2009 Executive Budget

Executive Budget

Many More Community Pharmacies in Danger of Closing
OPPOSE

Because the 2008-2009 state budget dealt a punishing blow to New York's 4,200 community pharmacies, the legislature was right to reject the further cut proposed by the Executive in the Deficit Reduction package earlier this session. We urge the legislature not only to reject any further cuts, but to take steps to stabilize the network of community pharmacies throughout the state by increasing dispensing fees paid under Medicaid, EPIC, Family Health Plus, Child Health Plus and the AIDS Drug Assistance Program to $7.25 and $8 for specialized packaging required in residential and long-term-care facilities or by restoring reimbursement levels that were in place before July 1, 2008.

We agree that every New Yorker should have access to primary medical care, and we strongly believe that access to medications is a necessary component of that care. The most reliable access is at a local pharmacy. Moreover, the individualized professional services provided by local pharmacists are an integral component of controlling other healthcare costs. Using medications safely, understanding when and how to take them and taking them as directed maintains independence and quality of life and reduces the costs that come from unnecessary hospitalizations, doctor, clinic and ER visits. Medication compliance can also delay or even prevent nursing home placement.

Since January, 2008, 185 community pharmacies have closed, a majority being independents, affecting approximately 2,500 full-time employees. For the first time in history, the state has a net loss of pharmacies. The pharmacies that remain face tough financial times. In response to the most drastic decrease in reimbursement ever enacted, community pharmacies pared down staff, shortened hours and renegotiated their lines of credit. The impact on consumers is more difficult to quantify, but certainly over a million New Yorkers have lost access to their regular pharmacy and to the pharmacist they know. Moreover, as inventory costs come under closer scrutiny, access to some medications is or will be in jeopardy. On the horizon is another threat to the survival of local pharmacies authorized in the 2008-09 budget: the implementation of administration's ‘specialty pharmacy' initiative. Under this plan, the administration will contract with a large vendor for injectable and other ‘specialty' drugs, an initiative that is anticipated to drive more tax dollars out of New York and deal a death-blow to the local pharmacies that have developed specialized services and expertise in this arena. Taking the local pharmacist out of the delivery model may actually increase healthcare costs due to delays in medically necessary therapy, the consequences of mishandled or damaged products, or the inappropriate use of very expensive and technically challenging new pharmaceutical products.

We estimate the full impact of the reimbursement change that went into effect on July 1, 2008 to be $100 million, with $50 million resulting from the cut in reimbursement for brands, and another $50 million from the state's new method of on reimbursement for generic drugs under the new State Maximum Allowable Cost (SMAC) that drove payments for generics lower than the federal payment levels. After fourteen years of steady decreases in reimbursement, with no trend factors or other cost-of-living adjustments in place the state-administered programs, it is no surprise that the state is losing community pharmacies. At a time when more New Yorkers become eligible for Medicaid, when programs such as Family Health Plus and Child Health Plus increase the number of beneficiaries to be served by state-funded pharmacy programs, it is more important than ever that the state remains in a position to able to deliver the healthcare it promises. New York reimburses pharmacies less than any other state in the country. Now is the time to right-size the state's payment levels to community pharmacies.