August 25, 2009

Texas Pharmacy Business Council is an organization of American Pharmacies and the Academy of Independent Pharmacists-Texas.
www.TxRxCouncil.org

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	Texas legislation success list
REGULATION OF Rx DISCOUNT CARDS PBM TRANSPARENCY IN STATE CONTRACTS MAIL ORDER PARITY

Be on alert!
AWP rollback equivalents ignored, plans using WAC-based formula

The National Community Pharmacists Association reports encouraging signs from the First DataBank AWP class action settlement, and that many PBMs plan to adopt policies that will not cause pharmacies' current average wholesale price-based reimbursements to be reduced. NCPA received word that Cigna, Humana, MemberHealth, Medco, and Caremark are all saying they will use equivalency formulas to adjust for any rollback in AWP.

However, we are hearing from Texas pharmacists who are reporting that Humana is using a WAC-based formula that slashes reimbursement.

Please e-mail or fax (512.992.1391) copies of letters from PBMs or health plans about changes in your contracts due to the AWP rollback. We will have them reviewed for legality and honesty. We also caution you about sharing your wholesale invoices with anyone.

Another potential wild card in this situation is the reaction of private third party payers. We don't know whether they are expecting a cut in their bills.

A U.S. District Court-approved settlement calls for a reduction in the markup factor used to calculate AWP for some 1,400 products by national drug code to 1.20 times Wholesale Acquisition Cost from 1.25. First DataBank and Medi-Span, the two publishers of data on the widely used benchmark, say they plan to institute the same rollback factor for an additional 20,000 NDCs not part of the settlement.

Both actions are scheduled to take effect Sept. 26 unless NCPA succeeds in its appeal to block the settlement and send the case back to the lower court. NCPA consistently argues that community pharmacies are innocent bystanders in this long-running legal saga, but stand to suffer more than the alleged conspirators--FDB, Medi-Span, and McKesson.

The same rollbacks will affect state Medicaid reimbursements, and there the situation is varied, fluid, and frankly not as encouraging overall. Some states are indicating they may adopt a WAC-based reimbursement methodology. Other states say they plan to pocket the money. In others still, the issue is unresolved.

NCPA is coordinating with the chains and state executives to arrange a high level meeting with CMS to discuss how harmful the rollback will be to extremely vulnerable patients by squeezing pharmacies. The likely result will reduce access to prescriptions drugs--not just to Medicaid patients, but to entire communities.

There also is the issue of state plan amendments, such as Texas' regarding changes in Medicaid reimbursement levels, waiting for CMS approval.

Thank you, Congressmen Doggett & Hall
Texas congressional delegation urges CMS to approve Texas Medicaid dispensing fee

Rep. Lloyd Doggett (D-25th District) and Rep. Ralph Hall (R-4th District) led an intense effort just before the House recessed for the summer district work period to acquire signatures of the Texas congressional delegation on a letter urging the Centers for Medicaid and Medicare Services to approve the Texas Medicaid dispensing fee in effect since 2007. Despite the furor and debate raging about health care reform, they took the time to address this very important issue to pharmacists and the state of Texas.

As incredulous as it seems, CMS still has not approved the fee increase authorized by the 2007 state legislature. Why is this important? Because the state has been footing the full amount of the increase, it could be forced to revert to the lower reimbursement of $5.14. Today the reimbursement on the "fixed component" is $7.50 per prescription. Will you be able to continue serving your Medicaid patients if you lose that increase?

The Texas Medicaid Vendor Drug Program sent a letter to CMS in August 2007 requesting approval of the increase. In a continued attempt to gain CMS approval, the Texas Health and Human Services Commission directed a study to determine the cost of dispensing Medicaid prescriptions, and submitted it to CMS. The study reported the cost was $9.41, clearly more than the $5.14 rate paid prior to the 2007 increase.

Many discussions have been held with CMS, but it continues to drag its feet on this issue. And that's why Congressmen Doggett and Hall took the action they did.

Thank yous are very powerful. Everyone, no matter who your U.S. Representative is, please call or e-mail Reps. Doggett and Hall to express your gratitude for their sponsoring the letter. It would be a welcome action if you also thanked those who signed the letter. Click here to see who represents you.

All but four signed the letter. We think they may not have had time to sign it before leaving for recess. If you are in one of the following districts, please check in with your congressman and ask him to send an individual letter to the CMS administrator:

Rep. John Culberson (R-7th District)
Rep. Jeb Hensarling (R-5th District)
Rep. Randy Neugebauer (R-19th District)
Rep. Mac Thornberry (R-13th District)

What's in health care reform for independent pharmacy?
Health care reform is extraordinarily complex, and HR 3200, America's Affordable Heath Choices Act of 2009, carries a number of provisions that affect independent pharmacy. Protecting independent pharmacy through this process requires the grassroots activism we are getting pretty good at.

