News from American Pharmacies, a Co-Op Owned by Independent Pharmacies.

A Co-Op Owned by
Independent Pharmacies

Working with pharmacy wholesalers, American Pharmacies saves our members real money.

January 26, 2010

Much more than a buying co-op!

APRx is a for-profit, member-owned buying group operating in Texas, Louisiana & Oklahoma,

with strong advocacy in Austin and Washington, D.C.

& have your voice heard in the legislative and regulatory arena.

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Founding member Texas Pharmacy Business Council * Member National Community Pharmacists Association

Message from Mike
Pushing back against PBMs

The following is a blog entry written by the National Community Pharmacists Association COO, Douglas Hoey, RPh, MBA. Amanda Fields, our general counsel, recommended this be shared with you, and we agree. The benefits of this settlement extend to pharmacies other than the plaintiffs, so you'll want to pay close attention.

Also note that the Texas Department of Insurance is assisting pharmacies with insurer/PBM complaints. Please bookmark the TDI pharmacy-specific Web site. File an electronic complaint with TDI using their online form. We urge you to take advantage of this service instituted last year for several reasons:

The obvious reason is this is a great new service to help in the never-ending array of problems with insurance reimbursement or onerous audits.
We want TDI to have a full understanding of our issues, so using their complaint process is an education tool.

Now back to the blog:

Another year, another PBM legal settlement

"Ask a community pharmacist for a list of professional pet peeves and odds are good that pharmacy benefit manager (PBM) audits will rank near the top. In this process, PBMs pore over a pharmacy's books and look for any excuse to take money back from the pharmacy. What's done with that recouped money and how much is shared with health plan sponsors is anybody's guess. Turnabout is not fair play as PBMs consistently resist similar oversight from their clients. A new PBM legal settlement brings this issue into focus.

"In 2006, five compounding pharmacies decided they'd had enough of what they felt were abusive auditing practices on the part of Medco Health Solutions, Inc. They filed a complaint against the PBM in arbitration through a class action that grew to 1,000+ pharmacies. NCPA helped fund the research that ultimately produced the complaint. We're grateful to those five Texas and Ohio pharmacies that led the way.

"The pharmacies challenged Medco's audit practices regarding compounds and its findings of "overpriced compounds" over eight years and thousands of audits. They asserted that Medco would re-price the compounds at the time of audit, finding an arbitrarily lower price and later retract money from pharmacies.

"Medco agreed to settle in June 2009, committing to pay $2 million into a settlement fund; to forgive 200 open audits (valued at $1.3 million), to pay about $1.5 million in partial attorneys fees and expenses; and to change certain business practices related to audits, in favor of pharmacies. The settlement checks were just recently distributed.

"Pharmacies that were not part of the class action will also benefit. Medco agreed to institute a number of new business practices as a result of the arbitration.

"First, Medco's most recent Pharmacy Services Manual (PSM) eliminates the binding arbitration clause. That clause required a pharmacy to file a complaint with the American Arbitration Association ("AAA") and to pay AAA's significant fees and to pay ½ of each arbitrator's significant hourly fees.

"Second, compounders can now challenge any unilateral Medco determination of an "overpriced compound" following an audit. Pharmacists can mount a challenge by providing back-up paperwork, such as compound recipes and AWP prices. The PSM also now defines previously ambiguous terms like "cost" and "professional fee", and permits an optional submission of compound formulas to support the price charged.

"Third, Medco pledged to make revisions to its in-house audit methods that will benefit compounding pharmacies. Much of this area is confidential and subject to a protective order.

"This settlement adds to a growing body of complaints and financial damages resulting from the heavy-handed tactics of many PBMs. In the past five years, a coalition of more than 30 state attorneys general brought five enforcement actions against the major PBMs for allegedly fraudulent and deceptive conduct, such as switching patients to higher-cost drugs to pad profits. To date, these actions have secured over $370 million in damages.

"More broadly, meaningful PBM regulation and transparency requirements would be positive steps for patients and health plan sponsors."

Don't forget to subscribe to this blog!

Continued success,
Mike blue background

Mike Gohlke
President, American Pharmacies

P.S. Stockholders reading this already know we sent out monthly generic rebate checks from our Premier Tier I vendors, AmerisourceBergen and Morris & Dickson. Those of you who did not receive a check, check in with either Neal or Kaye about sharing in the benefits of American Pharmacies membership. Their contact information is in the column to the right.

New packaging vendor joins APRx

Berry/Kerr Prescription Packaging is the newest approved vendor to offer products to American Pharmacy stockholders. The items are available through our wholesale drug vendors, AmerisourceBergen and Morris & Dickson.

The contract calls for net, off-invoice pricing and introduction of Berry's new reversible "CHOICE" closure for the Friendly & Safe line. Additional information including samples, wholesaler item numbers, 2010 Berry Rewards program, and introduction promotion details will arrive in the mail soon.

Wrong prescriber info may lead to audit

Double check that you are providing correct prescriber identification for claims to the Vendor Drug Program. Inaccurate information runs the risk of an audit exception and causes erroneous data on reports.

Submit the prescriber specific 5-character alphanumeric Texas License number in the "Prescriber ID" field (field 411-DB). Providers can search for prescriber information at txvendordrug.com.

Fraud education required for high-volume pharmacy employees

Federal law requires all providers and other entities that receive or make annual Medicaid payments of $5 million or more to educate their employees, contractors, and agents about fraud and false claims laws and the whistleblower protections available under those laws.

Click here for more information.

In this issue

Pushing back against PBMs

Berry/Kerr newest APRx vendor

Wrong prescriber info may lead to audit

Fraud education required for high-volume pharmacy employees survey

Dividends & Rebates

Expert business & law advice

Your APRx board

Your APRx staff

Dividends & Rebates

American Pharmacies distributed rebates or dividends to stockholders on the dates listed at the end of this article. To read the letters, go to the Members Only section.

To get your password, go to the Contact Us section and type your preferred password in the Comments area.

If you would like to become an American Pharmacies stockholder to receive extra $$$, contact an American Pharmacies business development manager.

Check presentation to Dr. Marv Shepherd