NY Bill Continues To Stir The Pot – NCPA, FTC

The bill to restrict mail order utilization for pharmacy is not the first attempt, and it won’t be the last attempt by the independents to try to even the playing field with the PBMs through legislation (see comments about KS bill).  If limiting networks (retail, specialty, mail) can lower prices and save consumers and payers money, why shouldn’t they exist?  The payers should have this option in their toolkit.

Here’s the actual text from the bill:

SHALL PERMIT  EACH PARTICIPANT TO FILL ANY MAIL ORDER COVERED PRESCRIPTION, AT  HIS OR HER OPTION, AT ANY MAIL ORDER PHARMACY OR  NETWORK  PARTICIPATING  NON-MAIL  ORDER  RETAIL  PHARMACY  IF THE NETWORK PARTICIPATING NON-MAIL  ORDER RETAIL PHARMACY OFFERS TO ACCEPT A PRICE  THAT  IS  COMPARABLE  TO  THAT  OF THE MAIL ORDER PHARMACY. ANY POLICY WHICH PROVIDES COVERAGE FOR  PRESCRIPTION DRUGS SHALL NOT IMPOSE A CO-PAYMENT FEE OR OTHER  CONDITION  ON ANY INSURED WHO ELECTS TO PURCHASE DRUGS FROM A NETWORK PARTICIPATING  NON-MAIL  ORDER  RETAIL  PHARMACY  WHICH IS NOT ALSO IMPOSED ON INSUREDS ELECTING TO PURCHASE  DRUGS  FROM  A  DESIGNATED  MAIL  ORDER  PHARMACY

Let me make a few comments:

1. Does this mean that Express Scripts has to let it’s members go to Caremark mail order if they meet their rates?
2. What does “comparable” mean?  Why isn’t it the same?  Do the independents really want to go to mail order rates?
3. No more copay differentials?  If this works, pharma should lobby for no more formularies.  (That might not be relevant today, but in the biologics or biosimilars world, they could say we’ll meet the price but you can’t have any copay differentials or utilization management restrictions…AND get it legislated!)

You can see some similar comments on this from Ed Silverman at Pharmalot and Adam Fein at Drug Channels.

As Adam points out, this may even be a leading indicator on how the FTC views the acquisition of Medco by Express Scripts (although the $MHS stock doesn’t reflect that right now).  Here’s what the FTC said in their letter:

FTC staff appreciate that A-5502-B seeks to enhance consumers’ ability to fill their prescriptions at the pharmacies of their choice. We are concerned, however, that the Bill impedes a fundamental prerequisite to consumer choice: healthy competition between retail and mail order pharmacies, which constrains costs and maximizes access to prescription drugs. We are concerned that, in the end, higher costs will lead to higher prices and fewer choices for New York health care consumers. For some consumers, increased costs may mean higher out-of-pocket prices for prescription drugs. For other consumers, it may mean that prescription drug benefits are curtailed or eliminated. Scaled-back drug benefits are likely to create pressing financial concerns for many consumers, and may even lead to additional health problems. As an article in ealth Affairs noted, “when costs are high, people who cannot afford something find substitutes or do without. The higher the cost of health insurance, the more people are uninsured. The higher the cost of pharmaceuticals, the more people skip doses or do not fill their prescriptions.”

As I mentioned in a Pharmacy Times article that I just wrote for their online version, this is a unique time for the independents to try to figure out what to do about consolidation in the industry.  If it’s not Express and Medco, it will be others.  This will look like the wholesaler market sooner rather than later.  It’s time to figure out how to make lemonade here and differentiate their pitch and value. 

In the end, I think you do yourself a long-term disservice to not allow for pricing differentiation within the network based on copays.  I would want to position myself as a higher service pharmacy with greater satisfaction, better medication possession ratio, better outcomes, and therefore become a preferred pharmacy within a limited retail network.