Legislation approved this week in New York highlights the escalating tug of war between retail pharmacies and pharmacy benefit managers (PBMs).

Assembly Bill 5502-B, Anti-Mandatory Mail Order Pharmacy Bill, Andrew Cuomo, retail pharmacies, drug stores, pharmacy benefit managers, PBMs, mail order pharmacy, network retail pharmacy, health insurers, National Community Pharmacists Association, NCPA, B. Douglas Hoey, Pharmaceutical Care Management Association, PCMA, Mark Merritt, prescription drug benefits, Express Scripts, Medco Health Solutions, Walgreens, Russell Redman, Federal Trade Commission

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Drug stores vs. PBMs: Anti-mail bill OK'd in N.Y.

December 14th, 2011

NEW YORK – Legislation approved this week in New York highlights the escalating tug of war between retail pharmacies and pharmacy benefit managers (PBMs).

New York Gov. Andrew Cuomo on Tuesday signed Assembly Bill 5502-B, the Anti-Mandatory Mail Order Pharmacy Bill, which prohibits health insurers from requiring people to buy prescription drugs from a mail order pharmacy. The measure enables consumers to fill a prescription at a network retail pharmacy without being subject to an additional co-payment, fees or other conditions — provided that the retail pharmacy accepts a price in line with that of the mail order pharmacy.

He also signed similar legislation, Assembly Bill 7779, which would allow an insured to buy fertility medication at a local specialty pharmacy without incurring extra costs by not using a mail order pharmacy.

"Both of these bills seek to improve consumer convenience by expanding the options by which consumers can fill their drug prescriptions," Cuomo stated in the approval memorandum for the two pieces of legislation.

However, Cuomo noted that his approval came with conditions. "While I support their objectives, I have concerns with these bills," he said in the memorandum. "To address these concerns, both houses of the legislature have agreed to pass amending legislation making several changes, including providing that the retail pharmacy must agree in advance to accept the same reimbursement rate and applicable terms and conditions established for mail order pharmacies. With the understanding that these amendments will be passed, I approved these bills."

Retail pharmacy and PBM trade groups both claimed victory with the legislation's approval.

"In signing this bill into law, Gov. Cuomo made the right call for public health, patient choice and New York jobs," National Community Pharmacists Association chief executive officer B. Douglas Hoey said in a statement. "First, the law empowers patients to choose the best pharmacy option for their personal health needs and preferences. While most patients overwhelmingly prefer to talk to a pharmacist in person, those who prefer to use mail order facilities will have that choice. But mail order is not for everyone, and the key is leaving that decision in the hands of patients — not a large corporation with a vested interest in growing its mail order business."

Hoey also noted that face-to-face consultations with pharmacists spur medication adherence, in turn improving health outcomes, and help flag potential adverse drug interactions. "Third, amid a struggling economy, this law keeps more New York health care dollars in the state," he explained. "That supports local tax revenue and jobs, including those at the Empire State's 2,200 independent community pharmacies. According to the Pharmacists Society of the State of New York, the required use of mail order pharmacies has resulted in over $5 billion leaving the state every year."

The Pharmaceutical Care Management Association (PCMA), which represents the PBM industry, opposed the bill but credited Cuomo with requiring lawmakers to amend it by making retail pharmacies subject to the same reimbursement, terms and conditions as mail order pharmacies.

"Employers, taxpayers and consumers appreciate Gov. Cuomo's admonition to the Legislature to improve this costly, anti-consumer bill," PCMA president and CEO Mark Merritt said in a statement. "In this economy, employers need every cost-saving tool they can get, and mail-service pharmacy is at the top of the list."

In a news release on Cuomo's approval of the legislation, PCMA stated, "Home delivery is popular with patients because it offers 90-day prescriptions that are less expensive and is more convenient than driving to the drug store every 30 days. With mail-service pharmacies, patients can get private counseling over the phone from trained pharmacists seven days a week, 24 hours a day. Numerous other government and peer-reviewed data have confirmed the increased savings, safety and adherence provided by mail-service pharmacies."

Last week, PCMA announced the results of a survey finding that cost savings weighed more heavily with consumers than wider access to drug stores. When asked which is most important for their prescription drug benefits, 56% of respondents said "holding down premiums and other out-of-pocket costs" versus 17% saying "access to every drug store in [their] area." Of adults polled, 12% indicated they would be willing to pay a higher premium if their drug plan added more drug stores to its network, while 84% would not be willing to pay more.

In addition, among the 31% of insured adults surveyed who have tried mail order, 89% indicated they are satisfied with the service, and 70% of respondents agreed that "prescription drug plans should try to reduce prescription drug costs for consumers as much as possible, even if it means drug stores make less money," according to PCMA.

The signing of the bill in New York came just a week after a key U.S. Senate hearing scrutinizing the proposed merger of PBMs Express Scripts and Medco Health Solutions.

Supporters of the deal, which is being reviewed by the Federal Trade Commission, say it will lower the cost of prescription drugs for Americans. Opponents say the promise of savings is hollow and claim the merger is anticompetitive because the merged PBM would exploit its market leverage by forcing consumers to use its mail order pharmacy to fill prescriptions instead of being able to do so at a drug store.

Meanwhile, Express Scripts and Walgreen Co., the nation's biggest drug chain, remain locked in a contract dispute. Walgreens announced this summer that starting next year it would no longer participate in Express Scripts' retail pharmacy network. The chain has since been working to move forward largely without the PBM by touting the value of its vast store network and pharmacy services to health plans and employers.

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