State pharmacy programs: Are they too political to work?
Beware, those who enter the gates of the state pharmacy program, warns Thomas Snedden of the Pennsylvania Department of Aging. Awaiting those brave enough to walk through is a tangle of politics and dollar signs, he says.
"These programs are steeped in politics," Mr. Snedden asserts, "with the pharmaceutical industry, pharmacists, older people, the states, all of them lobbying. You’ve got to have money to do this. Many states do not have it."
To begin, money is a top priority; there should be plenty in the coffers at the beginning, he says. States should then identify their nonfinancial resources and expertise. Then define their target groups and choose their cost-containment strategies.
"It’s very political," Snedden says. "It’s a zero-sum game. The loser is the manufacturer or the pharmacist or the people."
Up next is engaging procurement and contracting agencies. It’s best to find out what’s going on in other states and how they serve their similar target groups. Then, inform stakeholder groups, such as pharmacists, the state’s department of aging, and insurance companies.
Snedden’s program is the Pennsylvania Pharmaceutical Assis-tance Contract for the Elderly (PACE). He admits he had a leg up when it comes to funding PACE, which was started in 1983: PACE is 100% funded by the Pennsylvania state lottery.
PACE eligibility requirements included:
- Recipients must be age 65 or older.
- Recipients must be Pennsylvania residents for at least 90 days prior to application.
- Their income must be no more than $14,000 for a single person or $17,200 for a married couple.
- Participants must not be enrolled in a Medicaid prescription program.
- Re-enrollment is required annually or biannually.
Among PACE’s cost-containment features are the fixed-income limits ("The biggest cost-containment limit we have," Mr. Snedden says), mandatory generic substitution, manufacturer rebates, mandatory drug utilization edits, and aggressive provider compliance.
Across the country, pharmacy programs vary from state to state. According to Kimberly Fox, policy analyst for Rutgers University’s Center for State Health Policy in New Brunswick, NJ, funding comes from general funds; categorical funds such as casino revenue, lotteries, and cigarette taxes; tobacco settlement funds; and Medicaid waivers. She also says states have a tough time deciding who exactly needs help and ultimately the eligibility determination revolves around politics.
Lessons to learn
She offers these lessons from states who have undertaken pharmacy programs:
- For start-up, investment outreach is key. "Program cost is the biggest issue for states with this program," she adds. "Also, provide enough lead time for designing the benefit, consumer education and outreach, and getting the rebate agreements in place."
- Be conservative; start small. Low enrollment and underspending is not necessarily bad at the outset, Ms. Fox says.
- Keep it simple. A complicated program design limits participation and can result in negative publicity. Recent expansions with complicated cost sharing have had lower than expected enrollment, according to Ms. Fox.
In South Carolina, the pharmaceutical program is run with $20 million in funds from the state’s share of the general tobacco settlement, according to Rob Tester, assistant director of South Carolina’s Office of Insurance Services in Columbia.
To enroll, participants must be age 65 and older, be ineligible for Medicaid, must use no other prescription insurance coverage, and their annual income must not be above 175% of poverty.
The pharmacy reimbursement rates are held at the state Medicaid level, which Mr. Tester says is "a rich rate. We didn’t want pharmacies, in the first year, badmouthing the program, so we gave in and are paying the Medicaid rate."
To keep the program running as smoothly as possible, Tester said the state has created an advisory council of advocates from pharmacies, senior centers, and state social agencies to give their input on program issues.
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