Magazine article Drug Topics

Squeeze Pay

Magazine article Drug Topics

Squeeze Pay

Article excerpt

The downward spiral of community pharmacists' reimbursements is bottoming out, said a managed care pharmacy consultant. But changes in pharmacists' role as managed care practitioners are far from over.

That was the word from David Wierz, senior v.p., director of managed care reimbursement at the medical advertising agency Robert A. Becker Inc., New York. From his perspective as a consultant who helps drug manufacturers and their managed care clients develop new ways to profitably partner in prescription drug distribution, Wierz shared with Drug Topics his insights into managed care pharmacy developments.

Reimbursements based on discounts off average wholesale prices plus dispensing fees have dropped about as low as they can go, he asserted. Managed care organizations (MCOs) realize they need to take other measures to hold down pharmacy benefit costs for their clients.

"The discussions we've had with managed care organizations pretty clearly indicate that they understand they've taken cost-cutting as a function of discounting and rebating--and reductions in dispensing fees for pharmacists--as far as it is going to go," Wierz said.

The refusal of several drugstore chains to take on especially low reimbursement contracts has helped determine this bottoming-out of reimbursement levels, he noted. But MCOs have known that sooner or later the reimbursement squeeze would come to an end.

"There's been the sense--especially as it's been articulated to us by some managed care organizations--that there's only so much margin to extract. There's only so much to extract from the manufacturers, and there's only so much to extract from the pharmacist," he said. "You can't keep negotiating discounts. At a certain point, there's nothing left. [MCOs] are asking for discounts that don't make sense anymore, and it's like anything else in the market: You reach equilibrium. When chains start turning down contracts because they don't make sense, that means they don't make sense."

Now managed care organizations that provide pharmacy benefits are looking to new "value-added" services they can offer their clients--services that focus on educating patients and physicians alike on the better use of prescription drugs, he continued.

This shift in strategy includes an increasing focus on what's called disease management, he pointed out. In disease management, patients who take medications to control a chronic disease are singled out for stronger educational measures that aim to help the patients control their disease more cost-effectively. …

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