Medicare bill passed by Senate seen critical to pharmacy
WASHINGTON —Will community pharmacy or the White House prevail in their long-running battle over prescription reimbursements?
Boiled down to its essence, that was the question on the minds of industry leaders in mid-July, following the decisive passage in the House and Senate of a landmark bill to overhaul key facets of the Medicare program. The legislation cleared both houses of Congress with veto-proof majorities despite strong opposition from President Bush, but at press time its future remained unclear.
The bill, known as the Medicare Improvements for Patients and Providers Act or H.R. 6331, would speed Medicare prescription payments to pharmacies, cancel a plan to cut Medicare payments to physicians and delay an alarming cut in Medicaid pharmacy reimbursements. As such, its approval was hailed as a major victory for retail pharmacy.
“Passage by both the House, and now the Senate, of this legislation is a victory for pharmacies across the country,” said Steve Anderson, president and chief executive of the National Association of Chain Drug Stores. “The pro-pharmacy measures in this legislation are essential to fostering better patient care and preserving access to pharmacy services.”
Cathy Polley, vice president of pharmacy services for the Food Marketing Institute, called the vote “a victory for low-income families across America.”
Among other changes, the bill would require pharmacy benefit plans to pay Medicare Part D prescription claims within 14 days. It also requires weekly updates of posted Medicare prescription drug prices, allowing pharmacies to more quickly adjust their claims data.
Importantly, the bill also postpones until Oct. 1, 2009, the implementation of a new pricing formula adopted by the Centers for Medicare and Medicaid Services for generic drugs dispensed under Medicaid.
That new formula, based on the average manufacturer price of a generic, would slash payments to pharmacies and force them to dispense generics to Medicaid patients at a loss, pharmacy leaders warned.
The bill also delays, for 18 months, the rollout of Round 1 of the new competitive bidding requirement for durable medical equipment and other health supplies sold by pharmacies and other outlets under Medicare Part B. H.R. 6331 also provides financial incentives to spur the adoption by physicians of electronic prescribing for Medicare.
Pharmacy leaders were buoyant over congressional support for those measures, but unclear about what happens next. Although the Senate passed the bill by a veto-proof majority of 69-30 July 10—with an ailing Sen. Edward Kennedy, D-Mass. making a dramatic appearance to cast a crucial vote in favor of the legislation, and Arizona Republican John McCain skipping the vote as he campaigns—President Bush immediately renewed his pledge to veto the legislation on the grounds that it would add to the spiraling costs of Medicare and reduce the role of the private insurance sector in health care for the elderly.
At press time, efforts to reach the White House for comment were not immediately successful. However, expectations were high that the bill would become law. “The president would only have to get a few senators to switch their vote [to sustain his veto],” observed Larry Kocot, visiting fellow at the Brookings Institution and deputy director of the Engelberg Center for Health Care Reform. However, he told Drug Store News, “It’s going to be a tough sell for the president to get anybody to switch,” given his low popularity, the state of the economy, the reluctance of lawmakers to switch their vote, and other factors.
Kocot urged pharmacy leaders, however, to look beyond the current victory and focus on a broader objective: the reinvention of the pharmacy payment model and the industry’s evolution beyond its current defensive posture.
Pharmacy leaders “need to get out of this constant reimbursement-system battle,” said Kocot, a veteran of NACDS and CMS. “They’ve shown some muscle in getting this thing passed…and they’ve got an incredible chance right now to go beyond this and show what pharmacy can really do in health care.”
For their part, Anderson and Polley urged the president to sign the measure into law. They were joined by such pharmacy leaders as John Gans of the American Pharmacists Association, Bruce Roberts of the National Community Pharmacists Association, Scott Melville of the Healthcare Distribution Management Association and Kathleen Jaeger of the Generic Pharmaceutical Association.
Retail industry analyst Deborah Weinswig of Citi Investment Research was among those anticipating quick resolution of the issue. “We think it is likely the bill will be enacted,” she noted in a July 10 report, adding, “it is likely the House and Senate could vote in the next 10 days to override his veto.”
She added that, “President Bush could take no action on the bill for 10 days, and [it] would become law.”
CVS Caremark to expand headquarters, add positions
WOONSOCKET, R.I. CVS Caremark has announced expansion plans for its headquarters over the next two years, a move that will help support the company’s continued growth and current hiring expectations of more than 200 new positions on its corporate campus.
The nature of the new jobs was not disclosed. In Rhode Island, the company currently employs 5,800 associates.
The plans are to build two new 150,000-square-foot office facilities in the Highland Corporate Park in Cumberland, R.I. The company has been based in Highland Corporate Park, which is jointly located in Cumberland and Woonsocket, since 1982. The company significantly expanded its customer support center facilities in 1988 and again in 2000.
“Our company was founded in Rhode Island more than 40 years ago and we feel fortunate to be able to continually reinvest in our home state,” stated Tom Ryan, chairman, president and chief executive officer. “As the largest company in Rhode Island we are looking to further expand our base of operations to support our continued growth and, as a result, increase our workforce over the next few years.”
A&P announces fiscal Q1 improvements
MONTVALE, N.J. A&P, which operates 446 stores under such banners as A&P, Pathmark and Waldbaum’s, announced on Friday improved results for the first quarter as it nears the completion of the Pathmark integration.
“The first quarter of 2008 clearly demonstrates our continuing progression in operating improvement with the achievement of our fourth straight quarter of comparable store sales of over 3 percent,” stated Eric Claus, president and chief executive officer. “Further, Pathmark is already achieving positive results with comparable store sales climbing above 3 percent for the first time in many years. The company is also well underway with the completion of the Pathmark integration, as many of the planned milestones have been achieved. As of the end of the first quarter, our annualized run-rate of synergies is approximately $100 million.”
Sales for the quarter totaled $2.9 billion compared with $1.7 billion in the year-ago period. Same-store sales rose 3.2 percent, which excludes sales for Pathmark stores acquired in December 2007. Same-store sales for Pathmark, measured during the same period, rose 3.1 percent.
Net income from continuing operations was $3.8 million, with a net loss per diluted share of 48 cents after adjusting for non-operating income related to fair value adjustments. This compares with income of $61.4 million, or $1.45 per diluted share, in the year-ago period.
The company did not break out pharmacy sales results.
As previously reported by Drug Store News, the company announced during the quarter an integral step in its transformation—the conversion of the majority of SuperFresh stores in the Philadelphia market to the recently premiered Price Impact format under the Pathmark Sav-A-Center banner and a number of SuperFresh locations retaining the Fresh format with significant upgrades.
Also during the quarter, the supermarket chain completed the remodel of A&P Fresh in Holmdel, N.J., to the updated Fresh format and began remodeling additional stores. The company also premiered its Price Impact format in the Irvington and Edison Pathmark stores.
“The remainder of fiscal 2008 will be focused on progressing the company further toward operating profitability by: moving forward our operating and aggressive merchandising strategies; maintaining cost control and reduction disciplines throughout the business. Integral to our drive to profitability is the continued and ongoing execution of capital improvement projects all geared for maximum return, and particularly weighted to value propositions,” stated Claus.