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U.S. District Court dismisses most elements of antitrust suit against ESI-Medco

BY Michael Johnsen

PITTSBURGH — U.S. District Court judge Cathy Bissoon on Monday dismissed many of the claims levied against Express Scripts by the National Association of Chain Drug Stores, the National Community Pharmacist Association and nine independent pharmacies, regarding the allegedly anti-competitive nature of Express Scripts’ merger with Medco.

Under the 23-page ruling, however, claims regarding the anti-competitive impact the combined ESI-Medco will have on specialty pharmacies will proceed. "[Plaintiffs] allege the merged defendants will use their increased market power to force consumers away from … specialty pharmacy businesses and into their own mail-order and in-house specialty pharmacies," Bissoon wrote. "The anti-competitive acts alleged by plaintiffs would include forcing patients to use defendants’ specialty pharmacy — regardless of the patient’s wishes — by denying claims for specialty drugs purchased in any other manner."

In her decision, Bissoon identified the four antitrust violations charged by the plaintiffs:

  • First, the retail pharmacy groups alleged that because a combined Express Scripts-Medco would collectively control 72% of the "privately insured lives in the United States," a combined Express Scripts-Medco could account for a significant percentage of a pharmacy’s prescription sales. So much, in fact, that these pharmacies would be unable to negotiate around any reduction in pharmacy reimbursement rates, and would either have to accept those lower rates out of hand, significantly lower overhead costs by restricting services to accommodate those lower rates or go out of business altogether;

  • Second, regarding specialty pharmacies, pharmacy benefit managers are able to enter exclusive distribution agreements with manufacturers of specialty pharmaceuticals and can thereby direct which pharmacies can be reimbursed for adjudicating those specialty prescriptions. "These agreements, which allegedly are entered into by the manufacturers because of [Express Scripts’] size, and which allegedly will become more attractive to drug manufacturers due to [Express Scripts’] increased size post-merger, allegedly create high barriers to new competitors seeking to enter this field," Bissoon wrote. "This product market allegedly becomes even more inaccessible due to defendants’ ability to use its claims adjudication process to block competitors from filling prescriptions for specialty drugs;"

  • Third, because national employers require a pharmacy benefit management service that is national in scope, the choices available to them post merger are restricted now to two PBMs — Express Scripts-Medco and CVS Caremark. "Indeed,the so-called ‘Big Three’ [Express Scripts, Medco and CVS Caremark] allegedly provide PBM services to approximately 90% of the privately insured lives for which large employees are responsible," Bissoon wrote; and

  • Fourth, pharmacies and the mail-order entities owned and operated by the PBMs are in direct competition with one another in any given local market.

Bissoon dismissed without prejudice the portion of the suit arguing that retail pharmacy competes directly with pharmacy benefit managers for prescriptions. "Plaintiffs have failed to allege a cognizable antitrust injury with respect to this claim, and it will be dismissed," Bissoon ruled. However, NACDS, NCPA and the nine independent pharmacies that initially filed the suit in March 29 will have until Sept. 10 to amend the claim.

The plaintiffs’ allegation that they will suffer harm from the merger as consumers of PBM services was dismissed altogether.

Click here to view the entire ruling.


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Former CMS, FDA chief McClellan helps frame timeline for real health reform

BY Alaric DeArment

DENVER – Pharmacy is in a state of deep transformation, but it could take some time for the trend to gain traction.

That was one of the messages behind a keynote speech delivered Monday morning at the National Association of Chain Drug Stores’ Pharmacy & Technology Conference in Denver on the dynamics, challenges and opportunities of healthcare reform. The speaker, Mark McClellan, director of the Engelberg Center for Health Care Reform at the Brookings Institute, also said that regardless of the outcome of the 2012 elections, the retail pharmacy industry will be called to step up. “The trend toward more personalized care outside traditional institutions will continue,” McClellan said.

In addition, regardless of the elections, there will be a continued trend toward limited Medicaid and employer health coverage, a tighter Medicaid financing environment. “It’s going to be a much tougher environment for health care at the federal and state levels than we’ve ever faced before,” the former head of CMS and FDA  told NACDS attendees.

