Table of Contents
ARLINGTON, Va. — This year the political and public policy environment in Washington is markedly different from last year, when chaos prevailed. Interest both on Capitol Hill and in the White House in such pharmacy-related issues as drug pricing, the opioid epidemic, and direct and indirect remuneration (DIR) fees charged by pharmacy benefits managers has provided an opening and a natural focus for the National Association of Chain Drug Stores.
To seize the opportunities presented by this changed landscape, NACDS has launched four campaigns to advance the needs and goals of the chain drug industry with policy makers and legislators, not only in the nation’s capital, but in the states as well. The four campaigns highlight the industry’s priority issues: DIR fee reform; drug pricing policy; advancing pharmacy’s scope of business; and preventing opioid abuse.
At the top of the list, Anderson says, is relief from DIR fees, which, according to the Centers for Medicare and Medicaid Services, have skyrocketed an incredible 45,000% between 2010 and 2017.
As NACDS president and chief executive officer Steve Anderson explains in the interview below, the association developed and deployed the concept of campaigns to take advantage of the changed environment, but those campaigns have leveraged the years of work done by NACDS and its membership in past years to raise awareness of retail pharmacy’s real importance in health care through initiatives such as RxImpact Day and congressional pharmacy tours.
The campaigns have also created the scope for NACDS to partner with other pharmacy associations, namely the National Community Pharmacists Association and the National Association of Specialty Pharmacy, and those relationships will continue to be of value as NACDS continues to fight for the industry. That fight will be ongoing, because as Anderson notes, “You can’t say, ‘It’s not over until it’s over,’ because even when it’s over it can be changed later. It’s never over in our nation’s capital.
Steve Anderson
CDR: Let’s begin with the four campaigns that you’ve started, which seem to encapsulate NACDS’ agenda succinctly. NACDS is waging campaigns on direct and indirect remuneration (DIR) fee reform, overall pharmacy reimbursement, scope of business and opioid-abuse prevention.
ANDERSON: Yes. Right off the top we’ll explain how we got to this campaign concept, since this is the first time we’ve actually used this. We’ve been working on these issues for quite some time and in various capacities, but many times we have to adapt to what’s going on in the environment. Because of the increased focus in Washington on drug pricing and opioid issues, and because of the dramatically changing nature of the industry, we thought we would come up with new concepts to break the paradigm of how we make decisions.
As I’ve said, we’ve always been working on these issues, but it’s just a matter of timing, where we have an administration that really wants to focus on drug pricing, which is good. And we’ve got a society that’s afflicted by the opioid epidemic, which is tragic. And scope of business is interesting, where there is a lot of innovation. Reimbursement is tied to DIR. These issues intersect, so we put together campaigns that recognize the unique state of these issues, and the relationships among them. The senior vice presidents have done a terrific job in getting us to where we are with this, and we white-boarded all these issues and spent weeks doing it coming up with new arguments, and new approaches to arguments, to reflect the current environment.
Up to this point, there has not been much of an appetite by policy makers to address DIR fees, but that has changed with the Trump administration. So we further refined our arguments and our overall approach to assure we are strong on substance, on the politics and on process. Employing the campaign model on the DIR fee issue has provided an excellent test of this model.
NACDS and NCPA [National Community Pharmacists Association] had a meeting on DIR fee reform on July 30 with HHS [Department of Health and Human Services], and HHS said that pharmacy needs to speak with one voice on this issue. So we spent weeks of negotiations and conversations with NCPA and NASP, the National Association of Specialty Pharmacy, to hammer out where we could find common ground and really reform DIR, because otherwise it wasn’t going to happen. There was a proposed rule coming out, as there always is for every Medicare Part D plan year, and if we weren’t in the proposed rule for 2020, we weren’t going to be in the final rule. So we worked hard and we were pleased with the proposed rule, and we’re pushing it very aggressively as HHS will be coming out very soon with their final rule for the 2020 year.
Now we’re still keeping up the drumbeat on Capitol Hill. We had a very good meeting with [Health and Human Services] Secretary [Alex] Azar when our board was in town and with White House officials, and we’re expanding our ad campaign in D.C. on DIR reform to visually represent all of the committed efforts on this issue. So we’re just trying to get across the finish line. If we get it across the finish line — we’ve got a lot of other things we need to do, because it’s going to be a complicated rule and needs to be implemented in a pretty short time.
CDR: You said NACDS came up with new and different arguments. How did you arrive at them? Did you work with other pharmacy groups in crafting them?
ANDERSON: We worked very closely with NCPA and NASP. The initial comments that we made on the proposed rule were based on those negotiations. Being three associations, we still had an approval process with each board. So from a governing standpoint, it was what we are used to doing around here, but a little more complicated.
