The Mississippi Medicaid office recently began offering a program where patients can opt to receive their prescriptions by mail order. Medicaid estimates that the move could save a significant amount of money depending on how many people opt into the program. Savings of more than $1 million per year are possible.
With the state’s Medicaid deficit this year estimated at $53 million, you would think any cost savings measures would be welcomed. But state pharmacists have hotly contested the mail order pharmacy offering.
“Mail order prescriptions make less sense than anything I have run into,” said Mac McDivitt, executive director of the Mississippi Board of Pharmacy. “How great can it be for the economy of Mississippi if you send the money out of state? Pharmacists turn around and spend the money they earn in the community. It is economics 101. They need to grasp a little of that over at Medicaid.”
McDivitt said there are several problems with switching to mail order plans:
• The patient doesn’t have interaction with the pharmacist regarding questions and consultation.
• Mail order drugs can be lost or stolen, particularly when delivered to rural addresses. Many people on Medicaid change their address frequently.
• Prescription drugs can’t be received in a timely manner.
• If the plan caught on and large numbers of Medicaid patients went to mail order, it could have a devastating effect on pharmacies, particularly in rural and low-income areas of the state that have a high ratio of Medicaid customers.
“When they finally put rural pharmacies out of business and the patient doesn’t get their drugs in the mail, what do they do? Die?” McDivitt asks.
But Medicaid Executive Director Rica Lewis-Payton says allowing Medicaid patients to choose home delivery of prescription drugs is an important way to reduce costs. The mail order companies provide higher discounts on drugs and charge less in dispensing fees. Regular pharmacies charge the wholesale price of the drug less 12% and a dispensing fee of $3.91. The mail order companies charge the average wholesale price less 20% for generic drugs and less 15% for name brand drugs, plus a dispensing fee of $3.25.
“The prescription drug program for Medicaid is the single biggest expenditure in the program,” Lewis-Payton said. “Last year (FY 2002) we spent $565 million on prescription drugs alone, about 23% of our total budget. So anytime we are considering having to contain costs, that is one of the areas we definitely have to look at. In addition to that, pharmacy expenditures have been the fastest growing expenditure for Medicaid. In FY 2000, our pharmacy costs were $339 million. The next year it increased 36% to $465 million. Between 2001 and 2002, we saw a 22% increase.”
Lewis-Payton said it is important to look at all options for reducing prescription drug expenditures. And she said that the state employees insurance plan, and many private insurance plans, offer home delivery of prescriptions.
“Why should Medicaid patients be treated any differently?” she asks. “Given that my responsibility is to implement whatever cost containment measures I can to reduce costs in the Medicaid program, while I’m sensitive to providers in the state and I definitely want their businesses to flourish, I have a responsibility to contain costs and for us to come in within our budget. I have to implement strategies to do that, and mail order is one of them.“
McDivitt said the savings achieved by mail order drugs pale in comparison to the scope of the problem.
“Saving a million is not a solution when you have such a huge deficit,” McDivitt said. “We need to be looking at saving $10 or $35 million. The problem is the spiraling costs of new drugs. We could eliminate 10 designer drugs and balance the budget. It is funny that when a drug loses its patent, suddenly it is not a good drug anymore. Isn’t that strange?
“Someone has to say we can’t afford all these drugs. Nobody needs to suffer. But they are covering too many drugs we can’t afford to cover. Three drugs account for 10% of Medicaid costs. You have to eliminate some of these expensive drugs, and it will work. You will get the state out of its budget crisis. No one seems to face the fact that next year there will be another $35 million worth of new drugs. They are just churning these things out. Somebody has to say ‘No. Let’s put an end to this.’”
Lewis-Payton counters by saying that Medicaid in Mississippi has now mandated the use of generic drugs. More expensive, non-generic drugs can only be used when the patient has a documented allergic reaction to the generic drugs. She said use of generics and other cost containment measures have helped Medicaid reduce a funding shortfall originally estimated to be $120 million for the current 2003 fiscal year to $53 million.
Customer service an issue
Another issue is whether mail-order pharmacies provide the same level of quality control. Kyle Ardoin, executive director of Mississippi Independent Pharmacies Association, said there is a lack of quality control with mail-order pharmacies, and they can’t substitute for face-to-face interactions between the health care provider pharmacists and the patients.
“There is no substitute for face-to-face interaction with a health care provider,” Ardoin said. “The pharmacist can call the physician, and say, ‘This isn’t working for the patient.’ More times than not the pharmacist is the health care provider that people see the most often. Patients, especially Medicaid patients who are poor and the least educated, sometimes can’t make informed decisions. If they can’t read, they can’t take medications properly without instruction from the pharmacist.”
Bob Lomenick, president of the Mississippi Independent Pharmacists Association, said the mail-order program has been tried in several states, including Florida.
“The Medicaid division got bombarded because people ended up in hospitals,” Lomenick said. “The track record has been terrible. People were being put on hold for hours when they had questions.”
Lost jobs, closed pharmacies
Regarding the issue of how mail-order pharmacies affect the economy of Mississippi, Lomenick said lost jobs and closed pharmacies could result from local pharmacies losing Medicaid customers. He said in the long run, it would not result in a savings to the State of Mississippi.
“We certainly don’t want mail order being mandated,” said Lomenick, who owns three pharmacies in Holly Springs. “One, we don’t want the patient taken away from the local pharmacy and local pharmacist, which is a local economic driver in the state of Mississippi. It keeps the money in the local economy. These out-of-state mail-order pharmacies don’t pay a nickel in taxes. The spinoff would be pharmacies have to close, causing numerous people to losing their jobs. The tax ramifications would be certainly terrible. Medicaid is saying we can save a few millions by putting this together. But you are losing jobs in Mississippi. You are losing a tax base. When you weigh it out, no, there is not a savings. If a majority of patients go to mail order, the pharmacy closes.
“The bottom line is we don’t understand why our own state program signed a contract with two out-of-state vendors when pharmacists in Mississippi could do the same job if given the opportunity. I understand and respect that Medicaid is trying to cut back. I understand we need to address the cost of drugs. But certainly pharmacists don’t need to be cut anymore.”
Lomenick said the cost of the drugs is the problem, not the $3 to $4 per bottle the pharmacist is paid to dispense the medicine.
Lewis-Payton said Medicaid
a major impact on the state’s economy with a budget of $2.8 billion to provide care for 25% of the state’s population. She says adequately funding the program not only improves care, but is