Magazine article Drug Topics

Huge State Deficit Puts Heavy Pressure on N.Y. Pharmacy

Magazine article Drug Topics

Huge State Deficit Puts Heavy Pressure on N.Y. Pharmacy

Article excerpt

As far as pharmacy is concerned, New York State is not the place to be lately. For one thing, pharmacists may still be facing a price freeze on Medicaid drugs until March 1992.

State lawmakers have already given the price freeze the cold shoulder, said Jerome Sager, executive secretary, Empire State Pharmaceutical Society. But the issue may not be truly dead -- just hibernating -- countered Peter Zimmerman, executive director of the Chain Pharmacy Association of New York State.

The latest bad news, Zimmerman said, is that the state deficit was $500 million higher than originally thought, and in fiscal 1991-92 might soar to the $5 billion to $6 billion range. A shortfall of that magnitude would put everything on the table again.

Right now, as a matter of fact, the Department of Social Services is taking aim at pharmacy. It contends that New York Medicaid will soon be declared out of compliance with Health Care Financing Administration regulations requiring reimbursement to be discounted from average wholesale price for the drug ingredient.

A spoonful of sugar: A complicating factor: New York is a special case because a legal battle waged 20 years ago gave pharmacy some reimbursement protection under a court "stipulation." So to try to make the proposed cut palatable, Medicaid's latest proposal is to offer pharmacy a higher dispensing fee in exchange for a 10% discount from AWP.

Zimmerman isn't jumping at the offer, however, even though the dispensing fee, which has been unchanged for a dozen years at $2.60, is the lowest nationwide. He's more interested in "some kind of an indexed fee" that would rise as drug prices do.

The state has alternative ways to save money on the Medicaid drug program, of course. Sager and Zimmerman agree that the No. 1 target should be curtailing fraud and abuse in the system --something the state has so far failed to do. Systematic fraud, "where the pharmacy goes into business with the express purpose of ripping off the program, and where it's in collusion with doctors, labs, and other providers," is ripe for correction, said Sager.

Another option, said Zimmerman, is to institute a drug threshold for Medicaid recipients -- that is, a limit on the number of Rxs available to them in a given time; then questions could be raised as to overuse of medication. …

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