In bid to level playing field, independents hail ‘Fairness,’ Act II
WASHINGTON —Some of the independent community pharmacy industry’s most reliable supporters in Congress again are advancing legislation that would give small-scale community pharmacy operators the right to band together to collectively negotiate for better terms with managed-care prescription plans.
The right to collective bargaining is seen by independent operators as a critical factor in their ability to compete with big pharmacy chains and thrive in a tough retail environment. So, industry leaders were cheered by new moves in Congress last month to set aside anti-trust restrictions that prevent small-scale pharmacy owners from negotiating with pharmacy benefit management plans as a group, rather than individually.
The move came in late February, when Reps. Anthony Weiner, D-N.Y., and Jerry Moran, R-Kan., introduced H.R. 1204, the Community Pharmacy Fairness Act of 2009. The bill attracted 32 bipartisan cosponsors, but there’s no guarantee of success: it reprises similar legislation that failed to pass in 2008.
This year’s bill, however, may stand a better chance. It reflects the changes that were made when the previous one was voted out of the House Judiciary Committee last year—changes that may make it more palatable for uncommitted lawmakers.
With the changes, the Weiner-Moran bill would:
Limit pharmacy negotiating pools to 25% of market share in a Medicare Part D region;
Define an independent pharmacy as one with less than 10% of market share of a prescription drug plan region, as defined under Part D regulations, and less than 1% of market share of the United States;
Provide a five-year sunset clause from the bill’s passage;
Mandate a Government Accountability Office study six months before sunset of the law to examine its impact on the marketplace.
Leaders of the National Community Pharmacists Association have expressed strong support for H.R. 1204. The ability to negotiate collectively with giant PBMs helps level the playing field, they said.
“Current law prevents community pharmacists from having the same leverage as large chains in negotiating the terms of their contracts with PBMs,” said NCPA EVP and CEO Bruce Roberts. “As a result, community pharmacies are given the Hobson’s Choice of signing unfair contracts that don’t benefit patients, or lose their patients altogether. That is why we applaud Congressmen Anthony Weiner and Jerry Moran…and we urge the House Judiciary Committee to take action on the bill, and hope the Senate will also introduce a companion bill soon.”
NCPA has long asserted that independents have to cope with take-it-or-leave-it contracts. PBMs are “subjecting community pharmacy owners to onerous and inflexible contract terms, along with low reimbursement rates,” argued NCPA president and Seattle-based pharmacy owner Holly Henry. “H.R. 1204 gives us the ability to cater to our patents’ needs by restoring a business model that puts each of the respective parties on some semblance of equal footing when negotiating contracts.”
NCPA cited some of the benefits owner-operators and their patients would gain if their pharmacies were allowed to extract better negotiating terms with contractors. Collective bargaining, the group asserted, would “protect patients from shrinking and shifting formularies that confuse and restrict a patient’s treatment options,” and also “reduce the pre-authorization hassles to obtain refills or formulary-restricted medications that generate red tape and create hurdles for patients.”
The change also would limit the switching of patients to higher-cost medications “that may not be better for them therapeutically, but that earn higher brand-name drug rebates for the PBM,” NCPA asserted.
Walgreens set to expand distribution capacity
WOBORN, Mass. Walgreens is expanding the distribution capacity at its Mt. Vernon, Ill.-based distribution center by adding more portable robotic picking devices and upgrading many of its traditional conveyor-based systems into automated zones for sortation and movement of items to be shipped.
Walgreens uses the Kiva Mobile Fulfillment System from Kiva Systems in Mt. Vernon to store inventory and pick replenishment orders for its 6,700 stores and specialty pharmacies. Expanding the system in that distribution center puts nearly 1,000 mobile robots under a single roof, according to Kiva.
The upgrade marks the third expansion of the robotic picking system at the center since its initial deployment in 2007, Kiva noted. It also heralds a doubling of the throughput capacity at the center, the company reports.
“Productivity metrics from previous rollouts far exceeded Walgreens’ specifications for pick rate, accuracy, cycle time, tote utilization and installation time,” said Kiva CEO Mick Mountz. “By doubling capacity we expect Walgreens to quickly achieve an extraordinary new level of strategic competitive advantage and productivity.”
Congress takes up follow-on biologics bill
The long-awaited breakthrough for follow-on biologics may be close at hand.
Prompted by a far more supportive President and the growing crisis in healthcare funding, Congress has again taken up the call for a bill that would create a regulatory pathway for FDA approval of generic versions of biologically-engineered drugs. And with the strong affirmation of President Obama, who has campaigned for such an approval pathway, the newest iteration of the bill stands a far better chance of passage than previous attempts in the House and Senate.
The Promoting Innovation and Access to Life-Saving Medicine Act could mark the most significant change to the delicate balance of power between the branded and generic drug industries since passage of the landmark Hatch/Waxman compromise bill in 1984, which ushered in the modern era of me-too medicines. Tellingly, one of the new bill’s sponsors is an architect of that 1984 legislation, Democratic Rep. Henry Waxman of California.
The push for follow-on biologics augers well for both health plan payers and patients coping with the sometimes staggering costs of critically important but expensive pioneer biologics, and for the generic drug industry itself as it faces a critical shortage of new marketing opportunities as the number of blockbuster drugs facing patent expirations dries up. A new pipeline of me-too biologics could help fill the gap.
“With countless patients struggling to pay the high costs of brand biopharmaceuticals, an approval pathway for safe, effective and affordable biogeneric medicines that provides access sooner rather than later is desperately needed,” stated Kathleen Jaeger, president and CEO, Generic Pharmaceutical Association.
Cost-saving considerations aside, there’s no disputing the business potential follow-on biologics represent. Bio-engineered pharmaceuticals and specialized, highly targeted medications aimed at serious chronic or life-threatening diseases represent the only major bright spot right now in the global pharmaceutical market, with growth rates that far outpace the sluggish market for mainline meds. Indeed, most of the drugs that have reached blockbuster status in recent years have been biologically engineered specialty meds.