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Pharmacy appeals to HHS in wake of AWP ruling

BY Jim Frederick

Stung by an anticipated but still painful defeat in federal court, chain and independent pharmacy groups have turned to the Obama administration for help in turning aside what could be a new and imminent round of cuts in Medicaid prescription payments.

Three national pharmacy groups are asking the nation’s top federal health official for help in their bid to stave off the anticipated cuts, following an appeals court ruling that upheld the settlement earlier this year of a longstanding dispute over the wholesale prices paid for prescription drugs. The expected cuts in reimbursement could impact the rate at which Medicaid pays pharmacies to dispense more than 1,400 branded and multisource prescription drugs after publication of new drug-pricing data began Sept. 26, as set out in a court-approved settlement of the pricing dispute.

On Sept. 8, the National Association of Chain Drug Stores, National Community Pharmacists Association and National Association of State Pharmacy Associations took their case to the Department of Health and Human Services. Their appeal, in the form of an urgent, hand-delivered letter to HHS secretary Kathleen Sebelius, came in the wake of a federal court ruling handed down Sept. 3.

In that ruling, the U.S. Court of Appeals for the First Circuit rejected an appeal from retail pharmacy advocates and upheld a lower court’s settlement of a three-year-old class-action lawsuit filed by a group of health plan sponsors against two drug data publishers, First DataBank and MediSpan, along with drug wholesalers.

The plaintiffs—which included union pension funds, teachers’ unions and other health plan sponsors—alleged that the publishers and wholesalers illegally conspired to inflate the markup between wholesale acquisition cost and average wholesale price from 120% to 125% of WAC. “This resulted in higher costs to patients and third-party payers,” NCPA acknowledged earlier this year.

Under terms of the settlement, both publishers agreed to reduce the published AWP figures used in pharmacy reimbursement contracts, beginning with new drug pricing data released Sept. 26. But without intervention by the HHS secretary, the pharmacy groups warned in their appeal to Sebelius, the reduction “will result in significant cuts to the pharmacy reimbursement rates in all states that base their reimbursement methodology on AWP.”

“We are concerned that many state Medicaid programs are not acting to make changes to their pharmacy reimbursement rates to compensate for a change in the way that the pharmacy reimbursement benchmark…is being calculated and reported,” noted NACDS, NCPA and NASPA. “This AWP benchmark is the one which is most frequently used by state Medicaid programs to reimburse pharmacies for most single-source drugs and some multiple-source drugs.”

Added the letter, “We strongly urge you to please act now to instruct states to modify their Medicaid pharmacy reimbursement rates such that access to pharmacy services can be maintained.” If states do not adjust their payment rates, noted the pharmacy groups, “reimbursement will be artificially reduced by about 4% below the states’ best estimate of pharmacies’ actual acquisition costs.”

The court’s affirmation of the settlement created what NACDS president and CEO Steve Anderson called a “fragile situation” regarding pharmacy reimbursements. In a statement that seems to mingle resignation over the ruling with a determination to shift the battle to other venues outside the courtroom, Anderson vowed to continue pressing the fight to protect pharmacy reimbursement levels.

“For three years, the National Association of Chain Drug Stores and allied organizations have been successful through legal action in preventing reductions to published average wholesale prices for prescription drugs,” he noted. “This has prevented subsequent reductions in reimbursement to pharmacies for the patient care they provide, and thus has been a three-year campaign that was worth waging on behalf of pharmacies and the patients they serve.”

“The appellate court’s ruling…that now allows the reduction of AWPs does not signify the end of the campaign, but rather shifts the urgency for action to other arenas,” Anderson added. “The fact remains that reduction of AWPs threatens to cut pharmacy reimbursement for drugs below their costs—an untenable position for any healthcare provider and for any business. Fortunately, some private payers are taking steps to remedy this situation by making appropriate reimbursement adjustments. Likewise, we renew our call today to state Medicaid programs to take the only viable course for patient care and to address the flawed reimbursement that the reduced AWPs will create,” Anderson said.

In an interview, NACDS chief legal counsel Don Bell agreed “the decision was disappointing.” However, he added, “we have been planning for this for years. We and our allied organizations were successful in putting off the AWP reductions for three years…so at least we were able to give retail pharmacies more time to prepare,” Bell told Drug Store News.

Bell agreed that one of pharmacy leaders’ biggest concerns is the effect the new 120% pricing formula will have on Medicaid prescription payments. But the impact the settlement will have in the private-payer marketplace “depends on how each of the contracts are written with the payers,” he added. At this point, Bell added, “we’re looking at all our options” as the group mulls a variety of actions to offset the impact of the lowered AWP formula on Medicaid payments. That includes direct appeals at the state level and “the potential for some sort of legal action.”

On a more positive note, the court-ordered injunction against CMS’ long-standing plan to impose a new AMP-based payment model on retail pharmacies dispensing generic drugs to Medicaid beneficiaries is still in effect. “That injunction remains in place,” said Bell, while the agency strives to come up with an acceptable definition of a multiple-source drug for purposes of setting an average market price on which to base generic drug reimbursements.

