Independent Pharmacists Face Challenges Head on

At NCPA’s 113th Annual Convention & Trade Exposition in Nashville, TN, industry leaders zeroed in on the challenges and opportunities facing independent pharmacy.

Independent pharmacy is at a crossroads, National Community Pharmacists Association (NCPA) officials expressed in a press conference held Tuesday, October 11, 2011. Despite considerable challenges—the impending merger of 2 massive pharmacy benefit managers, competition from mail-order pharmacies, and declining reimbursement rates, to name a few—the association's outlook remains positive.

“Our industry is very resilient, and we continue to view things with a ‘glass half-full,’ optimistic standpoint,” said NCPA executive vice president and chief executive officer, Douglas Hoey, RPh, MBA. To ensure the long-term success of independent pharmacies, however, NCPA is focused on legislative and advocacy initiatives in 3 key areas, which were discussed at length by stakeholders attending the organization's 113th annual meeting:

Medicaid reimbursements

Tighter profit margins may be on the horizon for independents as the Centers for Medicare and Medicaid Services (CMS) implements a new payment model. On September 23, 2011, CMS released the first draft of monthly Average Manufacturer Price (AMP) data and Federal Upper Limits (FULs), the result of revisions to its reimbursement formula for multi-source drugs covered under Medicaid.

Although the new formula has yet to take effect, early analyses of the draft FULs suggest pharmacy reimbursements for generic drugs will fall. Hoey said the association is “very concerned with the initial release of this information, and we’ll be talking more with CMS, sharing our strategy, and asking them to reconsider how they calculate those figures.”

Industry consolidation

NCPA continues to voice its strong opposition to the proposed merger of leading pharmacy benefit managers Medco Health Solutions and Express Scripts. The transaction would result in a firm with “incredible dominance in certain segments of the market,” accounting for 60% of all mail-order prescriptions and more than 50% of all specialty drugs, according to Jennifer Mallon, NCPA General Counsel.

Mallon said the merger also signifies “a significant tipping point” in pharmacies’ ability to negotiate contract terms with PBMs. Many pharmacies would be unable to participate in their networks, effectively cutting off patients’ access to the services independent pharmacies provide. NCPA advocates are currently focused on educating decision makers about what it deems the “significant anticompetitive impact” of the so-called “mega PBM.”

So far, their efforts have been well received. A group of more than 20 state attorneys general recently voiced concerns over the merger, and an investigation by the Federal Trade Commission is underway. “We think that we’re getting a very receptive audience,” said Mallon.

Mail-order pharmacies

Mail-order pharmacies are increasingly seen as a one-size-fits-all solution for curbing prescription drug costs and improving adherence. Dismantling that view is a priority for NCPA President-elect Lonny Wilson, RPh, a pharmacy owner in Oklahoma City, Oklahoma. During his term as NCPA president, Wilson said his goal is to educate payers that mail order is “not cost-effective” compared with 90-day supplies of drugs dispensed in community pharmacies.

As an organization, NCPA is also encouraging members to “tell the story about medication waste” that occurs when mail-order pharmacies continue dispense medications to patients who are no longer taking them. To that end, they have released “Waste Not, Want Not,” a brief presented by NCPA staff to the House Judiciary Committee’s subcommittee on Intellectual Property, Competition, and the Internet. The brief covers examples of mail-order waste that were the basis of a testimony by NCPA member Joe Lech, RPh, at a congressional hearing held September 20, 2011.

“The waste is just egregious and we want the message to get out,” said Hoey.