As expected, the state budget deficit is occupying the bulk of legislators’ time as our elected officials continue to struggle to find ways to balance the budget while facing a $27 billion deficit. Also, as reported last week by Texas TrueCare, one of the proposals to save money is to move the Medicaid pharmacy benefit from the Vendor Drug Program (VDP) to managed care. Texas TrueCare has been working tirelessly along the with the Texas Pharmacy Association and the Texas Pharmacy Business Council and other pharmacy groups aligned on this issue to explain to legislators the vital importance of keeping the benefit within Vendor Drug. But, we need your help. The most effective advocate for your profession is YOU! Please heed this call and take time to reach out to your state Representative and Senator and explain the importance of keeping this vital program within the VDP. (See below on how to find your elected official.)
By most accounts, the Texas Medicaid Vendor Drug Program is one of the best-run state pharmacy programs in the country. Texas Medicaid aggressively monitors and adjusts prescription costs and they are widely respected for their efforts on obtaining and setting price data. In an effort to achieve cost savings for the state and to ensure proper payments to pharmacies, in 2001 the VDP adopted its own pricing benchmark known as the estimated acquisition cost.
This innovative method for reimbursing pharmacies for the cost of medication achieved both objectives. In 2007, the Legislature set a pharmacy’s cost todispense a medication at $7.50. This amount is lower than what has been universally shown in several recent studies, including a study by The University of Texas, as a pharmacy’s actual cost to dispense a medication. In September 2010, pharmacists absorbed a 1% reduction in this fee and an additional 1% reduction in February 2011. Including the additional $1.00 reduction currently contained in SB1, the dispensing fee will be reduced by 15.3%. No other healthcare provider group has seen a reduction this significant thus far.
Administration of Medicaid pharmacy benefits is handled differently than administration of health benefits under traditional health plans. Consequently, assumptions of savings by moving the Medicaid pharmacy benefit to managed care may not hold true. The bulk of revenue generated for the state under managed care for the Medicaid pharmacy benefit is largely derived from the Premium Tax, and not true cost savings. In fact, much of this tax will be paid through public federal funds for the benefit of the private managed care entities. In addition, there is concern that this revenue could prove short lived if the “revenue” is merely passed on, or shifted, to other
consumers or offset by additional provider cuts. Further erosion of pharmacists’ professional fees could drive up healthcare costs by reducing access to quality patient care thereby increasing avoidable, more expensive treatments. Additional cost shifting by reducing pharmacists’ professional fees could result in reduction of participation in the program. This would be particularly problematic in rural areas where access to pharmacy services is limited or in geographic areas with heavy Medicaid populations.
HHSC and the Legislature should focus instead on controlling drug product costs and improved patient care and not further reductions in the dispensing fee. Drug costs make up nearly 90% of the overall drug spend. Currently, the VDP provides a comprehensive drug benefit to its clients. While there is a monthly limitation on the number of prescriptions for some beneficiaries within the program, there are only limited restrictions on brand names vs. generics, prescription and product limits, or quantity limits. There is opportunity for the Legislature and HHSC to modify the existing program to obtain significant and true cost savings for the state. Texas should also support a growing national trend of proven, proactive intervention activities through pharmacist-based patient care services, such as Medication Therapy Management (MTM), adherence and disease state management, to further reduce costs. Go to www.TruecareTexas.com for talking points on VDP savings.
Independent pharmacies have struggled to maintain their bottom lines in the shadows of growing chain pharmacies, resulting sometimes in a strained relationship as both groups operate in a very competitive marketplace. However, in this current Texas Legislative Session, there has been an air of cooperation between the independents and some of our chain counterparts. We have joined forces under the Texas Community Pharmacy Coalition to propose cost-saving measures within the Vendor Drug Program as an alternative to moving the Medicaid pharmacy benefit to managed care.
The Coalition believes that the Vendor Drug Program should incorporate “managed care” cost-saving strategies into their current operation. This would cause the least amount of disruption to patients and healthcare providers within the program.
Along with your TrueCare Legislative Team and the Texas Pharmacy Business Council, representatives for the chains have been attending meetings, participating in conference calls and spending countless hours trying to find ways to save the state additional monies through the existing VDP program. We are grateful to all of these organizations for contributing their resources and expertise, and for leading the fight for the future of pharmacy. Not only is it refreshing to work together, we believe a united front is essential in this current legislative climate.
So, we want to say a big Thank You to our chain partners in this coalition - Walgreens, HEB, Randalls / Tom Thumb, United Supermarkets, Brookshire Grocery Company, Brookshire Brothers and Kroger Supermarkets. We welcome this new partnership and pledge to work together to find solutions where we have common goals. We also want to acknowledge the Texas Pharmacy Association for its continued leadership. Look for updates on the VDP in future issues of Inside Pharmacy.
Click here to read the letter sent by the Texas Community Pharmacy Coalition on VDP drug savings to Thomas Suehs, Executive Commissioner, Texas Health and Human Services Commission.
Dawn Hunter has worked for PBA Health for more than five years and served as a Regional Dirctor of Business Development for two years. Today she oversees a region that encompasses most of the Southern U.S. Prior to joining PBA, Dawn spent five years working for one of the Big 3 pharmaceutical wholesalers. “I have had the opportunity to see both the business and practice of pharmacy,” Dawn said. “This perspective enables me to better serve the pharmacies I work with.”
Dawn began her PBA career as a Business Development Manager covering Oklahoma and Arkansas. As the company and her experience grew, she stepped into a Director role and expanded her territory to include California, New Mexico, Texas, Oklahoma, Arkansas and Louisiana. Today this larger territory provides her with valuable insights into what is transpiring in different marketplaces. She works closely with PBA's endorsed wholesalers, administrative staff and her five Business Development Managers to bring efficiencies, improvements and more dollars to the bottom line of independent pharmacies across the country.“Every day I see the struggles faced by independent pharmacies,” she said. “I feel fortunate to be able to provide them some relief through many of the business opportunities offered by PBA Health.” When she’s not working for PBA, you might find her reading, baking, leading church-related ministries, traveling or at the beach! Dawn absolutely loves her job and welcomes any pharmacy to contact her with questions or ideas.
Email: dawn.hunter@pbahealth.com
