition cost, WAC, was used to calculate the AWP, reducing the price of most medications by percent.]

Caremark's contract with participating pharmacies was AWP minus percent, plus $ dispensing fee. To maintain revenue neutrality for Caremark, for ERS, for beneficiaries, and for pharmacies, the formula would need to be adjusted to approximately AWP minus percent plus $ . Pharmacies made their original decision to contract with Caremark for the ERS program based not on a percentage; rather, they looked at what that percentage represented.

A little more than a year ago, ERS signed a new pharmacy benefit contract with CVS/Caremark, projecting more than $200 million in savings. Those savings are the result of unrelenting efforts by pharmacy to force ERS to join the enlightened health plans and demand more transparency in their PBM contract.

ERS readily admits those savings also are the result of cuts to pharmacy reimbursements. And now they expect pharmacy, especially those pharmacies that are small businesses, to pay for ERS' poor planning that led to the current significant shortfall in its own health care budget.

Why should only pharmacy be tapped for this loss? Is ERS afraid to admit to its beneficiaries and the legislature that its staff and consultant "experts" aren't so expert after all?

In a scene that could come right out of a Shakespeare farce, ERS executives say the cut to pharmacy is "only 2.2 to 2.8 percent." Gee, I wonder how they would like to take a 2.2 to 2.8 percent cut in their salaries? Since taxes pay their salaries and pharmacies pay taxes, that seems only fair.

Less you think your efforts last week were for naught, we did get excellent support from our elected officials in a very short time span. But we need to continue the effort. Please continue contacting your state representatives and state senators about this. Even if you've spoken to them once, call again to express your outrage over the letter they sent to those legislators who had the opportunity to contact ERS last week.

Legislators can direct their questions to ERS Executive Director Ann Fuelberg at (512) 867-7174 or her e-mail is Ann.Fuelberg@ers.state.tx.us.

Click here to find out who your state representative and senator is, and how to reach him or her. Please let us know who you contacted and their response.

Help us track these issues.We would appreciate knowing whether:

you opted back in and you're showing up on the Web site as being on the plan but cant get prescriptions to go through,
you opted in and are not showing on the Web site as participating, or
you opted out and you're still listed on the Web site as participating.

Many of you have said you are remaining in the Caremark contract because you are counting on us to remedy the problem, and that in the meantime, you do not want to lose your patients. Let me assure you that we are reviewing this issue from all angles and with a variety of solutions in mind.

Stay tuned!