ARLINGTON, Va. — Associations stand at the nexus of business and government, a critical juncture for retail pharmacy operators at a time when the nation’s health care system is experiencing the most sweeping changes since the mid-1960s, notes Steve Anderson, president and chief executive officer of the National Association of Chain Drug Stores.

Steve Anderson

The fitful implementation of the Affordable Care Act would be enough to keep NACDS, which Anderson has headed for the past seven years, busy, but the group and the industry it represents face unprecedented challenges and opportunities on multiple fronts.

The pending switch in the way pharmacy reimbursements under Medicaid are calculated, the fight to secure provider status for pharmacists, the push to promote broader use of medication therapy management to improve health outcomes and lower overall health care costs, the gradual rollout of track-and-trace regulations in the pharmaceutical supply chain, and the need for states to adjust dispensing fees are just some of the issues with which NACDS is currently dealing.

Anderson gives his take on these matters and other issues in an interview with Chain Drug Review‘s Jeffrey Woldt. Here are excerpts of their discussion.

CDR: What are NACDS’ top priorities for 2014? How do they fit in with your strategic vision of emphasizing government affairs, communications and member services?

ANDERSON: First and foremost, it’s essential to have a strong trade association. Utilizing a strategic planning approach, NACDS works to ensure that the industry issues are front and center. This approach has worked well thanks to the leadership of the NACDS Board of Directors.

NACDS works to address pro-patient, pro-pharmacy issues that impact the industry from a policy perspective, as well as providing business opportunities that deliver value and return on investment for our members and meeting attendees. And we leverage communications to ensure that both NACDS members and external stakeholders such as the media have a clear picture of how NACDS is advocating for and creating opportunities within the industry.

From a government affairs perspective, the implementation of the Affordable Care Act, ensuring fair pharmacy reimbursement through Medicaid, continued efforts to ensure patient access to pharmacy services and medications, as well as advancing legislation to enable pharmacists to help patients take their medications properly, are certainly at the forefront of our priorities for 2014. And we will work collaboratively with our allies and partners to address these key pharmacy ­issues.

As a member-service organization, NACDS is committed to providing business opportunities of high value for our members. Following the inaugural success of the NACDS Total Store Expo last year, we are continuing to build on that success for 2014 with the programming and high-caliber trade show which NACDS is known for.

CDR: Implementation of the ACA is under way. Assess the process and its impact on your members thus far. Is NACDS currently advocating any substantive changes in the ­program?

ANDERSON: NACDS has been engaged on the ACA since it was first proposed. As the January 1, 2014, start date approached, NACDS worked with our membership to prevent and mitigate any potential issues with exchange-purchased plans that might make it difficult for pharmacies to provide prescription drug services to the millions of newly insured Americans.

Potentially problematic scenarios include covered patients with no evidence of enrollment and/or no I.D. card, patients who think they are covered but who are not actually enrolled in coverage, and patients who have not paid their first month’s premium. To address these potential scenarios, NACDS asked insurers and HHS [Department of Health and Human Services] to provide short-term overrides of prior authorizations, nightly uploads of eligibility files, extensive patient education and outreach, and increased call center availability and support.

In addition, NACDS attended two meetings at the White House where we met with senior health care officials, and we were on many conference calls with the White House to discuss how the rollout was going in members’ pharmacies.

Also, NACDS conveyed our concerns in written comments to HHS in response to an HHS Interim Final Rule implementing last-minute policy changes for the plans. In an ongoing effort to monitor and update our members on implementation, we also sent out several communications to NACDS chain members. We provided updates on exchange enrollment numbers, information requests from the administration regarding exchange problems, new patient outreach and educational documents from the administration, and responses from the administration to member ­concerns.

I think the next six months will be very telling in how successful the implementation process has been. The Obama administration states that more than 6 million people have signed up through the online insurance marketplaces so far. And NACDS will remain engaged with the administration on pharmacy provisions as implementation continues.

CDR: You’ve stated several times over the years that chain pharmacy needs to own the issue of adherence. How close is the industry to achieving that goal? What more needs to be done?

ANDERSON: We have come a long way in our efforts to demonstrate that medication adherence is linked to improved health and controlled healthcare costs.

We are pleased that the growing body of evidence by peer-reviewed health and medical journals and other research publications indicates that improving medication adherence — including the use of medication therapy management [MTM] to help patients take medication as prescribed — helps to enhance patient health and improve health care affordability.

Reports by the Congressional Budget Office and the Centers for Medicare and Medicaid Services [CMS], as well as articles in Health Affairs, the Journal of American Pharmacists and the Journal of Managed Care Pharmacy offer further support that appropriate medication use can improve health while lowering costs.

NACDS also urges CMS to adopt measures related to medication adherence and appropriate medication use as part of its Quality Rating System [QRS] for Qualified Health Plans [QHPs], which are offered through health insurance exchanges.

CDR: Several bills paving the way for increased use of MTM have been introduced in Congress. What are the prospects for passage of those bills, and what are NACDS and its members doing to bring that about?

