NCPA urges new payment model for community R.Ph.s

November 5, 2001

NCPA convention wants new reimbursement model for community pharmacies

 

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MAJOR STORIES FOR PHARMACISTS AT DEADLINE

NCPA urges new payment model for community R.Ph.s

In Philadelphia—the cradle of American liberty—the nation's independent pharmacists pledged to battle for their financial freedom. James Martin, who assumed the presidency of the National Community Pharmacists Association at its 103rd annual meeting in that city last month, said NCPA would focus "time and resources on developing the 'perfect' pharmacy reimbursement formula."

The formula would include five key elements of pharmacy practice, said Martin, executive director of the Texas Pharmacy Association. They are product costs, overhead, a base dispensing fee, a professional services fee, and a return on investment.

Underpinning that formula will be a study NCPA and the National Association of Chain Drug Stores have commissioned to determine what it really costs to put a prescription drug on a pharmacy shelf, not just its acquisition price. "What about return goods, outdated merchandise, ordering and inventory costs?" asked Calvin Anthony, who is stepping down after six years as NCPA executive v.p. "All of this should be included in determining the true costs to stock a medicine in a pharmacy."

Anthony was responding in part to a recent government report that said the actual acquisition cost for brand-name drugs was AWP (average wholesale price) minus 22%. "I don't know about you, but I'm still searching to find a community pharmacy that routinely gets those kinds of discounts," said Anthony, the owner of three pharmacies in his native Oklahoma. "My stores sure do not."

The federal report, done by the Office of Inspector General at the Department of Health & Human Services, acknowledged that there are costs beyond acquiring the medicine, which were not measured. They included "the cost to provide professional services other than the dispensing of a prescription for instances such as therapeutic intervention, patient education, and physician consultation and the cost of dispensing, which includes costs for computers, multipart labels, containers, technical staff, transaction fees, Medicaid-specific administrative costs, and general overhead," said the report. NCPA incorporated exact language into a resolution approved by its house of delegates that urged Medicaid and Medicare reformers to include it in their calculations.

Another avenue to financial freedom to explore, said Martin, is through compliance and adherence programs. "I hope that through NCPA we will be able to work with manufacturers to create programs that drive patient compliance," he said. "Let's face it, we can dispense prescriptions all day, but if patients are not compliant, it's all for naught."

A similar theme was struck by John Gans, CEO of the American Pharmaceutical Association, in a speech to the Healthcare Marketing & Communications Council also in Philadelphia. "We need a new reimbursement model," Gans said. He disclosed that APhA is working on compliance and risk management payment modules it plans to unveil at its 150th anniversary annual convention in March.

The movement to find new payment mechanisms reflects concern that already powerful pharmacy benefit managers are gaining additional clout at the expense of community pharmacies. NCPA and NACDS were shut out of the closed-door talks between PBMs and the Bush Administration that led the proposed Medicare-endorsed discount card program. NCPA and NACDS so far have succeeded in their legal efforts to derail it. They also have countered an electronic prescribing initiative offered by PBMs with one of their own, called SureScript.

NCPA sent state pharmacy boards and insurance commissioners model PBM oversight legislation it developed this summer, which has been introduced in 14 state legislatures. NCPA contends that PBMs are hybrid organizations that deal with both health insurance benefits and pharmacy practice. The proposal calls for insurance regulators to oversee PBMs' financial status and pharmacy boards their market content. The house of delegates adopted a resolution directing NCPA to put its weight behind enactment of the model legislation and ensuring that PBMs have a limited role in any Medicare Rx benefit.

The delegates also said the association should review its current uniform opposition to unit-of-use packaging in community pharmacies. To buff the image of independent pharmacy with students, NCPA's independent chain policy committee recommended an NCPA presence at the annual APhA convention. The committee also suggested a volume-based, tiered discount rate for membership dues for staff R.Ph.s of independent chain members to aid in recruiting.

An effort to give non-owner R.Ph.s voting rights in the house of delegates narrowly failed to gain the required two-thirds vote, taking down with it a lengthy but noncontroversial effort to overhaul NCPA's constitution and bylaws.

Michael F. Conlan

 

Mike Conlan. NCPA urges new payment model for community R.Ph.s. Drug Topics 2001;21:13.