SECTION: CAPITOL HILL HEARING TESTIMONY

LENGTH: 1795 words

COMMITTEE: HOUSE SMALL BUSINESS

HEADLINE: "MEDICARE ENDORSED PRESCRIPTION DRUG DISCOUNT CARDS AND THEIR IMPACT ON SMALL BUSINESS"

TESTIMONY-BY: LAVARNE BURTON,, PRESIDENT,

AFFILIATION: PHARMACY CARE MANAGEMENT ASSOCIATION

BODY:
House Committee on Small Business

"Medicare Endorsed Prescription Drug Discount Cards And Their Impact On Small Business"

October 25, 2001

Prepared Remarks of LaVarne Burton, President, Pharmacy Care Management Association

Mr. Chairman, Mrs. Velazquez and members of the Committee, I am LaVarne Burton, President of the Pharmaceutical Care Management Association (PCMA). Thank you for the opportunity to appear before you today to testify on behalf of PCMA and its membership.

PCMA's Members

The Pharmaceutical Care Management Association (PCMA) represents companies that provide pharmacy benefits on behalf of health plans, HMOs, employers, unions, Medicaid and Medicare managed care plans, the Federal Employees Health Benefits Program and others. These entities, often referred to as PBMs (pharmaceutical benefit managers), include a wide variety of companies including some that primarily provide pharmacy benefits and others, including chain pharmacies, health plans, and insurers that provide pharmacy benefits as a part of their operations. Today, about 170 entities provide managed prescription drug benefits to approximately 170 million individuals. These entities are involved with more than 2 billion - or 70 percent - of the approximately 3.2 billion prescriptions dispensed each year in the United States. PCMA also represents Internet and mail service pharmacies that dispense almost all of the approximately 340 million mail service prescription orders for ambulatory care patients, the fastest- growing segment of the prescription drug delivery sector - equating to approximately 16 percent of all prescriptions. PCMA members employ over 12,000 pharmacists. While many of our members serve broad national populations, some focus on the needs of specific communities such as patients with HIV/AIDS, organ transplants, or cancer.

PCMA strongly supports a legislative effort to provide America's seniors with a Medicare prescription drug benefit. We stand ready to work with the Congress and the Administration to design a program that improves seniors' access to prescription drug coverage. We also support the Administration's proposed prescription discount card program as a good first step toward providing America's seniors with comprehensive prescription drug coverage. Discount cards would provide immediate relief for the out-of-pocket expenses incurred by many seniors and contribute to improved health.

We are pleased to respond to the Small Business Committee's interest in the impact of the Administration's discount card program on small businesses - specifically independent pharmacies. In this regard, I will address the role of our members and their close working relationship with pharmacy in delivering prescription drug benefits in a manner that assures patient care while managing cost.

The Role of Managed Pharmaceutical Services in Patient Care

Of the more than 3 billion prescriptions filled last year, nearly three in four involved the active involvement of our members. Managed pharmaceutical care provides patients and their physicians with a centralized clearinghouse to review a patient's prescription drug use. In many cases, patients see more than one physician and, without our services, physicians may be unable to obtain a complete drug history for their patients. A recent review by one of our members of a national health plan with over 14,000 members who were 65 and over showed that:

51 percent visited two or more pharmacies;

46 percent visited three or more doctors; and

53 percent are on more than five drugs.

By consulting the centralized clearinghouse, pharmaceutical benefit managers and our partners in community retail pharmacy can play an important role in ensuring that seniors are not subject to adverse drug interactions. The relationship between pharmacy benefit managers, physicians, and pharmacists are complementary with each party playing a role in delivering safe and effective health care to patients.

A study by Mathematica Policy Research (The Role of PBMs in Managing Drug Costs: Implications for a Medicare Drug Benefit prepared for the Henry J. Kaiser Family Foundation) noted these advantages of pharmacy benefit managers (PBMs). The authors cite that: " In addition to negotiating rebates with manufacturers, PBMs are able to contain costs by steering utilization toward more cost-effective drugs PBMs could also potentially improve the quality of pharmaceutical care received by seniors, as their drug expenditures would be tracked in a single data system (within each region) that would allow comprehensive reviews for drug interactions and contraindications. This would be a substantial improvement over the current system, which has a limited ability to track prescription drug use for seniors that lack drug coverage."

