Reid A. Paul, Senior Editor, joined <i>Drug Topics</i> in 2006. He covers technology and community pharmacies. He has six years' trade publishing experience covering the foodservice, hotel, and retail industries.

Reid Paul

Articles

Medicare Part D beneficiaries will see a 7.5% increase in costs in 2009.

Out-of-pocket expenses to rise in 2009 for Medicare Part D

An increasingly diverse collation of groups is pushing hard to increase adoption of electronic prescriptions. The uncommon alliance of pharmacy organizations, pharmacy benefit managers, and consumer organizations is pushing the Centers for Medicare & Medicaid Services, the Drug Enforcement Administration, and federal lawmakers to take steps to increase the use of e-prescriptions. 

The bill stops short of mandating e-prescribing and instead focuses on providing additional incentives for physicians to use the new technology. According to the bill, prescribers could receive a $2,000 bonus to cover start-up costs after reaching a threshold number of e-prescriptions that would be determined by CMS. In addition, physicians would be in line to receive a 1% higher reimbursement for using e-prescriptions. 

For now the focus is on getting prescribers on board. "We support any incentives the government can provide," said Kevin Nicholson, VP of pharmacy regulatory affairs at the National Association of Chain Drug Stores. "E-prescribing has the potential to provide so many benefits. It streamlines the prescribing process, prevents transcription errors at the pharmacy level, and patients are more compliant," said Nicholson. 

Other groups had been hoping the bill would move from providing incentives to mandating the use of e-prescriptions. The Pharmaceutical Care Management Association has been pushing for legislation to mandate the use of e-prescriptions by running television and print advertisements. In addition, the American Health Information Community, an advisory panel convened by Department of Health & Human Services Secretary Michael Leavitt, has joined the chorus, urging Leavitt to mandate the use of e-prescriptions in the Medicare program. 

The lack of DEA policies regarding e-prescribing of controlled substances (EPCS) is considered a key hurdle to more widespread adoption. Many e-prescription advocates note that doctors are unlikely to adopt the technology wholeheartedly before a system can be put in place that also satisfies DEA requirements. At a December Senate Judiciary Committee hearing, Joseph T. Rannazzisi, deputy assistant administrator of the DEA office of diversion control, assured the committee that DEA was dedicated to issuing e-prescription rules but refused to set a timeline.  

Following the hearing, Senator Sheldon Whitehouse (D, R.I.) wrote a letter co-signed by 18 other Senators urging Attorney General Michael Mukasey to take action. "DEA regulations permitting electronic prescribing have been delayed for years," he insisted. "We urge your prompt attention to this matter, and request that DEA issue regulations for electronic prescriptions for controlled substances as quickly as possible." 

CMS overcame a different hurdle for e-prescribing by taking another step in establishing standards for the technology. CMS recently proposed implementing new standards governing formulary and benefits data and medication history. The move keeps CMS on track to have a final standard ready to be implemented by April 1, 2009, as required by the Medicare Modernization Act.  

The rule has drawn positive responses from e-prescription companies. "When CMS puts a stake in the ground and says we view this standard as ready for prime time, that encourages the industry," said Ken Whittemore, R.Ph., SureScripts' senior VP clinical practice integration. 

New federal leglsation would mandate electronic prescriptions, dividing healthcare providers even the practice gains more acceptance.

Senate looks to boost e-prescribing

Average manufacturer price is dead, or is it? Two months after a Federal District Court Judge granted a temporary restraining order, preventing the Centers for Medicare and Medicaid Services from implementing the new generic drug reimbursement model for Medicaid, the future of the reimbursement plan remains up in the air. Still, while it is unclear how or when the case will be resolved, most pharmacy experts agree that pharmacists will continue to see tightening in prescription drug reimbursement. 

Unfortunately for many pharmacists, while drug reimbursement formulas are becoming more accurate, dispensing fees are not. Even as payors push for greater accuracy in drug cost models, there has been no comparable change in drug dispensing. According to

, a national study conducted by accounting firm Grant Thornton that was commissioned by the Coalition for Community Pharmacy Action, the national average cost of dispensing medications is $10.50 per prescription, even though the average dispensing fee paid by government programs such as Medicaid is closer to $4.50. (See sidebar). 