Still, according to McClellan, the overriding goal of healthcare reform remains the same: improving care while reducing costs; but lowering prices and expanding insurance wouldn’t be enough. The risk is that efforts to lower costs can lower quality as well. “The payment rates go down, and the quality of care is squeezed,” McClellan said. Meanwhile, allowing healthcare costs to rise risks squeezing out funding for other services like infrastructure, research and development and education, he said. This created a need to get out of the “vicious circle” of holding healthcare costs down while not improving quality and outcomes.

In the meantime, he said, pharmacy would have a significant role to play in the drive to achieve better outcomes, including helping in the management of disease states like diabetes and cardiovascular disease through services like improving medication adherence. “Those are treatable chronic diseases – lots of opportunities to improve quality and reduce costs there,” McClellan said. “There are opportunities to build on pharmacy leadership.”

Other opportunities included preventive services and partnerships with other providers like hospitals and physicians.
 

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Amid uncertainty of elections, health reform, community pharmacy ‘must adjust sails,’ Anderson charges

BY Alaric DeArment

DENVER — The 2012 elections mean a lot of things to a lot of people, communities and industries, and retail pharmacy is no exception.

In his speech Monday morning during the second business program at the National Association of Chain Drug Stores’ 2012 Pharmacy and Technology Conference in Denver, NACDS president and CEO Steve Anderson talked about the November presidential and congressional elections and what the industry his organization represents has in store as it prepares to mark its 80th anniversary next year. “Amid all of this, one bet seems pretty solid: Things are going to get even more nasty as we head down to the wire and into next year,” Anderson said. “I saw one report that the new Congress could be one of the least-experienced in decades, with about 155 members with less than four years’ experience, with stronger partisanship and less willingness to compromise.”

The elections were just one of the external forces and dynamics that will affect the industry. Another was whether states would accept the Medicaid expansion that is part of the Patient Protection and Affordable Care Act, a key provision of which, the individual mandate to have health coverage, the Supreme Court recently upheld as constitutional. “Some think that even the governors who say they won’t participate are really going to have to think twice,” Anderson said.

The next external force was the so-called “fiscal cliff,” which Anderson called a “witches’ brew” of hundreds of billions of dollars in spending cuts and tax increases that will go into effect unless action is taken in Congress due to the expiration of the Bush administration’s tax cuts and the failure of the congressional super committee to reduce spending last year. Cuts to Medicare are capped at 2% and will reach $123 billion over nine years, while Medicaid is exempt from cuts, though Medicaid spending is expected to decrease by $325 billion over the same period.

“But all of this – from the election to healthcare reform to the economy – creates the operating environment for pharmacy and for every industry,” Anderson said. “Even with factors beyond our control, success still relies on true leadership. We can’t change the wind, but we must adjust the sails.”

This, he said, would mean NACDS advocating that the government pursue policies favorable to patients and pharmacies, and promoting the value of pharmacy. “This focus and tenacity are necessary in the face of massive instability in our country,” Anderson said. “We face a pivotal election. We will see many new members of Congress who need to be educated on the value of pharmacy and on our crucial issues that impact their constituents and your patients.”

Anderson also touted the organization’s outreach to members of Congress and the public. These have included RxImpact, which brings together retail pharmacy leadership teams to meet one-on-one with members of Congress, and RxImpact Votes, designed to encourage people in the industry to volunteer on campaigns, register to vote and turn out on election day. In addition, retail pharmacies have sought the attention of members of Congress by offering tours of drug stores that include introductions to medication therapy management and other services around medication adherence and synchronization and answering questions on drug importation, government purchasing of medications and healthcare reform. So far, 48 such events have occurred this year, Anderson said. Anderson encouraged NACDS Pharmacy and Technology Conference attendees to continue look for opportunities to host more of these types of store visits with policy makers and congressional members.

Meanwhile, NACDS Foundation president Kathleen Jaeger has created the Pharmacy Care and Patient Advocacy Department, and has appeared in numerous newspaper op-eds and on TV news programs to advocate for pharmacy, since joining NACDS in November. “We pitch her to the media as a plain-spoken pharmacist, advocate and mom who can explain complex issues,” Anderson said, noting that Jaeger lately had been raising awareness about whooping cough vaccinations.

“The people of pharmacy save lives and reduce costs,” Anderson said. “They educate the nation on how much more pharmacy care can do. And the response, from patients to policy-makers, has been extraordinary.”


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