OPA Fights for Fair Prescription Drug Legislation in OH
New UAW Contract Mandates Mail Order, Federal Medicare Reform Bill Clears CongressLegislative Update January 2004
Kelly Vyzral, Director of Government Affairs
OPA Fights for Fair Prescription Drug Legislation
Ohio’s General Assembly recently passed House Bill 311, Ohio’s Best Rx prescription drug discount program for senior citizens and low-income residents. Representative John Hagan was the sponsor of HB 311, and Senator Robert Spada was the sponsor of SB 138, the companion bill in the Senate.
In an effort to avoid having the prescription drug issue placed on the November 2004 ballot, legislative leaders encouraged the Coalition for Affordable Prescription Drugs, representing Ohio AFL-CIO and various consumer groups and the Pharmaceutical Research and Manufacturers of America (PhRMA), to come up with a compromise. HB 311 was the result of that collaboration. Because there was no pharmacy representation involved in the drafting of this legislation, the original bill was rife with problems for pharmacists.
OPA, together with the Ohio Grocers Association and the Ohio Council of Retail Merchants, immediately began to draft a list of major concerns from the perspective of pharmacists and pharmacies. We presented these concerns to the legislature, as well as the members of the Coalition and PhRMA. Our original list of concerns included the following:
. mandated participation;
. pharmacists were to pay the 5 percent program administrative costs;
. no anti-coercion language;
. yearly updating of prices;
. called for submitting paper claims;
. no pharmacy representation on the 12-member oversight committee;
. dispensing fee cap; will start at $3, but can’t go any higher than Medicaid;
. convoluted pricing scheme wouldn’t allow pharmacists to figure program pricing.
After several weeks of meeting with individual legislators, negotiating with the Coalition and PhRMA, and many hearings, we were able to make numerous positive changes in the legislation that will make it much more palatable to pharmacists. Several pharmacists, including OPA President Debbie Lange, Rick Marlin, Dom Bartone, and Barney Renard, made the trip to Columbus to testify in front of the Senate and House Finance Committee on the negative impact this program will have on the pharmacists in Ohio.
As successive versions of the bill were released, some issues were cleared up and new issues appeared. Two of the most troubling additions to appear in HB 311 very late in the process were a mail order provision that was never discussed in committee, and the addition of a $1 transaction fee requested by the Department of Job and Family Services (ODJFS) to cover possible start-up and additional administrative costs. The addition of this transaction fee affected pharmacy in a negative way. We had a tentative agreement to raise the dispensing fee from $3.00 to $3.70, but the agreement fell apart with the ODJFS request for an additional transaction fee.
The final version of the bill contained the following provisions.
. The dispensing fee will remain at $3.00, with a requirement that ODJFS annually review the adequacy of the rate.
. The program is voluntary and includes anti-coercion language.
. The 5 percent administrative fee comes out before the rebate is given.
. Prices will be updated weekly.
. All claims will be filed electronically.
. The oversight council must include one pharmacy representative.
. Claims must be paid within two weeks of submission.
. A $1 transaction fee will be charged to the program participant for each prescription filled.
. The PBM who bids on the contract must have a mail order company as part of the requirements for bidding.
. A $10 million General Revenue Fund appropriation for program start-up costs will be included.
This is by no means a perfect bill, and we are not happy with the final outcome. But we were very successful in getting most of the things we had asked for. We will continue to monitor this legislation as it goes through the rule making process. We will be looking into legislation that will address some of the mail order problems we have in this bill.
Federal Medicare Reform Bill Clears Congress
The long awaited Medicare Reform Bill, HR 1, passed Congress at the end of November. The 10- year, $400 billion bill was approved by the Senate by a 54-44 vote while the House passed the measure 220-215. The following are the major prescription drug benefit provisions of HR 1:
. Beginning in 2006, Medicare beneficiaries would pay an average premium of $35 per month and an annual deductible of $250 for prescription drug coverage. Beneficiaries would pay 25 percent of their annual drug costs up to $2,250 and 100 percent of costs between $2,250 and $5,100;
Medicare coverage would kick in again and cover 95 percent of costs over $5,100.
. Medicare beneficiaries with annual incomes between 100 percent and 135 percent of poverty would not pay a premium or deductible for prescription drug coverage. They would pay copays of $2 for generic medication and $5 for brand-name drugs. For those between 135 percent of poverty and 150 percent, there will be no premium, a $50 deductible and a 15 percent copay for each prescription.
. Medicare beneficiaries can begin to purchase prescription discount cards in April 2004, which would provide discounts of 15 percent or more on medications until the prescription drug benefit takes effect in 2006.
. The new Medicare benefits include chronic benefit in all Medicare coverage options. They will also cover preventative services including one-time physical exam, cholesterol and lipid screening, and improved diabetes lab screening.
. In 2010, Medicare will start to compete with private health plans in six metropolitan areas.
. Employers who currently provide prescription drug coverage to retirees would receive tax-free subsidies to continue to provide such coverage after Medicare prescription drug benefits take effect.
. U.S. residents could purchase prescription drugs from Canada, provided the U.S. Department of Health and Human Services certifies the safety of the practice.
New UAW Contract Mandates Mail Order
The new United Auto Workers (UAW) contracts, scheduled to go into effect January 1, 2004, require certain prescription drugs to be ordered by mail, a move that poses a serious threat to pharmacies in Ohio.
A provision in the UAW contract, which mandates employees buy medication for ailments such as diabetes by mail order from out-of-state, is part of a package of changes aimed at cutting costs at General Motors Corp, Ford Motor Co., Daimler Chrysler AG’s Chrysler Group, Delphi, and Visteon.
Health care is a major obstacle to profitability for automakers. But this particular savings will come at the expense of the traditional local pharmacies. The provision in the UAW contract will shift the business for such drugs to out-of-state mail order pharmacies.
As a result, millions of dollars spent at Ohio pharmacies will instead go to pharmacists in states such as New Jersey, where mail order operations are located. This has ramifications not only for Ohio’s economy but, in time, for all states as other unions in other industries use the UAW-Big 3 contract as a precedent to negotiate health care benefits for their workers.
OPA will be working closely with associations in other states such as Michigan to find solutions to the problems facing pharmacies serving large union populations.
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