In 2005, Congress mandated Medicaid change from AWP to AMP in an effort to reduce the budget deficit and rein in spending in the healthcare program. In addition, a group representing unions sued First DataBank, one of the primary publishers of AWP, and the wholesaler McKesson, claiming they willfully manipulated AWP to inflate pharmacy reimbursement. First DataBank had agreed to settle the case and stop publishing AWP data, but in a surprise move Judge Patti Saris has invalidated the settlement. According to sources who attended the hearing, the judge indicated that she was unwilling to allow the elimination of AWP through the settlement. (See "AMP is back from the dead,").  

Opponents remain undeterred. "The marketplace is waking up to how rotten AWP is," argued Alex Sugarman-Brozan, director of the Prescription Access Litigation (PAL) Project, which brought the suit. 

In taking on AMP, pharmacy organizations have been pulling out all the stops: employing public relations, lobbying, and filing a legal suit to ensure they have a place at the table. "Historically pharmacists have gone after Medicaid because they have more influence in politics," argued Kreling. The only question is whether that will be enough. 

Pharmacists have temporarily blocked the Medicaid AMP formula, but a bruising battle still awaits.

BRACING FOR A SHOWDOWN

Seeking to improve security and to update a form that is more than 30 years old, the DEA announced that it has developed a new order form for Schedule I and II controlled substances. DEA proposed a rule that would eliminate the three-sheet carbon copy format and replace it with a single form. Designed to frustrate counterfeiters, the new form will have an embedded watermark of the DEA emblem. Pharmacies will now be required to make a photocopy of the form for their records, which will then display the word "copy" as another security feature. Under the proposed rule, once the new single-sheet form is in use, the current three-part form will be phased out and will no longer be issued by DEA.  

Most pharmacy organizations are still examining the proposed rule to determine its potential impact. The DEA is accepting comments through January 28, 2008. 

The American Medical Association lobbied hard for the rule and was clearly pleased with it in its final form. "The final rule will allow physicians to continue this well-established clinical practice and decrease the likelihood that patients will run out of drugs that provide critical relief from moderate to severe chronic pain," explained Rebecca Patchin, AMA board member in a written statement. Pharmacists also supported the rule, which should not add any additional burdens to pharmacists, according to Stacey Schwartz, senior director of pharmacy affairs at NCPA. 

The DEA also took steps to curb drug diversion, revoking the licenses of two Cardinal Health distribution centers and a pharmacy in Burlington, Wash. The DEA announced that it had suspended the license of Cardinal's Auburn, Wash., distribution facility after uncovering significant diversion by the Burlington-based Horen's Drug Store. According to the DEA, Horen's Drug purchased 605,000 dosage units of hydrocodone from Cardinal Health's Auburn facility between March 1 and September 30, 2007.   

Less than a week later, the DEA suspended the license of a second Cardinal distribution center. According to a DEA statement, the Lakeland center distributed over eight million dosage units of hydrocodone products between August 2005 and October 2007 to suspected Internet pharmacies. The DEA also signaled that it will be paying increased attention to the role distributors play in supplying Internet pharmacies. "The Internet is now the main conduit in Florida through which prescription drugs are diverted for abuse," Mark R. Trouville, Special Agent in Charge of the DEA's Miami Field Division, said. "DEA is not only holding doctors and pharmacies accountable, but pharmaceutical distributors as well."  

Another wholesaler also got into trouble. In April the DEA suspended the license of an AmerisourceBergen Distribution Center in Orlando, Fla. The license was reinstated in August following the implementation of a new order monitoring system at the center.  

Cardinal Health insisted that it would utilize its network of 25 distribution centers nationwide to ensure that pharmacies do not experience an interruption of service while it works to meet DEA demands. The company insists that it is implementing near-and long-term changes to guard against distribution to pharmacies engaged in diversion. 

"Anything less than best-in-class controls for the pharmaceutical supply chain is unacceptable," insisted R. Kerry Clark, Cardinal chairman and CEO. "We will do what it takes to address this execution issue with changes to our processes and systems. The security of the pharmaceutical supply chain is core to our business and we are committed to the highest standards as we work with the DEA to resolve this matter."  

DEA issues new rules governing schedule II narcotics prescriptions and forms and suspends the license for two Cardinal Healthcare distrubtion centers.

