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Choppy Seas Persist for Medicare Outpatient Drug Plan

From July 2006 P&T Journal

The Medicare drug benefit has
encountered rough seas since it
was launched at the beginning of
the year, and the waves are only getting
higher. The turbulence threatens to
upset the proverbial stomachs of a lot of
pharmacy benefit managers (PBMs) and
insurance companies, who are offering
the new Part D benefit. They are on the
defensive because of allegations that they
are riding roughshod over community
pharmacies, which are being shortchanged
because Part D plans funnel
most of the prescription business to mailorder
and big-name chain pharmacies.
Those complaints have already found
the ear of influential Republicans on Capitol
Hill, including Senator Thad Cochran
(R-Mississippi), chairman of the Senate
Appropriations Committee. At the end
of April, he introduced a bill (S. 2563)
that has attracted an influential group of
bipartisan cosponsors; this has spawned
a similar bill in the House (H.R. 5182),
sponsored by Representative Walter
Jones (R-North Carolina).
The bill does three things:
• It forces Part D plans to pay pharmacies
on a fixed schedule.
• It dictates the kind of medicationmanagement
programs that the
Part D plans must use.
• It outlaws the practice of Part D
plans—when they are partners with
a chain drugstore—of putting the
name of the chain on Part D cards
that are sent to the Medicare recipient.

Leslie Norwalk, Esquire, Deputy
Administrator of the Centers for
Medicare & Medicaid Ser vices
(CMS), has already stated that Part
D cards with drugstore names on
them are on the way out.
However, the CMS has been much
more hesitant to authorize changes in
the medication therapy management
(MTM) program. The program’s general
outlines were “sketched in” by the
Medicare Modernization Act of 2003
(MMA), which established the outpatient
drug benefit. Sketched is the operative
word, because that legislation did
not provide heavy details and the MTM
programs that the Part D plans have
deployed, according to critics, have been
conducted via telephone by the PBMs.
The MMA did not indicate who should
provide MTM services. Oren Harden,
Jr., RPh, Executive Vice President of the
Georgia Pharmacy Association, says that
community pharmacists should be working
directly with patients, face to face, to
manage their medications.
Some Medicare Part D plans do follow
that game plan. MemberHealth, Inc., the
fourth largest stand-alone Part D plan in
the U.S., has set up its Community Care
Rχ (CCRχ) program, whereby the local
pharmacist is enlisted specifically to help
steer consumers to generic drugs.
MemberHealth’s generic incentive program
provides higher dispensing rates to
pharmacies that meet generic dispensing-
rate goals. The CCRχ generic dispensing
rate is about 60%, well above
industry averages.
Mark Merritt, president of the Pharmaceutical
Care Management Association
(PCMA), the PBM industry trade
group, has been working overtime to
ward off the Cochran and Jones bills, the
latter of which had about 110 cosponsors

one month after they were introduced.
On MTM programs, the Jones bill states:
“To the extent feasible, face-to-face
interaction shall be the preferred method
of delivery of medication therapy management
Mr. Merritt points out that the average
senior adult takes five or more medications
each day and sees at least two physicians
at any one time. He or she may use
any number of pharmacies.
“A complete drug history is critical to
an effective MTM program,” he emphasizes.
“Individual pharmacies often do
not have this history, but the drug plan
does—and therefore can ensure patients
are not taking drugs which cause interactions.”
CMS’s Ms. Norwalk and her boss,
Mark McClellan, MD, PhD, can probably
read the tea leaves. Medicare already
made one significant PBM change a few
months ago, when it told Part D plans to
continue providing members with medications
that had been taken off the plan’s
formulary if the patient’s condition had
been stabilized with that drug—that is,
unless the brand name was taken off the
formulary for one of three reasons:
• A new generic product became
• There was a safety warning.
• New clinical guidelines that affected
that drug were published.
On the other hand, Medicare probably
understands that it makes no sense to tie
the hands of Part D plans too tightly concerning
MTM or anything else. After all,
even the CMS actuaries have said that
PBMs are achieving deeper discounts
than previously anticipated. Reductions
have achieved an average of 27% off the
normal retail price, much better than the
15% discount that had been expected