Released Monday, April 26, 2010
City Hall News

Independent City Pharmacists Try To Get Their Prescriptions Filled In Albany
By Selena Ross

Professional lobbyists have been in high gear over state budget negotiations for months.

But amid the schmoozing, a small group of pharmacists is trying to find its way around Albany too, taking time off from day jobs, switching their white coats for suits and knocking on legislators' doors.

The pharmacists, who own small, independent businesses largely in New York City, hope to find support for a budget statute that would add a few million dollars to health spending. They want higher Medicaid reimbursement rates for prescription drugs—but only for them, and not for chains like Rite Aid.

Hundreds of community pharmacies have gone out of business over the past few years, and the remaining owners say an emergency measure to raise their reimbursements would tide them over until a wider solution can be found, perhaps when federal reform measures come to New York.
"Independent pharmacies cannot survive with the current reimbursement," said Charles Catalano, president of the New York City Pharmacists Society. "It's the lowest reimbursement of the 50 states."

Independent pharmacies are squeezed by the fact that they have very few nonprescription sales like makeup and food, unlike chains. And they tend to serve a relatively high proportion of Medicaid patients, who, on top of bringing a low reimbursement, are not legally required to co-pay.
Most importantly, the pharmacists complain, the state dropped Medicaid reimbursement rates suddenly last fall without thinking of the consequences to businesses that rely on them.

In September, a federal ruling set off a series of changes in drug reimbursement rates, effectively lowering the amount that the state pays for Medicaid prescriptions. But the real prices of the drugs did not change, saving the state money while small pharmacies began to only break even on many sales.

After the ruling, Catalano said, private insurance companies raised their reimbursement rates after recognizing that the ruling left pharmacists buying drugs above the new official "market" rate. At the same time, New York lowered its Medicaid reimbursement levels in line with the ruling.
"What happened in September was we went below the bar, but private insurance realized that that lower reimbursement was not sustainable," Catalano said. "If the lawsuit hadn't gone through, we wouldn't be reimbursing the pharmacies at the lower level. It has nothing to do with saving money—it's a windfall."

While many Albany electeds are sympathetic to the plight of small pharmacies, finding a solution is not simple, they say.

"Whether the change in reimbursement from the lawsuit is a windfall for the state or the result of a long-overdue change depends on who you talk to," said Assembly Health Committee chair Dick Gottfried. "I look at it basically as to whether the independents have a valid argument for why they should be reimbursed a little more than for chain stores, and there I think they have a good case on the merits."

Aside from the lack of non-prescription sales to buffer losses, independent pharmacists say their businesses are radically different from chains in how much time they spend working with each patient. Consumer Reports magazine has consistently given them high marks for offering services like delivery, customizing medicines and helping patients with information and paperwork.

All of this can add up to a substantial source of preventive health care to lowincome patients, say the pharmacists, something that the state recognizes by relying on them to serve special-needs adult homes. Independent pharmacies are more common downstate than upstate, and are often concentrated in low-income neighborhoods.

"Delivery, adherence programs— there's a ton of stuff that goes on behind the scenes that really helps the state save money," said Joseph Navarra, the owner of a midtown Manhattan pharmacy. "We don't get paid for anything extra that we do."

Navarra said pharmacists suggested a fee-for-service reimbursement program to the state Health Department in 2008, but were turned down.
The Health Department had no comment on either plan.

No one has stepped forward in Albany to champion the proposed statute. Some legislators say it would take time to work through the legality and logistics of a two-tier reimbursement system—not to mention the price tag.

"At this point, we're trying to estimate what the actual cost would be," Gottfried said, "but any amount would be an obstacle in this year's budget."