DEA ends year with a flurry of activity

Community pharmacists can expect problems on their hands over average manufacturer price (AMP) at the start of the year, followed by the need for tamper-resistant Rx pads in April. For hospital R.Ph.s, they have to guard against hospital-acquired infections, since Medicare won't be paying for the care associated with HAIs next year. Both community and hospital pharmacists can look forward to a knockdown, drag-out Presidential race in November that could determine how health care is provided in the future. 

Optimism reigns for community pharmacists

How optimistic are pharmacists? When asked what kind of business year they were expecting for 2008, 80% of the 460 respondents indicated that it was good, very good, or excellent. That figure represents a 15% jump over last year's figures, reversing a five-year downward trend. Not since 2002 have R.Ph.s expressed that level of optimism. Interestingly, while only 65% of pharmacists surveyed last year expected a good, very good, or excellent year for 2007, in the current survey, 74% reported that this year will actually be good or very good, and another 10% expect this to be an excellent year. 

Undoubtedly higher Rx volume plays an important role in the overall optimism and pharmacists are expecting a healthy growth in sales for next year. More than half of all respondents-59% in fact-predict that sales will increase in 2008 by an average of 10%. In addition, 67% of respondents predict that operating expenses will rise. 

The optimism and improved profits came despite a sense of increased competition. While last year Medicare Part D topped the list of worries, this year's focus turned to increased competition from big box and supermarket pharmacies offering discounted generics. When Kmart first introduced its discounted generic plan last year-followed shortly thereafter by Wal-Mart's own plan-it set in motion an increasingly competitive market, with chains and big box pharmacies offering steeply discounted and even free generic medications.  

Although cash customers make up only 10% of the business for most pharmacies, it is clear that the discounted generic movement is having an impact. Respondents pegged the discounted generics as their top concern, with 33% of respondents indicating that it was a negative factor impacting their company, followed by Medicare Part D (32%) and the move of some cough and cold medicines behind the counter (19%).  

Now that Medicare Part D has moved out of the initial shock-and-awe phase, pharmacies are beginning to get a better grip on its true impact. Nevertheless, Part D was the top news item for 2007, with 28% of respondents selecting it as the top story, followed by the release of the AMP rule (17%), the drug error TV exposé on "20/20" (10%), and the growth of in-store clinics (9%).  

While the Presidential election is less than a year away and will certainly be a top news story for 2008, many pharmacists are ambivalent about how important it will be for pharmacists. Forty-three percent of respondents indicated that they did not expect the new President to have an impact, while 25% said that they did. The remaining 31% were unsure of the impact. Still some respondents hoped that "the elections will focus on the healthcare issues and, thus, will impact the delivery of health care." 

Respondents were more comfortable commenting on the importance of specific government programs. When asked specifically about how Part D was impacting their business, 28% of respondents indicated it had a positive impact on their pharmacy, while 37% felt it had a negative impact. The remaining 35% did not know what impact the program has had on their pharmacy. In comparison, last year, 55% of respondents felt the impact was negative, while only 24% saw it as a positive. As one respondent this year noted, "Part D had a dual effect. First, it created severe problems with reduced cash flow and lower profit margins, but it increased the volume of business and helped many patients take medications that they previously were not taking because of cost. Many patients qualified for additional help with their prescriptions and had no help previously." 

One of the promising aspects of the Part D program has been the increased opportunity to deliver medication therapy management services to patients. 

' survey found that 34% of community pharmacists reported they are providing MTM services, although only 18% were actually reimbursed for it.

Among the questions asked were what is expected for sales, salaries, and staffing for 2008.

FAIR OR FOUL?

 Throughout 2007, this column has appeared in each issue as part of our sesquicentennial celebration, and tied with the column is a contest. Monthly questions based on this column have been posted on the 

 anniversary microsite. Contestants are eligible to win a Visa gift card of $250. This is the last installment of this column. For details about the contest, which ends at the end of this month, go to 

In 1942 at least, Christmas did come twice. The front page of the Oct. 5, 1942, 

, which was meant to be posted in pharmacy windows, urged customers: "Don't let your boy down this Christmas." As the war effort was moving into full gear, the poster reminded customers of the Army and Navy rules regarding shipments to soldiers serving overseas. In an editorial, the magazine urged pharmacists to "make a determined effort to stir up interest in Christmas mail to the boys in uniform wherever they might be." 

Christmas slows rises in importance for pharmacies during the 20th century.