Our relationship with NCPA and NASP has been excellent. We’re still working with both groups, and were doing certain things independently, but with open lines of communication with the other groups. We have our RxImpact Day on Capitol Hill, and NCPA has a fly-in. Our close work with NCPA over the last 10 years has been very valuable.
We’ve been working at this and building the image of the industry for 12 years. We’re seeing the benefit of all that work that we’ve done with congressional pharmacy tours and RxImpact Day and all the different things we do with NACDS RxImpact grassroots engagement under that brand, because members of Congress and the regulatory agencies understand what we’re talking about.
It was really interesting talking to our 424 attendees of NACDS RxImpact Day and finding that the congressmen, congresswomen, senators and congressional staff they met seemed to know what we were talking about, which was really good. When you’ve got a big issue, you can’t just go in there and say, “Hi, I’ve never met you before, but this is our big issue, and here’s what it is and you’ve got to help us.” Washington doesn’t work that way. It’s been a steady drumbeat. And we’re using the concept that pharmacies are the face of health care. We look at that theme and evaluate it every year. Why change it if people are beginning to understand it and realize it?
CDR: It’s more true than ever that pharmacy is the face of neighborhood health care. Why do you think your message is resonating now?
ANDERSON: The change in administration is a factor, with the president’s emphasis on drug pricing. There is no doubt in my mind that during the 2020 election President Trump and his opponent will be talking about drug pricing and it will be one of the top five issues of the campaign. Our members are focused on the 2020 Medicare plan year, but to the president and to everybody else running for Congress and president, 2020 is also an election year. That’s going to drive the agenda.
CDR: You seem to have had favorable exchanges with HHS. What could go wrong at this point? Is there any reason to think DIR fee reform won’t be in the final rule?
ANDERSON: You can’t be a successful trade association CEO unless you’re healthily paranoid. I leave nothing to chance. This is all our team and our senior vice presidents talk about. We’re not just saying that if pharmacy is in a proposed rule on DIR fee reform, we’re done. That’s not the way Washington works. There are a lot of competing constituencies and a lot going on in health care generally, but particularly on drug pricing. There’s a lot of give and take.
You can’t pick up Capitol Hill publications like Politico, The Hill and Roll Call without seeing groups’ ads about their position on these issues. So we run scared all the time. And even if we get everything we want on DIR fee reform, this isn’t going to solve a lot of the reimbursement issues for our members. Things can always go wrong in this city, because there’s a lot of horse trading. You can’t say, “It’s not over until it’s over,” because even when it’s over it can be changed later. It’s never over in our nation’s capital.
CDR: Has NACDS taken a position on the administration’s proposed pharmaceutical rebate rule?
ANDERSON: We’ve looked at it. We’re in favor of the concept of what they’re trying to do to reduce drug pricing and have the patients be the beneficiaries of those savings. There are a lot more groups that are interested in the rebate rule. We have to file our comments by April 8, so we’re working with our various committees. We have our DIR Task Force, our Policy Council, and our Executive Committee working on the NACDS comments and we’re going to be submitting those comments soon.
CDR: How about long-term reimbursement? That’s another one of NACDS’ campaign themes. That’s, obviously, different from and bigger than DIR.
ANDERSON: We have been working very hard on this, going back to the AMP [average manufacturer price] rule and the Deficit Reduction Act of 2005. We have made great progress in fixing that. We obtained a better definition, as a result of a provision in the Affordable Care Act. There is A federal policy came out in 2016 that said there needs to be product reimbursement and dispensing fees that are appropriate. So we fight that fight every day.
Our big issue right now is in Washington state. On June 11, what they call a tribunal is going to be looking at the dispute between CMS [Centers for Medicare and Medicaid Services] and Washington state. NACDS, NCPA and the Washington State Pharmacy Association have been involved in litigation against the state of Washington over their reimbursement. That has great national implications because a lot of other state Medicaid programs are looking at the results of what’s happening in Washington. So it’s really important to our members moving forward.
We think we’re on solid ground. We’ve worked very closely with NCPA and the Washington State Pharmacy Association on this, so we’re in step with the issue. But we fight this in the states and have for many decades. This is very, very important because, From my perspective, DIR fees and reimbursement are the most important issues the industry is facing. The viability of many of our member companies is at stake. It’s very serious, and that’s why we’re so devoted to this. It’s our No. 1 issue.
CDR: It seems that in the last year or two the DIR issue has exploded. Why has it ratcheted up so much and become so much more threatening to everybody?
ANDERSON: It is more threatening, but it’s always been threatening. DIR fees from 2010 to 2017 have gone up 45,000% according to CMS.