ANDERSON: Bipartisan support continues to grow for the proposed Medication Therapy Management Empowerment Act of 2013 [H.R. 1024 and S. 557]. The legislation enjoys the cosponsorship of 161 members of the House of Representatives and 31 members of the Senate — more than 35% of Congress. We remain highly engaged with lawmakers to find opportunities for these bills to advance within the House and Senate.

The increasing focus on MTM has included action in the executive branch along with the legislative branch of government. Earlier this year CMS published a proposed rule that would improve eligibility criteria for MTM within Medicare, making MTM available to 18 million beneficiaries instead of the current 2.5 million, according to CMS estimates. NACDS is very supportive of this ­provision.

CDR: Medicaid reimbursement policy has been an issue for many years. How close is CMS to establishing a new reimbursement formula?

ANDERSON: Based on recent CMS announcements, the agency is very close to establishing a new reimbursement formula. In November 2013, CMS announced final publication of the National Average Drug Acquisition Costs [NADACs] and indicated that the final AMP [Average Manufacturer Price]-based Federal Upper Limits [FULs] would be published in July 2014. CMS also stated that the Final AMP Rule would be released in May 2014. However, there are concerns that the Final Rule release date may be delayed. Nonetheless, CMS has maintained that the July 2014 publication of the final AMP-based FULs is a hard deadline, and CMS expects immediate state implementation of those new FULs.

For many years, NACDS has worked with pharmacy partners, including the National Community Pharmacists Association, to urge fair and accurate reimbursement for pharmacy services within the Medicaid program. We have long held that the AMP is an inaccurate benchmark for pharmacy reimbursement, and there is no correlation between the weighted AMP and pharmacy acquisition costs. NACDS analysis indicates that approximately 35% of the draft FULs are below the NADAC.

While we remain hopeful that CMS will utilize the rule-making process to implement Medicaid pharmacy provisions in a manner that will ensure that pharmacies are not reimbursed below cost, we are still concerned with the flawed AMP-based methodology and CMS’ timeline for implementing the new AMP-based FULs.

We’re also highly engaged with our partners in the states to ensure fair Medicaid reimbursement for pharmacy as well as working with all 38 states that have not implemented a cost basis for their reimbursement or rely mainly on managed care.

CDR: The government recently issued a proposed rule on Medicare Part D. What impact did NACDS have on its development? Are you seeking changes in the proposed rule before it is finalized?

ANDERSON: CMS released the proposed rule in January that would revise the Medicare Advantage and Part D prescription drug program regulations. Applicable to pharmacy, the rule includes changes related to preferred pharmacy networks, revisions to MTM eligibility requirements and clarification on prescription drug pricing standards and maximum allowable cost [MAC].

As a longtime supporter of enhancing eligibility for MTM, NACDS was pleased that the proposed revisions to Part D MTM eligibility requirements are expected to increase the number of qualified beneficiaries from 2.5 million to 18 million. The other provisions are also consistent with our ­policies.

NACDS reviewed the proposed rule with our members and provided comments to CMS.
Given that CMS may move forward with some parts of the proposed rule, and further consider other aspects of it, these are issues that will play out over time.

CDR: Pharmacists have long sought recognition as “health care providers.” How important is that status to achieving the goal of making community pharmacy a more integral part of the health care system? Is a change in status likely to happen in the near term?

ANDERSON: Pharmacists are highly trusted by patients. And in recent years pharmacists have played an increasingly important role in the delivery of health care services. Pharmacists now commonly provide immunizations and MTM services. They are also developing new and innovative approaches through medication synchronization programs, identifying and treating medication adherence issues, and working to have the ability to provide simple medical testing services. And with more than 30 million newly insured patients over time, pharmacists can help alleviate the increased need for health care services.

We were so pleased that legislation [H.R. 4190] was introduced in lead-up to our annual congressional fly-in — the 6th Annual NACDS RxImpact Day on Capitol Hill. During the fly-in, more than 400 pharmacy advocates urged lawmakers to support legislation introduced by Reps. Brett Guthrie [R., Ky.], G.K. Butterfield [D., N.C.] and Todd Young [R., Ind.] that would elevate pharmacists’ ability to help patients achieve success in their health care.

Specifically, medically underserved Medicare patients could have enhanced access to pharmacy services, including immunizations, diabetes screenings and self-management education, cardiovascular screenings, and behavioral therapy within the scope of state laws under this new bill.

The provider status designation would amplify pharmacists’ ability to do what they do best — serve patients and help them on the road to better health — and work to their full capability by providing underserved patients in the Medicare program with services not currently available to them.

CDR: I wanted to ask you about a couple of other pieces of legislation that NACDS has been involved with, and how they are going to affect your membership. Let’s start with the supply chain bill.

ANDERSON: We have been engaged in this legislation for years, and it has moved through this Congress in a bipartisan fashion. Because of the involvement of NACDS and some of our allies and other stakeholders, we are in a much better position now than we were.

