From John Curry, December 11, 2009
Employees work in quality control as they check mail order prescription medications at Medco Health Solutions Inc.'s sprawling Willingboro Dispensing Pharmacy in Willingboro, N.J. AP File Photo/Mel Evans
As Congress debates a massive overhaul in America's health care system, Alaska lawmakers are considering how to control a major medical expense - the cost of prescription drugs.
The Alaska Legislature is considering a bill to require pharmacy benefit managers to reveal actual costs and profits.
Health insurance companies, which often provide administrative services for self-financed small business health insurance programs, contract with pharmacy benefit managers, known as PBMs, to administer prescription drug programs. PBMs in turn, contract with pharmaceutical firms for bulk drug purchases, and with pharmacies for "in-network" prescription sales.
Senate Bill 38, originally sponsored by former Sen. Kim Elton, D- Juneau, and now by Sen. Hollis French, D-Anchorage, would regulate pharmacy benefit managers.
The legislation would authorize the state Board of Pharmacy to cooperate with the state Division of Insurance to regulate pharmacy benefit managers.
SB 38 would require PBMs to disclose to the health care insurer all financial terms and arrangements for payments between the PBM and the prescription drug manufacturer. Disclosures would include rebates, drug substitution programs and various fees.
The legislation also would prohibit pharmacy benefit managers from terminating contracts or otherwise penalizing a pharmacist or pharmacies because of filed complaints, grievances or appeals with the PBM, or because they otherwise expressed disagreement with a PBM's decision to deny or limit benefits to a covered person.
The Alaska Pharmacists Association says Senate Bill 38, and similar federal legislation is needed to bring billings to private business under control. The APA says costs through mail order may greatly exceed the actual cost of the prescription drugs from manufacturers.
Federal privacy laws forbid PBMs, including Medco Health Solutions, from commenting on individual prescription drug cost issues unless they are posed by the person for whom the prescription was written.
So this writer asked the company about her own medication, Alendronate, the generic version of the drug Fosamax, taken by thousands of women to restore and maintain bone density.
A three-month supply of Alendronate costs $12.30 at an Anchorage Costco for members who have a prescription but are not covered by insurance.
A three-month supply of the same medication purchased through Medco's mail order pharmacy in Texas costs $105.72 under the Morris Communications prescription plan, with the employee required to pay $17.50 co-pay and the company billed another $88.22 by Medco.
(Morris Communications is the parent company of the Alaska Journal of Commerce.)
A Medco representative said the company is completely transparent in its dealings with the companies with which Medco administers pharmacy benefits.
An administrator for the Morris Communications' insurance program at United Healthcare said mail order is typically less expensive for brand-name medications, but may not be for some generic medications.
Less expensive prices for some generic medications at retail have resulted, in part, because of certain retailers' desires to drive people into their stores, where they will buy non-prescription items. Both the Fosomax and Alendronate when compared to Costco's price fall into this category.
In another recent incident, a North Slope oil field worker with Alyeska Pipeline Service Co. said a medication he purchased without using his insurance plan - after Premera Blue Cross had refused to honor the prescription at a local pharmacy - would have cost his employer nearly four times as much had the prescription been authorized by Premera.
Alyeska employee Ric Weinrick said the incident occurred when he tried to fill his wife's prescription for Lovenox, an anticoagulant, at his local Fred Meyer pharmacy in Wasilla, after his wife had surgery.
Weinrick said he paid $519.43 out of pocket for the medication, which his wife was supposed to begin taking immediately. Premera insisted that he fill the prescription through a mail order pharmacy, which would have taken days.
Weinrick said he was so aggravated by the situation that he did some computer research on costs of the drug, and what he learned angered him more.
He said he found his wife's prescription would cost $138 from online Canadapharmacy.com, significantly less than what he said was the $2,200 that Alyeska Pipeline Service's plan would have been billed by Walgreens' mail order pharmacy, after his $75 co-pay, had he filled the prescription via mail order. Weinrick identified Walgreens as one of mail order pharmacies listed under his plan at the time.
Weinrick said he brought the matter to the attention of Alyeska Pipeline's health plan administrator, and that he eventually got a $292.88 refund
"This whole thing is like a cancer," he said. "It goes so deep and it's so entrenched. The health care legislation they are working on in Washington right now, if it passes, it may treat the symptoms, but not the problem. The problem is the pharmaceutical companies are in bed with the insurance companies, who are in bed with the hospital corporations. They are feeding off of each other and the CEOs are making billions of dollars."
Eric Earling, a spokesperson for Premera Blue Cross - the state's largest health insurer- said Premera's contract with Medco to provide pharmacy benefit management services is a value to its members.
"Mail-order can be of particular value and convenience to our members," Earling said, noting that mail-order-only plans are selected at the choice of the customers, which are usually self-funded businesses. "Urgent prescriptions do not face mail-order-only requirements in order to support the obvious needs of our members."
Still, Weinrick's allegations echo those of the Alaska Pharmacy Association, which says pharmacy benefit managers reap huge profits for their administrative services.
Employees of some of Alaska's 35 independent pharmacies said Weinrick's experience is not unusual. They support federal and state legislation that would force pharmacy benefit managers to be transparent in how much they get in rebates from pharmaceutical firms that sell them the drugs, and how much they, in turn, bill clients.
The pharmacists said they are afraid to speak out individually, for fear of reprisal from the PBMs, who negotiate contracts with pharmacies where prescriptions may be filled.
Pharmacists who do speak out can find their contracts to fill prescriptions for certain insurance plans pulled by the PBMs or be subjected to a PBM audit, several said.
The pharmacists said that if the PBM finds an error in the billing for a particular drug, it may argue that it is likely that similar billing errors were made for a larger percentage of prescriptions for the same drug. The pharmacy may then be forced to pay thousands of dollars to the PBM to cover the probable cost of billing errors that may or may not have ever occurred, they said.
Pharmacists said they believe costs through PBMs are inflated. Examples included a customer paying a $37.50 co-pay for Zocor, a cholesterol-lowering drug, which the PBM then billed the customer's insurance plan another $187.50. The pharmacists said the actual cost of that drug to the pharmacy was $9, so the PBM made about $150 on one prescription.
Another customer paid 20 percent co-pay of $40.72 for a generic version of Prozac, an anti-depressant, which meant that the PBM billed the employer five times that amount, the pharmacists said.
Individuals with prescription insurance plans should demand to know how much their company is actually being billed for each drug, they said.
State officials heard complaints from pharmacists and from state employees, and looked into the details about the way drug claims were paid, said Pat Shier, director of the state Division of Retirement and Benefits.
The state used that information to write a better request for proposals for pharmacy services, Shier said.
The state formerly had a contract with Premera Blue Cross, which subcontracted pharmacy benefits management to Medco.
The state now is under contract, through Wells Fargo as the health insurance plan administrator, to use the Envison-Costco pharmacy plan partnership.
"We know the state is saving money on this, but more important to us, it is about our members finding a quality product at the place they choose to do business at a good value for them, the pharmacists and the plan," Shier said.
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