And we have a vehicle to reform it because of the focus on drug pricing. Because DIR fees have an impact on drug pricing, that’s why it’s so important. When you do what we do at NACDS on behalf of our members, it’s the environment in which you’re operating that helps substantially to get things done on an issue. No association sets the agenda for Washington. But when the agenda is set, you better be performing at the top of your game, which we’re doing right now.
We just didn’t all of a sudden start this thing from nowhere. We’ve been building relationships with members of Congress and members of the administration and educating them at the grassroots level, as you indicated in a recent editorial. We have a great mechanism to tell this story because we have incredible grass roots. We have NACDS members who are passionate about helping people in their local communities, which happen to be constituents of members of Congress at the same time, so there is that synergy. It’s a matter of timing, but also a matter of the immediacy on the viability of pharmacy moving forward.
CDR: Your newest round of advertising is unusual, isn’t it?
ANDERSON: Some associations need to advertise to build a positive image because they’re working for industries that may not be perceived as favorably as pharmacy is. We are using our ads to build on the positive image of pharmacies and reinforce our messages to legislators and to the administration about what exactly is needed to help pharmacies help patients. Right now, relief from DIR fees is our biggest priority. Our relationship with polling and media firm Morning Consult has really been important, because Morning Consult has such credibility for such a new company. We are doing polling with Morning Consult on our pivotal issues, so we can share this information with government decision-makers and opinion leaders. You’re seeing their polling in a lot of different places, in media and elsewhere, and it’s a very credible organization to partner with, and members of Congress know that, and people in the executive branch know that. You probably have noticed that in many NACDS press releases we can tie in our polling with Morning Consult.
The fact that we can break opinion research data down by state and congressional district is really important. Some of the members of the House don’t necessarily care what public opinion is on a national poll, but they really care about what reflects in their congressional district. And we can communicate that.
CDR: Let me go back and ask one quick question about reimbursement. You’re obviously focused, understandably so, on threats and things that have to be changed in the current system. Long term, do you want to see the basis for reimbursements to pharmacies shift to more of a focus on services rendered?
ANDERSON: From my perspective, the NACDS scope-of-business campaign is designed to address that issue.
The scope-of-business campaign gets to how quickly health care is changing and how our members are responding to it. We are working on developing and implementing a plan for 2020 on scope of business, even as we wage our current campaigns this year.
On that issue many have a different interpretation, because almost all our members are not just in pharmacy but have other aspects of their businesses. So the interesting thing when you develop a plan like that is that everybody has a different idea of how it should go. Since NACDS is a consensus-based group, we try to reach consensus where we can, so to me that plays right into other issues. We want provider status for pharmacists, and that’s part of it as well. But it really goes beyond that in terms of not just focusing on what we’ve been doing in the past, but seeing what we’re trying to build with this organization.
We’ve been really good in adapting NACDS to how quickly our members are changing and how quickly health care is changing, because we spend a lot of time focusing on how we can develop new issues every year. Every year we adopt a new strategic plan, which is always in draft form because of the political business and policy environment in which we operate. It changes every day.
We’re really focusing on that, since it will determine what kind of association NACDS will be in the future.
We’re not a company where we can make a decision and then go off and do it. We have a lot of bosses out there in terms of our members and our board, so we have to reach a consensus in what we’re doing. We’re really good at coming up with new and bold ideas.
The strength of NACDS is — you’ve heard me talk about it all the time — that we have an amazing staff team here that works on these issues, and we have members who are actively engaged, because we affect the bottom lines of their companies a lot, probably more than any association that I know of. Our members are highly engaged, and we get good expert advice. We have a spectacular board that really understands the industry and they work really well together.
CDR: How difficult is it to find that consensus when you have $100 billion-plus companies on the one hand, and then you might have others with six or eight stores?
ANDERSON: You will find our board is amazingly united on all our issues. The board and the executive committee make the policy, and we treat all of our members equally.
We have a diverse board. We have regional chains on the board. We have medium-sized chains and we have large chains. So we really reflect all aspects of the industry.
CDR: It is impressive the way you manage to keep all those diverse members together.
ANDERSON: The board makes it easy. There’s a lot of give and take, and that’s what makes this work so interesting. We have so many different components to make it work. We have a process where we have to reach consensus on these issues within the industry before the board votes and then the staff goes out and implements it.
CDR: Let me just ask you one more question about scope of practice. Obviously, provider status is something the industry has been working toward for a long time — what are the prospects for that now?
