Questions about the U.S. health care system and community pharmacy's place in it are as numerous as ever, despite the enactment of the health care reform law.

CDR Pharmacy Roundtable, health care reform, community pharmacy, Chain Drug Review, Patient Protection and Affordable Care Act, health care system, pharmacy, pharmacist, NACDS Pharmacy and Technology Conference, Steve Anderson, National Association of Chain Drug Stores, John Fegan, Winn-Dixie, Bob Loeffler, NACDS, H-E-B, Josh Flum, CVS Caremark, Tammy Royer, Rite Aid, Nik Seifter, Haggen Food & Pharmacy, Top Food & Drug, Mike Coughlin, ScriptPro, Jeff Farris, PDX, Mike McBride, Upsher-Smith, Tom Rhoads, Parata Systems, Robert Coopman, Robert Coopman Consultants, drug store

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Rx Roundtable: Where's health reform headed?

October 12th, 2011

BOSTON – Questions about the U.S. health care system and community pharmacy's place in it are as numerous as ever, despite the enactment of the health care reform law.

Even as implementation of the Patient Protection and Affordable Care Act proceeds, challenges to the March 2010 law continue in Congress and the federal courts. Meanwhile, players in the private sector — including many pharmacy operators — are recasting their business model to better serve patients in an environment in which the way every health care dollar is spent draws scrutiny.

To help sort things out, Chain Drug Review assembled leading pharmacy retailers and suppliers for a roundtable discussion at the NACDS Pharmacy and Technology Conference in Boston.

Chain drug store panelists in the CDR Pharmacy Roundtable included Steve Anderson, president and chief executive officer of the National Association of Chain Drug Stores; John Fegan, vice president of pharmacy at Winn-Dixie Stores; Josh Flum, senior vice president of retail pharmacy at CVS Caremark; Bob Loeffler, chief administrative officer at H-E-B and NACDS chairman; Tammy Royer, vice president of clinical services and pharmacy initiatives at Rite Aid; and Nik Seifter, pharmacy director at Haggen Food & Pharmacy/Top Food & Drug.

Supplier participants included Mike Coughlin, president and CEO of ScriptPro; Jeff Farris, president and CEO of; Mike McBride, senior director of industry relations at Upsher-Smith Laboratories; and Tom Rhoads, CEO of Parata Systems. The roundtable was moderated by Robert Coopman, president of Robert Coopman Consultants and a regular contributor to Chain Drug Review.

Here are excerpts of the discussion on the implementation and future of the health care reform law.


When we attended this session a year ago, we had just gone through the actual enactment of the Affordable Care Act. The president signed it in March of last year, and we've been in the process of working on implementation, with all the different ramifications, ever since. There's a legislative side to this in terms of attempting to repeal it, which is not going to be terribly successful with the current makeup of Congress and the current occupant of the White House. At the same time, you have regulatory things that are being ­implemented. ...

The other interesting aspect, the one that's getting most of the press now, is the legal challenges to the Affordable Care Act. We've had at least two federal appeals courts that have ruled on the constitutionality of the legislation. We just had one that came out of Atlanta a couple of weeks ago. In a 2-to-1 decision, the judges found the individual mandate requiring people to actually go out and buy health care coverage violates the commerce clause of the Constitution. 

"Pharmacy spend is actually an extremely powerful lever for lowering overall health care costs."

— Josh Flum, CVS Caremark

Most experts have said the entire health care bill will rise or fall based on the constitutionality of the individual mandate. Attorneys at NACDS and others have said that if that is thrown out, there is no way that the health care legislation could actually be implemented because the individual mandate is what drives the bus. Different federal courts have come to different conclusions, so the issue will eventually go to the Supreme Court. Conventional wisdom is the vote there will be really close.


The big issue is whether the courts throw the whole bill out as being unconstitutional, or they keep some pieces of it and eliminate others. Is pharmacy in a position to say don't throw the whole bill out because we have the AMP issue resolved, which is very crucial?
If they eliminate the individual mandate at the last minute but keep the requirements that insurance companies provide universal coverage, what does that do to the insurance industry? There are several significant elements in play.


Steve [Anderson] made a point that health care reform did get us to the table and did get us recognized, which is a good thing. But I attended a discussion not too long ago sponsored by PricewaterhouseCoopers, and the message there was that we're still going to be impacted in pharmacy. Policy makers are looking to cut costs somehow, and we're one of the targets.