Drug Discount Cards Can Improve Care and Save Money

PCMA supports the President's discount card initiative because it expands the health care benefits of prescription drug management to those who today lack prescription drug coverage. In addition, Medicare drug discount cards can bring immediate financial savings to seniors.

Perhaps the best evidence of the potential benefits of discount cards is the millions of seniors who already use discount cards. They realize the benefits of discount cards, and they know when to use them to save money. In July, PCMA looked at some of the discounts that are already available from our members through discount cards. A review of just some of the more popular medicines used by seniors revealed savings as much as 24 percent for brand drugs purchased at the retail level and up to 37 percent for drugs purchased through mail order compared to the average prices paid by cash customers without discount cards. Even greater savings, as much as 65 percent on retail and 69 percent through mail order are realized for generic drugs purchased through a discount card program.

The number and variety of discount cards available through the private sector are evolving. The largest senior organization in the country, the AARP, already provides a discount card to its members. Within the last few weeks, a major pharmaceutical manufacturer, GlaxoSmithKline, announced a card that is specifically designed to lower prescription drug costs for lower income seniors and the disabled. Former Congressman Joseph Kennedy recently kicked-off a discount card program of Citizen Health, a Massachusetts, Rhode Island and Connecticut program that will offer point-of-sale discounts to seniors.

What these efforts have in common is that they all involve pharmacy benefit managers working with consumers and other private sector organizations to increase the number of Americans who have access to safe and affordable prescription drugs. PCMA and our member companies believe that all of us in the pharmacy industry, including pharmacy benefit managers, manufacturers, wholesalers, and retail pharmacy, can work together to assure that discounts currently available to some consumers can indeed be made available to all.

The President's initiative can expand and improve on what our members are already doing. The Medicare stamp of approval would signal seniors that discount drug cards are worth investigating. Medicare involvement will strengthen the hands of our members in negotiating favorable prices with everyone in the pharmaceutical supply chain. Community Pharmacies and Drug Discount Cards

PCMA believes that partnerships among all of pharmacy are essential to delivering pharmaceutical care services. In fact, community retail pharmacies dispense some 84 percent of the prescriptions in which pharmacy benefit managers are already involved. Networks of community pharmacies are one of the most important tools that our members use to provide consumers with their primary access to receive pharmaceutical care.

Pharmacies are active participants in both employer-funded pharmacy benefit programs and existing drug discount cards. Consumers with managed prescription drug benefits have access to the vast majority of pharmacies throughout the United States. Virtually every retail pharmacy in the country already participates in these programs, providing access in rural, suburban and urban settings.

Medicare drug discount cards - like today's managed drug benefit programs - will also rely heavily on the services of community retail pharmacies. As with existing card programs, individual pharmacies can choose to participate in a pharmacy network in order to better serve their customers and to benefit from increased pharmacy and non-pharmacy sales. The President's discount card program will extend the favorable pharmacy pricing currently offered by these community retail pharmacies to even more Americans.

After a decade-long decline in the number of independent community pharmacies, the trend has changed. According to an October 13, 2001, press release from the National Community Pharmacists Association, the number of independent pharmacies grew by more than 200. At the same time, independent pharmacies experienced overall double-digit sales growth, increasing 18 percent over the previous year. NCPA defines an "independent" as single-store independent pharmacies, independent chains, pharmacy franchises, and pharmacist-owned supermarket pharmacies. While the number of independent pharmacies has grown, so have the number of PBMs and the lives they cover.

Conclusion

The private sector relies on PBMs to operate efficient and cost- effective drug benefit programs, in which an estimated 70 percent of prescriptions are managed by a PBM. The goal of the President's discount card program is simply to ensure that all Medicare beneficiaries have access to the same demonstrated drug management experience as those with private sector drug coverage. And, just as in all private sector pharmacy benefit programs today, the success of pharmaceutical care will include pharmacy networks that relies on both large and small pharmacy businesses. In conclusion, Mr. Chairman, I want to make clear to the Committee that our members are ready to serve the senior population of the United States in both a Medicare drug benefit and in a drug discount card program. We hope and expect that community retail pharmacies will continue to serve as our partners in pharmacy networks for a discount card plan or the much-needed comprehensive drug benefit. Everyone involved in the delivery of health care should now move toward the goal of providing quality and affordable prescription drug coverage to our seniors that already is enjoyed by millions of the people in the private sector. PCMA appreciates your seeking our views and I look forward to your questions.



LOAD-DATE: November 16, 2001