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Bartell forges ahead with another store opening

BY Alaric DeArment

SEATTLE Before the linoleum in its two newest stores even has a chance to get dirty, Bartell Drugs will open another store.

The Seattle-based regional chain announced the Friday opening of its 57th store, in Overlake Center at 5700 East Lake Sammamish Parkway SE in Issaquah, Wash. A ribbon-cutting event will take place at 10 a.m. Pacific time Tuesday.

The 16,395 sq.-ft. store is the third Bartell’s to open in 2009, following the openings of stores in Lynnwood, Wash., and Mill Creek, Wash., in July and August, respectively.

“We have been working towards opening a location in Issaquah for a number of years,” chairman and CEO George Bartell said in a statement. “We’re very excited about this new location and look forward to serving the needs of the community.”

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CVS/pharmacy marks a milestone with 7,000th store

BY DSN STAFF

LITTLE CANADA, Minn.

The sun was shining bright and spirits were high as CVS Caremark executives and city and state officials gathered here on Thursday to celebrate the grand opening of the pharmacy retailer’s 7,000th store.

“I am certainly delighted to see such a terrific turnout, and just when we were getting ready to start you can see the sun came out, and we think that is a very good sign as we open our 7,000th store,” Larry Merlo, president of CVS/pharmacy, told attendees of the milestone event.

The new store marks the company’s 41st location in the state and the 7,000th store since the retailer first opened its doors in Massachusetts in 1963 initially under the “Consumer Value Stores” banner. The company entered the state of Minnesota five years ago and today employs more than 1,000 people in the state.

In talking with Drug Store News, Merlo said the company has a healthy pipeline of stores and is looking to open between 275 and 300 stores a year nationwide — which, not including acquisitions, is pretty consistent with its number of openings in the last three to four years.

“We still have lots of opportunity for growth,” Merlo said.

Nested along busy Rice Street, at 2650 Rice St. to be specific, the new 13,000-sq.-ft. store is the retailer’s current prototype with a full-service pharmacy and double-lane drive-thru; digital photo cafe that provides customers with a relaxing atmosphere while they customize and print their own pictures; and a complete line of health and beauty products, general merchandise and convenience food items.

While this newest location does not feature a MinuteClinic, there is a MinuteClinic location at a nearby CVS store and, in fact, about two dozen of the CVS stores in the state have a MinuteClinic.

To celebrate the opening, local residents filled the parking lot to enjoy hot dogs and refreshments as the local Johnson Senior High School marching band kicked off the festivities in style.

CVS executives, including Merlo and SVP Hanley Wheeler, addressed the crowd, as did several officials, including Little Canada Mayor Bill Blesener and Minnesota Department of Employment and Economic Development Commissioner Dan McElroy.

“To have 7,000 stores is quite an accomplishment, and we feel quite honored to have store No. 7,000 here in our city,” Blesener said.

The opening of the CVS store is among the latest positive development in Little Canada. Two months ago, the city had another reason to celebrate; a St. Jude medical facility of 190,000 sq. ft opened its doors, which is expected to bring in 650 new jobs to the city.

“With 7,000 locations, we are the largest retail pharmacy in America. As part of CVS Caremark, we are the No. 1 provider of prescriptions in pharmacy-related health services in the country,” Merlo said. “CVS Caremark is the only fully integrated pharmacy healthcare company in the United States, and our pharmacy care services actually allow us to provide a greater a convenience and choice for patients to improve patient outcomes and lower overall healthcare costs.”

During the event, Merlo announced that Minnesota is participating in the company’s free seasonal flu shot program. CVS is partnering with the Department of Employment and Economic Development to provide more than 2,500 vouchers for a free flu shot to the unemployed in Minnesota. The 2,500 vouchers, a $75,000 value, will be distributed through 11 WorkForce Centers in the Twin Cities area.

Nationwide, the retailer is holding more than 9,000 scheduled flu clinics in CVS stores and, as part of the campaign, is providing more than $3 million worth of free seasonal flu shots to unemployed Americans through vouchers good for a free flu shot in any MinuteClinic or any of the scheduled CVS/pharmacy flu clinics.

CVS also handed out flu prevention kits containing CVS brand products like hand sanitizers to the first 100 shoppers at the store.

To further mark the occasion, CVS presented a $7,000 donation to the Courage Center, a Minnesota-based rehabilitation and resource center that advances the lives of children and adults experiencing barriers to health and independence. The donation is in keeping with CVS’ philanthropic program All Kids Can, a five-year, $25 million initiative to help children with disabilities. Accepting the donation on behalf of the Courage Center was Jan Malcolm, CEO of Courage Center.

With the sun in full force, an official ribbon cutting and round of applause wrapped up the presentation as a voice from the crowd shouted, “Let’s go shopping!”

Click here to view photos of the grand opening of the 7,000th CVS store.

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