ANDERSON: The issue we’ve always had is the price tag of the original bill. On its merits we and our members think it should be implemented. But when the Congressional Budget Office gives members of Congress a score on any bill, certain bills give members of Congress pause. So we’re working on the bill as it relates to the opioid epidemic where there’s an immediate problem. Pharmacists can play a big role, and so we’re working on that. We had our positions represented in H.R. 6, the opioid bill that was enacted last fall. Because it’s an immediate crisis and a political issue in 2020 in the congressional and presidential races, the state legislatures, and the gubernatorial races, we may see more opioid legislation. We’re working hard to see if we can get that provider status language on opioids included in the bill. We’re doing that as the state level as well.
We’re also fighting so-called opioid taxes in several states. We’ve worked well with our state association partners on opioid issues and other issues.
CDR: Do you fear that if legislatures start taxing one prescription drug, suddenly a Pandora’s box is open and they tax all medications?
ANDERSON: Yes, anything can happen.
CDR: You mentioned the positive steps that pharmacies are taking to help address this opioid crisis. How do you envision the role of NACDS and the industry going forward?
ANDERSON: Two years ago we started to work on our policy recommendations on opioids that had to do with limiting to seven days the initial supply of an opioid prescription for acute care, electronic prescribing, pharmacy prescription drug monitoring programs, and drug disposal. We’re making excellent progress because, once again, it’s one of those issues where we go to Capitol Hill or the state legislature saying we’re part of the solution to this issue, and that’s been very well received. We have the electronic prescribing language related to Medicare in the federal opioid law that was enacted last year, and 17 states have enacted an NACDS-backed mandate to this point.
CDR: You’ve touched on this already, but maybe you could talk a little bit about RxImpact Day and how this year’s installment went.
ANDERSON: It was terrific, and it just keeps getting better and better. Once again we reached all 535 congressional offices, where we met with senators, congressmen, congresswomen and congressional staff. We had half of our chain members participating this year, which was an all-time high. And people are really committed. You heard me say during my speech at the NACDS Regional Chain Conference, “If you’re concerned about DIR fees, which everybody in this room is, you ought to be at Washington for NACDS RxImpact Day.”
I just love NACDS RxImpact Day on Capitol Hill. I’ve been in Washington for many years, but I love talking to our members who have done this for the first time or students that we have from 55 pharmacy schools who participate. It’s just such an eye-opening experience. I always tell them that big dome is like the Land of Oz, like the Emerald City, but at those meetings we pull back the curtain and see the people who are running the government. It makes them feel impactful, because they are impactful.
NACDS has a lot of influence, and we’re leveraging that to the best of our ability.
CDR: Let’s return to more NACDS-specific questions. What are you doing to support the front-end business?
ANDERSON: We have a great group on the NACDS Retail Advisory Board. We have the chain and the associate members sitting at the table working on common issues where we can find common ground, and we bring them together at our meetings. We have those discussions at the NACDS Annual Meeting, which is always sold out, and at our NACDS Total Store Expo, which has been really a great program. We’re about 98% contracted for our exhibit space at TSE and it’s only April. Our associate members are having vital business discussions in the strategic exchanges at both the NACDS Annual Meeting and the TSE. The NACDS Regional Chain Conference is an excellent setting for those discussions as well.
CDR: It seems that pharmacy is taking a much more conscious role in public health than it used to. Is that something you’ll continue to foster?
ANDERSON: Yes. We work in public policy, which focuses on public health. And our work in this area has changed dramatically in the last eight years
We made a substantive change in our pharmacy care and patient advocacy team and what they’re doing. And public health is certainly a focus on the association side. Separately, the NACDS Foundation focuses quite a bit on public health and works with other groups in the public health community, including the American Society of State and Territorial Health Officials, the March of Dimes Foundation. We’re doing pilots on important issues like transitions of care, HIV and hepatitis C screenings.
CDR: In light of everything that we’ve discussed, where do you see retail pharmacy headed?
ANDERSON: One thing I’ve discovered over the years is that when somebody makes a certain prediction that one company is going to change an industry or the industry is going to go this way because of certain trends, it generally doesn’t happen that way. It goes back to the book The Anticipatory Organization. You have hard trends and soft trends, and you make your decisions based on the hard trends –— the ones that are almost certain to occur.
Yes, we have an aging population, prescription drug sales have increased and will continue to increase because of that demographic, and other hard trends. I have great admiration for the people that run all of our companies. They make tough decisions based on the hard trends that they expect. Some people do it in different ways, but there will always be a need for our member company stores, and we need to make sure that we’re creating the business, political and policy environment so that they can do that. That’s our role.
They can’t really do that by themselves, we have to do it as an industry. That’s really where we started this discussion — with the four NACDS campaigns and how we’re focusing on the really big issues. There’s a brilliant role for this industry and a brilliant role for NACDS to build an incredible future.
