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Illinois ends Caremark contract
with drug company Pharmacists say deal is hurting business |
| Friday, November 19, 2004 By Caleb Hale The Southern |
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Illinois' Central Management System plans to terminate a contract with a Texas-based pharmaceutical services giant early for essentially "suckering" the state into using mail-order prescription medicine facilities for state employees, one pharmacist leader says.
Mike Patton, executive director of the Illinois Pharmacists Association, said the state has notified Caremark Rx Inc. it is flushing the company out of its contract in July, roughly three years into its five-year agreement with CMS. The plan provides prescription drugs to an estimated 250,000 people statewide. The state is opening bids to other prescription benefits managers, with stipulations that terms of any contracts be open during the negotiation process. Caremark imposed "trade secret" conditions when formulating its contract that forbid CMS from revealing pricing points, even to state legislators, Patton said. Caremark is one of the nation's leading prescription benefits managers, with more than 1,200 plan sponsors, including government entities, and more than 55,000 participating retail pharmacies. It purchased AdvancePCS in March. The company, based in San Antonio, also operates four mail service pharmacies. Patton said the state and American Federation of State, County and Municipal Employees integrated a mail-order prescription system when negotiating a new labor contract over the summer. He said at that time, Gov. Rod Blagojevich and legislative leaders signed a "memorandum of understanding" Caremark would give independent and retail pharmacies the option to become medical providers. CMS reports since the offer went into effect Nov. 1, 35 pharmacies statewide have signed on to become Caremark providers. But some Southern Illinois pharmacists say they couldn't afford Caremark's offer, which may mean many state employees and their families have to get regular prescription medication through the mail. Going to a neighborhood pharmacy means paying double the price. Not surprisingly, local pharmacists aren't happy. Pharmacist Mark Danke, of Danke Pharmacy in Vienna, said he stands to lose roughly 25 percent of his profit base to mail-order medications. Danke operates the only local pharmacy in Vienna, where two state prisons are located. As a small business owner, he said it will be hard to absorb the loss, but he stood to lose more money per bottle of medicine sold under the terms from Caremark. "What it does to my business, with maintenance medication most all independent pharmacies would be losing money on all brand name drugs," Danke said. He said Caremark wanted a share of the profit, plus the full rebate for each medication sold. Even worse than his monetary loss, Danke said, is what the agreement does to customers. "One of my main arguments is this completely eliminates the customer's freedom of choice," he said. "They (Caremark) are claiming they are giving the customer a choice, but it's not a fair choice." William Mills, a nurse at Choate Mental Health and Developmental Center in Anna, is one employee upset by the mail-order system. Mills said prices are cheaper, but part of what he liked about the previous prescription drug set-up was the choice he had for providers. "I pay more each day for that insurance, and now one of the major benefits is being taken away," Mills said. "Yes, my out-of-pocket expense is going to be less if I go with Caremark, but I'm going to be hurting my community." Tim Lawson, who works at Metropolis Drugs II, said the problem with prescription benefits managers is bigger than what Illinois has experienced with Caremark. He said if independent pharmacists continue to lose to big mail-order operations, the small-town pharmacy will either have to scale back services or completely shut down. "They are formulating a non-compete market," Lawson said. Lawson said the worst part is for the remainder of the state contract with Caremark, if individuals for some reason don't receive their medication on time and are forced to head to a local pharmacy, they will be paying for it almost entirely from their own pockets. CMS spokesman Willy Medina said the state did what it could under the rules of Caremark. "As much as you always want to root for the little guy, (the pharmacists') situation didn't change with the contract amendment," Medina said. "From the state's perspective they did what they had to do." Medina said CMS can't do much for independent pharmacists who can't afford to be Caremark providers. He said the state is beginning the process of searching for a new prescription benefits manager, under more open terms, although Caremark is eligible to bid again. Pharmacy industry representatives and legislators attended a hearing in Springfield earlier this week. Questions were posed to Caremark, whose business practices are under investigation by Attorney General Lisa Madigan. Illinois is leading a 19-state investigation into the company, officials in the attorney general's office said. Caremark largely remained quiet on the terms of the 2002 contract negotiated with CMS, but Patton said he hopes the state is more careful next time when dealing with large pharmaceutical companies. "I think there is a white-hot light on prescription benefits managers, and a window of understanding has been opened," Patton said. Sen. David Luechtefeld, R-Okawville, who opposed entering the mail-order system, said he still doesn't know all the terms of Caremark's agreement with the state, but he knows "it was not thought through." Luechtefeld said senior citizens, which makes up a large customer base in the prescription drug industry, don't like using mail-order systems. Representatives of Caremark Rx Inc. could not be reached for comment. |
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