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Newsletter 11.09.2018

We would like to express our gratitude to the more than 75 of you who trav-eled to Baton Rouge to join us as we met with Governor John Bel Edwards. While our time was limited, we were able to shed light on a number of topics that impact you on a daily basis in a productive manner and we received highly valuable feedback from the governor. We continue to see large corpo-rate entities involved in the practice of pharmacy reap great benefits at the cost of your business, our future discussions will serve to give you an oppor-tunity to compete in the market you have committed to serve.

One of the first topics discussed in our meeting with the governor was the waste in mail order drugs and not just in discarded drugs. We have continued to see Express Scripts (ESI) boast about their status as the fourth largest phar-macy by volume and that they are the largest mail order pharmacy, no one is checking to make certain that they are paying the $0.10 provider fee on all of the prescriptions they send into Louisiana or following on not only their refusal to pay the local and municipal sales taxes. An major problem we have is that the state allows these compa-nies to be contractors for contracts that the state has control over while there are laws standing against these and other PBM practices.

Of significant concern is the amount of waste seen in mail order pharmacy. A key part of having you come to Ba-ton Rouge is so that you may offer specific examples of the ways in which we see this waste. Particular examples offered during this meeting showed about 58,000 pounds of drugs that were turned into law enforcement or phar-macies as unnecessary medication over the past four years in the drug take-back program. This only includes the unnecessary drugs turned into this law enforcement program. This did not include those drugs flushed down the toilet or thrown in the trash, or worse yet—drugs that end up being used or sold in illegitimate channels. Two weeks ago LIPA staff was a few miles south of Baton Rouge and saw signs where one can sell their diabetic test strips.

Many of these wasteful quantities exists and are paid for by any number of employers or government sources. We don’t see this kind of waste in the face to face relationships of our pharmacists serving their patients. The health plans and the employees need to be more aware of this waste.

When we expressed our concerns about and objections to the Group Benefits contract awarding BCBS and ESI Medicare plan contracts with state employees without requiring that the letter that the Office of Group Benefits (OGB) sent back to the governor’s staff suggested that ESI said that any pharmacy in their network is going to be able to serve the Group Benefits population. However, we have seen a number of our phar-macies who are not allowed into a network. You are being told that you can’t do business with a PBM unless you choose someone to contract with that PBM on your behalf, only to further be limited by who the PBM is willing to contract with. This is the situation that continues to be a tremendous problem.

Additionally, Louisiana and Illinois are the only two states that have a tax at the local and municipal level on pre-scription drugs, but that tax runs from 4.5%-7% in some areas. The PBMs are taking that money from a pharmacy ingredient cost and are pushing that onto the pharmacy to be the payer of that tax. While that's not something that may be on the state Medicaid claim because we don't have tax on that--it's on commercial claims--those people who are violating those laws by not paying those prescription drug taxes, not paying them into the state, not pay-ing the provider fee and not reimbursing the pharmacies for that are still significant and major contractors for the state programs. The state is allowing contracts be awarded to a company that is flagrantly violating laws that are on the books. Maybe by working with the governor and his staff, work to find solutions for that and the other is-sues we currently face. These solutions may come from the Louisiana Department of Health (LDH), the Depart-ment of Insurance, or the Board of Pharmacy because the laws are on the books.

Moving forward, we will be working with the governor’s staff to offer concrete examples of the problems you face. With the legislative session approaching next spring, we will be able to propose legislation that will not only help to level the playing field for your business, but also offer transparency and more robust regulations. As Governor Edwards said at our meeting, “Sunshine is the best disinfectant.”

Single PDL

Following our meeting with the Governor, LIPA staff and members met with LDH to discuss issues we have seen in the proposed single PDL. We appreciate the time that LDH staff took to establish a greater understanding of the process for you, and how certain decisions are being reached. However, some items we discussed continue to raise our alarms and we will continue communications with LDH staff to resolve them.

The folks at Myers & Stauffer drew up a list that compares the AAC they developed to the NADAC they devel-oped, but very simply what we are seeing here is that Myers & Stauffer developed NADAC through an agreement with the federal government. We have kept track of certain things they've done for Louisiana AAC, and certain items that they have developed which Louisiana has bought into. So, we can make changes within Louisiana AAC that address the shortcomings that we have or if we move to NADAC, Myers & Stauffer is at risk for maybe not being needed for that portion of managing the Louisiana reimbursement and that conflict of interest must be acknowledged.

LDH told us that in every arena, every provider, and every service area their number one goal has been to shift cost-based reimbursement to something that is efficient. However, in Louisiana, we find ourselves lumped together with roughly 1,100 drug stores and having to compete with some stores who have the ability of pricing for 5,000 stores or 9,000 stores. While others who have the ability for the best pricing being the price that 200 or 250 stores receive, then there are some of your pharmacies where your relationship with your wholesaler depends on varia-bles from how quickly you pay to what your credit score is.