It’s interesting that when you look at health care costs today, prescription drugs are 10% to 12% of the total spend. Professional services, hospitals and home care represent another 64%. Administrative costs, commissions and other expenses represent 17%, and then there's the profit. It's wrong for the powers that control health care expenditures to focus on 10% to 12% of the total spend to solve the problem.

By being at the table, we now have the opportunity as pharmacy advocates to show that the solution can't reasonably come from here. It's not going to give the answer on controlling overall health care costs. In fact, if reimbursement cuts come from pharmacy, it could work to the detriment of what we're trying to do with the re-education of the patients we serve on adherence and other issues that will make pharmacy care more effective.


John [Fegan] highlighted a critical and important message. When you look at the economics of health care, one of the most striking things you see is that pharmacy spend is actually an extremely powerful lever for lowering overall health care costs.

For example, roughly half of all diabetes patients have some sort of gap in care, meaning that either they are nonadherent to their medication or they are missing a medication altogether. Closing that gap will save over $4,400 per year in avoidable health care costs related to nonadherence.

"Retail pharmacists work with the problems and successes of delivering medication therapy to the community every day."

— Nik Seifter, Haggen

This is not unique to diabetes. It is a pattern that repeats itself over and over again in hypertension, dyslipidemia, coronary artery disease, congestive heart failure — and the list goes on.

We now know that across a typical population of 100,000 patients, improved patient outcomes resulting exclusively from better pharmacy care can take out $54 million per year in health care costs for an employer or health plan.

What we need to do as industry leaders is to make sure that payers and policy makers who are looking to cut costs understand that value as well.


The situation creates an opportunity to show what community pharmacy can do. We need to talk about the contributions pharmacists can make by lowering health care costs through better compliance and expanded patient care services. It's disturbing to see that we're not necessarily thought of as part of that health care continuum, because we probably hold the greatest potential for making a positive impact.


The [health reform] provisions for MTM [medication therapy management] have been very important. As a result, there are some clear case studies out there that are beginning to show how effective MTM can be. Numerous studies place the ROI [return on investment] ranging from $11 to $13 for each $1 spent on MTM. Twenty-five percent of that is in reduced product cost, and the remainder is downstream health care cost savings. I recently read a presentation citing seven different studies that all showed the return for MTM to be $4 for $1. We need to get those numbers out in front of payers and policy ­makers. ...

Pharmacy has to establish a permanent seat at the table. ... We have a good story to tell now, and we need to gather evidence to back it up.


Retail pharmacists work with the problems and successes of delivering medication therapy to the community every day. Prescribers are begging for someone to help with barriers to providing medication to patients. They spend more time trying to figure out how to fill out insurance forms — as said earlier, "dot all the I's, cross all the T's" — and fill that out correctly to get payment versus making sure the patient walks away with a medication that's helpful. 


Collaborative sharing of patient information is going to happen. It's going to be legislated that pharmacies will share patient information in real time with any pharmacy in the United States at the time a patient is being serviced. That is what the "portability" piece of HIPAA means. ... You see that today in some of the provinces in Canada, where every pharmacy filling a prescription in real time is looking at a patient's prescription history across the entire province. And it is only a matter of time before this will be legislated in the United States.


Anyone who uses the health care system knows that it has to be improved. On that we agree. The big question is how are we going to pay for it.

One bright spot is more people have access to health care and prescription drug coverage. That's a good thing. One major piece of this is how big a payer the government will be and what this means for controls and all of the changes that will impact the industry. It's really the biggest concern for most of us. If health care gets in the hands of government, that's not likely to be the most efficient model — you only need to look at other countries where this has happened to confirm this. 


With our health care costs rising, [Parata] mandated last year that [all employees], if they wanted to receive a preferential rate, get a physical. A third party was brought in, and they provided the exams. By the end of day, we had two ambulances outside our office rushing people to the hospital for undiagnosed diabetes. We have to help our employees manage these chronic disease states. Smoking cessation is a big piece of that, as well as the diabetes care. Our efforts have already caused a substantial reduction in cost.

*For more of the discussion in the CDR Pharmacy Roundtable, please see the Oct. 10, 2011, issue of Chain Drug Review.