Helene Levens Lipton
In the first interview with health policy expert Helene Levens Lipton, PhD, Professor of Health Policy in the UCSF Department of Clinical Pharmacy and the Institute for Health Policy Studies, she outlined the threat to independent pharmacies posed by slow and reduced reimbursement. With less than 30 days left until the Medicare Part D signup deadline, Lipton takes another independent and balanced look at the problem from the perspectives of key players - patients, health professionals, payers, and policymakers.
When you look at the national picture, do you find that all pharmacies are suffering economically as a result of Medicare Part D's implementation? Or is the picture mixed?
For pharmacies nationwide, the picture is mixed. For some big chain stores, business is better because more patients enrolled in Medicare Part D translate into greater customer volume. For independent pharmacies, the picture is not nearly as bright, due mainly to slow and low reimbursement from the Medicare drug plans. Some health plans are paying pharmacies more than six weeks after drug claims are submitted. Some pharmacies - particularly the independents - have had to take out loans to cover this float. In many states, these new Medicare drug plans are paying pharmacies less than half the dispensing fee that Medicaid offers. Currently, there are bills in Congress that would require plans to pay pharmacies more promptly after submission of drug claims.
How about the health insurers themselves? Are the larger insurers the winners so far and if that continues, does that bode well or ill for the pharmacy profession?
Large insurers are some of the biggest winners under the new benefit. United HealthCare is a clear winner, due in part to its collaboration with AARP. Other major winners are the drug companies. They are seeing increased drug use and expenditures as more seniors who previously lacked drug coverage are now able to afford to purchase needed drugs.
There have been reports that some of the health insurance plans have refused to negotiate their prices with different pharmacies. Are these reports true? And is it true that Medicare cannot negotiate for lower drug prices?
Health insurers have been negotiating prices with all pharmacies interested in participating in their networks; however, certain pharmacies - particularly those with large patient volume and/or the prospect of delivering greater volume - often receive pricing and contract terms that are more favorable. These are called "preferred" pharmacies.
Despite this inequity, and because of the way the current law is written, some Medicare Part D health insurers can claim to be meeting the law's pharmacy access requirements by counting all the pharmacies they have under contract - even those that receive a lower reimbursement. New legislative initiatives in Congress would require that Medicare health insurance drug plans count only "preferred" pharmacies in meeting pharmacy access requirements. This could strengthen the bargaining power of non-preferred pharmacies in contracting with plans.
Yes, it is true that under the new benefit, Medicare does not have the authority to negotiate with drug companies for lower drug prices; in fact, it is currently prohibited from doing so. Many analysts assert that this prohibition will lead to runaway drug expenditures under Medicare Part D; if the government could negotiate directly with health plans, it would have enormous purchasing power which could drive down drug prices. The cost of Medicare Part D - its long-term financial sustainability - is already a concern. But in this election year, the ability of patients to access benefits and of pharmacies to stay in business are the big issues.
When you review the promotional materials for the various prescription drug plans, how do you rate their clarity and honesty? Should consumers be alert to particular terms or practices?
Most consumers are really confused by the wide variety of terms that are used to describe Medicare drug plans. For example, some drug plans describe their products as "Standard" or "Enhanced," while others use terms that are equally vague, such as "Silver Plus" or "Premium." Different plans use different terms, so it is extremely confusing for seniors to compare "apples with apples." Currently, there are legislative initiatives in Congress that would require plans to develop and use standardized nomenclature. All health plans would be required to use the same terminology in presentations of benefits and procedures.
In your view, are there adequate protections for consumers who enroll in the new Medicare benefit?
In a word: No. The prior authorization and appeals processes are quite burdensome and time-consuming, not only for patients and their families, but also for pharmacists and physicians. To compound the problem, prior authorization and appeals procedures differ greatly from health plan to health plan. We need to require standardized appeals, prior authorization and exemption processes and procedures across all health plans.
Is there any hope that this new benefit will increase use of cost-effective drugs?
Yes, I think Medicare Part D will drive switches to generic drugs when these drugs are available. Since Part D will increase overall drug coverage and use, both generic and brand-name drug use will go up in real terms. The real issue is whether the benefit will increase the rate of generic use relative to the rate of brand-name drug use. This is often called "generic penetration."
The plans have a huge incentive to deliver drug benefits at low costs, so they are actively trying to drive physicians to prescribe and patients to use generic drugs. They do not want their enrollees falling into the "donut hole" (coverage gap). Plans have implemented aggressive prior authorization and step-therapy requirements. The Centers for Medicare and Medicaid Services has given plans enormous leeway in designing their drug formularies. Plans are free to charge patients significantly more for brand-name drugs than their generic equivalents through "multi-tiered" pricing (i.e., different co-pay levels for brand versus generic drugs). Plans also can require that physicians fill out onerous prior authorization forms in order for patients to obtain brand-name drugs. So generic drug use - and more importantly, generic penetration - will increase significantly.