Yes, we're asking you to contact your representative about these issues, perhaps at the same time you contact them to say thank you for signing the Medicaid letter.

Here are four provisions in HR 3200 that require your action. Please use these talking points to personalize messages to your representatives.

1. Medicaid Pharmacy Reimbursement (Section 1741, Payment to Pharmacists)

Independent community pharmacies serve a greater percentage of Medicaid recipients than other pharmacies, and many independents operate pharmacies in rural and urban locations where most Medicaid recipients live. Those patients and pharmacies would be disproportionately affected by inadequate Medicaid reimbursements.
Reimbursement rates, which are determined by the Average Manufacturers Price (AMP), should reflect as closely as possible the prices paid only by retail pharmacies. HR 3200 excludes from the definition of AMP those prices paid for pharmaceuticals that retail pharmacies do not have access to, such as mail order pharmacies and PBM rebates.
HR 3200 also changes the basis of reimbursement from the "lowest AMP" of a multiple-source drug to the "weighted average" AMP of that drug.
The Deficit Reduction Act of 2005 reduced pharmacy reimbursements for generic drugs to 36 percent less than acquisition cost.
The past Congress addressed this problem with legislation that sets the reimbursement rate at 300 percent of the weighted AMP. However, the reimbursement rate included in HR 3200 is less than half of the 300 percent multiplier.
With the current economic environment, 300 percent may not be realistic, but reimbursement for generics at no more than 130 percent of the weighted average AMP, combined with the low dispensing fees paid by states, could limit independent pharmacies' ability to serve Medicaid patients.
This reimbursement rate also could impact generic dispensing, which makes no sense because generic drugs are substantially less expensive than the brand name alternative.

2. Exemptions from Medicare DME accreditation and surety bond requirements

HR 3200 modifies the costly DMEPOS accreditation and surety bond requirements as they apply to pharmacies.
Unless these modifications are enacted by Oct. 1, they will reduce my patients' access to diabetes testing supplies - such as blood glucose test strips and lancets - as well as other noncomplex DMEPOS items, such as crutches and canes.
Please take up these revisions in a separate bill because the modifications go into effect Oct. 1, 2009.
If the requirements as they apply to pharmacies are not changed, the Oct. 1 deadline needs to be extended to give providers more time to complete the accreditation process if they submitted an application before Aug. 1, 2009.

3. Operation of public health insurance plan option and PBM transparency

The public plan option contains transparency requirements to make sure PBMs are serving the best interests of the plan sponsor and its enrollees, rather than the self-serving financial interests of the PBMs.
However, the public plan option lacks specificity on how reimbursement rates for prescription drugs will be determined by the Secretary. It gives no direction to the Secretary in negotiating the contract terms; it gives the Secretary complete discretion. The bill should specify that payments to pharmacies should include reimbursement for the pharmacy's cost of product, as well as a dispensing fee, based on annual cost-of-dispensing surveys.
The bill should include language that clarifies the difference between a pharmacy benefits administrator (PBA) and a pharmacy benefits manager (PBM). In models like state Medicaid programs or the DOD TRICARE program, an "administrator" is used, and all manufacturer rebates are passed through to these programs.
For clarity and financial savings, this bill should specify use of a pharmacy benefit administrator.
The bill should include an 'any willing provider" provision, similar to Medicare Part D and Medicaid,so any pharmacy that is willing to accept the payment rates can participate.

4. Grant program to test new and innovative methods to deliver medication therapy.

The amendment accepted by the House Energy and Commerce Committee establishes a grant program to test new and innovative methods to deliver medication therapy management services by pharmacists, especially in the treatment of chronic medical conditions.
Pharmacists' involvement in the treatment of patients with chronic medical conditions, such as diabetes and heart disease, substantially decreases costs and improves the health of those patients.

As usual, we would be very grateful to receive a brief report from you as to whether you visited with your Congressman by phone or e-mail. If by e-mail, please send us a copy.

PBMs targets of health care reform
Two Democrats are pushing PBM transparency in their versions of health care reform. Their efforts, and those of NCPA's government affairs team, garnered interest from The Wall Street Journal.

The article notes efforts of Rep. Anthony Weiner (D-NY), the lead sponsor of provisions to force PBMs into transparency and accountability, is a member of the House Energy and Commerce Committee. His provisions are included in the committee's version of health care reform passed last month.

Senator Maria Cantwell (D-WA), a member of the Finance Committee, wants her committee's health-care bill to include similar disclosure requirements for PBMs.

Stay tuned!

Richard E. Beck, RPh
Executive Director, Texas Pharmacy Business Council

Texas Pharmacy Business Council
Ensuring patient access to quality pharmacy care services,
the viability of community pharmacy and the pharmacy profession.
1001 Congress Ave., Suite 250, Austin, TX 78701 512.992.1219
Richard E. Beck, RPh, Executive Director
www.TxRxCouncil.org