The enactment of the Drug Quality and Security Act [in November 2013] was very significant on the supply chain side. There were some compounding issues that we needed to clarify — as a result of a rather tragic situation with a New England company [an outbreak of fungal meningitis was traced to contamination in medication supplied by a compounding company] — but at least as a result of this new law we have, more or less, national uniformity.

We have a good relationship with Rep. Fred Upton [R., Mich.], who is chairman of the House Energy and Commerce Committee and was the prime sponsor of the legislation. He spoke at our breakfast event on NACDS RxImpact Day on Capitol Hill. The passage of this legislation shows what we can do when we’re all working together on various aspects of the complicated distribution system that we have in the pharmaceutical industry.
As with any new law, the focus now turns to the implementation phase, and NACDS will remain engaged in advocacy and in promoting awareness of the timeline and specifics of the various effective dates included in the law.

CDR: How important was the compounding aspect of the legislation in terms of finally securing passage of the bill?

ANDERSON: The compounding issue may have been the driving force for the overall legislation. The bill made its way through Congress a little more effectively than it would have if it had just been a supply chain measure.

In the end, it’s better for issues like this to go through the legislative process as opposed to somebody doing something by executive order or through regulations.

CDR: What’s the current status of the Medicaid reimbursement cuts in California?

ANDERSON: We have some good news on that front. In his 2014-2015 fiscal year budget proposal, made in January, Gov. [Jerry] Brown said he is now restoring some of the cuts in the reimbursements for prescription drugs under Medi-Cal, and allowing pharmacy to participate in recommending other adjustments to the cuts. So we’re cautiously optimistic about that situation.

CDR: What are your other current concerns at the state level?

ANDERSON: Medicaid reimbursement for pharmacy is definitely one of our top priorities in the states this year. We are particularly concerned with the ability of states to fairly and accurately reimburse pharmacy, while meeting CMS’ plans to immediately implement the new FULs in July. Many states face administrative and legislative obstacles to implementing the new FULs in July and will need to pass new legislation, revise regulations and conduct cost-of dispensing-fee studies prior to implementing the new FULs. In fact, the National Association of Medicaid Directors has requested a transition period of up to one year from the date of final FUL publication to implement the new FULs.

We are particularly concerned regarding the ability of states to adjust dispensing fees prior to the July FUL implementation. Although dispensing fee increases are not required as part of the transition to the new FULs, CMS has strongly indicated that states must seriously consider whether their current dispensing fees will continue to provide adequate reimbursement for the cost of dispensing a prescription to a Medicaid beneficiary. Cost-of-dispensing-fee studies take at least six months to complete, and therefore it is not possible for states to complete those studies prior to the July deadline.

NACDS is working with members, partners and other allies to further develop and execute state-specific strategies to positively influence states’ efforts to implement acquisition cost reimbursement methodology and AMP-based FULs. NACDS is in the process of further developing state strategy that would lessen the impact on community pharmacy. We are also urging the administration to give the states the time they need to reform their programs so that beneficiaries’ access to prescription drugs is protected, and we are also reaching out to members of Congress and third parties about our concerns.

Overall on state issues, we work closely with our state partners — and that is due in large part to the great work of the NACDS state directors. We give our state partners all the support we can give them to ensure we are successful on our priority issues in the states.

CDR: The first Total Store Expo last August represented a major shift for NACDS. How was the event received? Will there be any changes in format this year? What other steps are being taken to augment member services?

ANDERSON: The NACDS Total Store Expo is truly evolutionary. It is distinguished in its ability to deliver the precision and personalization that members and attendees have come to expect from NACDS conferences and meetings. What we have heard and continue to hear from attendees is the cross-industry approach to doing business in a new way was not only very successful but also necessary for the industry, which is ever evolving.

As we look ahead to this year’s event, the energy is already building. Our attendance at the inaugural NACDS Total Store Expo in 2013 was outstanding. Well over 5,500 industry retailers and suppliers were in attendance. Survey results reveal that 92% planned to return for the 2014 trade show.

NACDS will build on the successes of the inaugural Total Store Expo. The core programming and strong elements of the trade show will continue, because the format worked well. However, just as the industry is ever evolving, so will the NACDS Total Store Expo.

In NACDS’ continued efforts to demonstrate the innovation and technology of the Total Store Expo, last year NACDS-TV was introduced, which captured the inaugural event through interviews, highlights and features that offered new attendees a snapshot of the trade show. Taking it one step further this year, NACDS-TV is offering attendees video resources to help in their planning. A new five-part video series titled “Tips for Successful Exhibiting at Total Store Expo” provides registrants with “how to” instructions to help make the show experience successful for retailers and suppliers, including how to utilize online resources such as the Exhibitor Manual and My Show Planner Guide to help personalize attendees’ show experience.

In the coming months NACDS will provide additional updates on programming and opportunities for the 2014 NACDS Total Store Expo. Stay tuned.

*For the full Anderson interview, please see the April 28, 2014, print edition of Chain Drug Review.