State legislation seen as key to survival

February 5, 2007

State legislators have emerged as key players in pharmacy. Faced with shrinking margins from Medicare Part D and the specter of bankruptcy from proposed Medicaid reimbursement rates, many pharmacists are pushing their state legislatures to shift the balance.

"Every association has its own priorities, but we are seeing concerted activity in states all across the country," said Hrant Jamgochian, director of state relations for the American Pharmacists Association (APhA). "The new AMP [average manufacturer price] rules for Medicaid, higher dispensing fees, PBM transparency, and medication therapy management-these are themes we are seeing in multiple states."

FPA, like other state associations, is backing APhA's efforts to change AMP rules. Jackson is also taking the battle to the state legislature. Florida is moving its Medicaid program from a fee-for-service model to managed care, Jackson said. Pilot programs that include Fort Lauderdale and Jacksonville will likely restrict pharmacy access. That gives FPA an opening to address economic issues as well as network participation, patient access, and medication therapy management.

The Texas Pharmacy Association (TPA) is working a different angle. Since AMP eliminates promises to slash reimbursement, TPA is asking legislators to boost dispensing fees. Target fees are $10 for brand-name scripts and $15 for generics, said Jim Martin, TPA executive director and CEO (the current Texas Medicaid dispensing fee is $5.14). "We want to provide an incentive for the pharmacist to switch to more generics and bring overall costs down," Martin said. TPA is also pushing legislators to overhaul PBM practices. The immediate goal is community pharmacy parity with mail order.

Financial incentives are pushing patients out of community pharmacies and into mail-order operations, Martin said. Pharmacy is backing legislation to force price and service parity across distribution channels. The initial targets are the Texas state employee and teacher retirement programs. "We have proven that there are no savings and net cost increases in mandatory mail order," Martin said.

California pharmacists are cautious. "The governor has pledged that 2007 will be all about healthcare reform," said CEO Lynn Rolston of the California Pharmacists Association (CPhA). "We have a fair bit of trepidation, given that Part D did not come out well for pharmacists."

Part of the worry revolves around anticipated reimbursement cuts from the move to AMP. CPhA is laying the groundwork for emergency state payments to ease the impact of Medicaid cuts that could reduce reimbursement by 50%.

The association spearheaded a similar program to support pharmacies affected by program shortfalls when Medicare Part D was implemented in January 2006. "We are prepared to seek whatever help is needed to keep patients getting their medications without requiring pharmacies to donate product and services," said CPhA VP of government affairs Kathy Lynch.

New York pharmacists are cautiously optimistic. Newly elected Democratic governor Eliot Spitzer comes to the statehouse with a history of supporting patient rights and healthcare reform. Said Craig Burridge, executive director of the Pharmacists Society of the State of New York, "He understands health care and the lack of regulation of PBMs." Spitzer's first State of the State plan rolled out proposals to allow the state to bargain directly with drug manufacturers to control drug costs. Bills to improve PBM transparency and ban mandatory mail order are expected to pass in 2007, as is a bill to allow pharmacists to administer immunizations.