When we start looking at how we can reduce the price of what pharmacies are paying we have seen that the aver-aging of package sizes is a significant problem. That is a game that we see played among the PBMs who may try to reimburse the pharmacy based on one package size and bill the health plan based on a different package size. While this may be alleviated through using the LDH pricing model, if Myers & Stauffer is going to lump every-thing together in that then this action still gives off a false indicator of actual price. You can find in the attach-ments of the newsletter the handout given to us by LDH at this meeting, showing that $30 million more would be reimbursement using NADAC than on generic drugs as opposed to using the Louisiana AAC.

If our state moved to NADAC instead of AAC our pharmacies would have a benefit of $13.3 million across the board. Furthermore, if the state implemented generic reimbursement at NADAC instead of AAC, our pharmacies benefit $31.8 million. If our pharmacy reimbursement was moved from an AAC reimbursement for brand to a NADAC reimbursement for brand our pharmacies would be cut by $18.5 million. Compelling in this is LDH wants to move to a brand heavy formulary as the portion of a single PDL and we continue to wait on the state to provide us with the fiscal impact to the state and to the providers for those activities. The state has complete con-trol over how they define AAC with Myers & Stauffer, the best alternative for Louisiana pharmacies and the pa-tients they serve is redefining Louisiana AAC to continue the brand use of AAC and the NADAC or WAC based reimbursement for generic drug.

Granted, with the single PDL, those costs may be relieved somewhat, but they haven't been relieved yet. Pharma-cists are going through those every day and having to deal with this. The fact that we use Myers & Stauffer-determined AAC to establish ingredient cost that is less than the cost of acquiring the drugs requires the pharma-cies to contact LDH and Myers & Stauffer. We looked at the outpatient drug letter, we spoke with LDH staff and we have discussed choosing an actual acquisition cost over an estimated acquisition cost and updating the profes-sional dispensing fee to capture the true cost. It is important to remember that the survey findings and new dis-pensing fee recommendation provided to us by LDH is considered a draft and we need to look at it and revise it as such.


Governor Edwards told us two weeks ago that he is not going to use this draft recommendation of a reduction to a $10.32 dispensing fee, so as we have discussed ingredient cost reimbursement and we can see the problems associ-ated with that and because we are looking at the single PDL, there are substantial concerns about that. We look forward to continuing those conversations on the ingredient costs and we hope to help develop a methodology that bring those about in a favorable manner, but if we want to look at the COD survey, then we would like another chance to work together with LDH and other experts to thoroughly pinpoint areas of concern.

Cost of Prescriptions

Today you will see a story out of Vermont where a small pharmacy is suing CVS for refusing to let them into a specialty network. Next week we will be closely monitoring the Joint Legislative Committee on the Budget (JLCB) as they consider the group benefits contract with Blue Cross Blue Shield (BCBS) and Express Scripts for a Medicare plan for some Louisiana retirees covered by the Office of Group Benefits. Our concern at that time was closely related question to what we’re seeing in Vermont where CVS may be limiting access to a specialty network, ESI is limiting access in Louisiana to pharmacies that may fol-low its requirements from who they contract with. We’re continuing to work on this issue with the Attorney General and others following our members meeting with the Governor about PBMs as it was a major part of our discussion earlier this week.

During the testimony last month at the JLCB hearing, we heard a state official talk about the major determining factor related to specialty drugs is often times price. We’ve had to fight several issues where we see price being included as part of the specialty drug determination with the Medicaid program, and we certainly deal with this regularly. In the contracts which you are seeing, some have said that any drug costing $300 or more for monthly maintenance would be a specialty drug. At a different meeting, LIPA staff spoke to a group of health insurance agents at the Louisiana Department of Insurance where spoke with those agents about part of the cost of care and we asked them to look deeper into how we this pricing impacts Louisiana citizens. The BCBS pharmacy director spoke at the same meeting and in the same session he offered information that the average price of a generic prescription BCBSLA is $25.83 and the average price of a brand prescription paper through the BCBS network is $264.58. The average specialty drug cost per month is $2,785.41, and we know that these same people want to classify that any prescription being driven by price can be a specialty prescrip-tion as the determining factor. Even though these are ordinary and available prescriptions with no particular han-dling requiring, the activities we are seeing are prohibiting patient access to these drugs because of price.

LIPA Board Meeting

Following the LIPA Board member elections last Sunday November 4, we have seen TJ Woodard (District 4), Al-len Cassidy (District 6), and Charlie Jones (District 10) all reelected, with multiple nominations for each, without opposition. Additionally, Blake Pitre and Robert Rock have been nominated in District 2, and LIPA founder Butch Ray have Marty McKay (District 8) have been nominated as LIPA Board members. With next week’s newsletter, we will send out the ballot for these two districts and accompanying information about the nominees. Following that information, LIPA staff will be requesting from those pharmacies in District 2 and District 8 to sub-mit their votes back to the LIPA office. We will send out those ballots by email and fax blast to LIPA members in those districts.