Pharmacies Grapple With Their Future

Posted October 22, 2008 at 1:59pm

Community pharmacies and their mail-order counterparts are in a battle that is being waged on Main Street and might conclude in Congress.

Each side argues that its approach guarantees lower costs and greater consumer safety. Each side is also lobbying and marshaling its arguments.

Mail-service pharmacies can be safer because they use electronic prescriptions, an approach that tends to decrease errors in prescribing, said Mark Merritt, president and chief executive officer of the Pharmaceutical Care Management Association.

Pharmacy benefit managers, which administer drug benefit programs for employers and health insurance carriers, use the mail to distribute their products, allowing patients to order medication online.

The use of e-prescribing results in prescription dispensing accuracy rates of 99.9 percent or better, “dramatically reducing serious errors more common in busy retail pharmacies,” according to PCMA. Electronic prescriptions are easier to read than handwritten documents, leading to fewer mistakes.

Also, these records are easier to share among doctors, cutting down on errors or oversights when patients go from one physician to another.

Mail-service pharmacies can save customers money because their collective buying power means lower costs. On average, mail-service pharmacies save 25 percent over traditional pharmacies, Merritt said.

Community pharmacies disagree. Face-to-face counseling is essential to a patient’s health. And only community pharmacies can provide that service, said Charlie Sewell, senior vice president of government affairs for the National Community Pharmacists Association. Medications are also more likely to degrade when shipped through the mail, he said.

Community pharmacists also work to find lower-cost options for patients, including greater use of generics, Sewell said. Moving 1 percent of prescriptions from brand to generic drugs can save $200 million, he said.

The battle between PBM-run mail- service pharmacies and community pharmacies will continue next year. The NCPA will again work with Reps. Anthony Weiner (D-N.Y.) and Jerry Moran (R-Kan.) to reintroduce the Community Pharmacy Fairness Act.

The legislation would provide an antitrust exemption to give community pharmacies collective bargaining power.

This would provide these pharmacies with the edge that they need to stay afloat financially, Sewell said.

The bill is also meant to address allegations of improper tactics by PBMs, such as changing formularies to drive out cheaper generic drugs, limiting pharmacies’ ability to prepare and sell customized prescription drugs, and billing employers more than PBMs pay a pharmacy, according to advocates for local pharmacists.

Their mail-order competitors contend that this authority is unnecessary. According to a study conducted by the group, independent community pharmacies are successfully adjusting to market conditions. According to the PCMA, the study shows that increasing profits and salaries at community pharmacies “further highlights that we don’t need to create new ‘collective bargaining’ legislation that would empower independent drugstores to charge higher prices to consumers and payors.”

In addition, the legislation would cost $640 million over 10 years, according to a Congressional Budget Office estimate cited in the report.

Community pharmacists dismissed the report as biased. “They put out the same bogus report last year,” Sewell said, adding that Congress is tiring of seeing hometown pharmacies “squeezed” by larger competitors.

“It is an anti-competitive marketplace,” said Steve Giroux, the former president of NCPA. The larger pharmacies have an unregulated market, and they want it to stay that way, he added.

President Bush recently signed legislation into law that both mail-service and community pharmacies agree with. That bill, the Ryan Haight Online Pharmacy Consumer Protection Act, would amend the Controlled Substances Act to limit the sale of controlled substances by online pharmacies.

Under this new law, such sales cannot take place without a valid prescription and a practitioner must conduct an in-person examination of a patient for a prescription to be considered valid. The law also increases penalties on pharmacies that fail to comply with these requirements.