The Crazy Battle to Outlaw Mail Pharmacies

Here’s the newest anti-mail strategy from pharmacy owners: If you can’t beat mail, just make it illegal in your state!

Friday’s New York Times describes anti-mail legislation in Pennsylvania and New York that is being marketed under the banner of “freedom of choice.” See Pharmacists Fight the Rise of Mail Order, which features comments from yours truly.

In reality, these bills would prohibit just about every tool available to plan sponsors and governments to manage dispensing and distribution costs. If the law passes, say goodbye to differential co-payments for mail-order pharmacies, preferred networks, and just about anything else that could possibly make a retail store-based pharmacy compete for a payer's business.

In addition to raising costs for payers, the bills would hurt Pharmacy Benefit Managers (PBMs) and at least two major pharmacy chains. Manufacturers of specialty pharmaceuticals should care because your limited distribution strategy would become illegal in Pennsylvania. See my comments below for the unpleasant details.

How are these bills anything more than a self-interested and anti-competitive attempt by pharmacy owners to protect their profits at the expense of taxpayers and employers?

THE KEYSTONE KOPS STATE

Let’s take a quick look at Pennsylvania Senate Bill No. 201, which was recently introduced here in my home state. I’m not a lawyer, but my plain English review of this bill suggests that almost every current commercial benefit design would be invalid if it became law.

Of course, mandatory mail-order is out. But so are preferred networks such as Restat’s Align, Walmart's (NYSE:WMT) Access Based Network Design, and even the Humana Walmart Preferred Rx Plan in Medicare Part D.

What else? Lower co-payments for mail-order would be gone. (Sorry, consumers!) Express Scripts (NYSE:ESRX) can say goodbye to consumerology and the use of behavioral economics in Pennsylvania. CVS Caremark’s (NYSE:CVS) Maintenance Choice program would also have to end in the state.

The bill also brings “any willing provider” to commercial plans, which will open up specialty networks just like Medicare Part D and Medicaid. See Who Pays For Specialty Drugs? (And Why It Matters) for an explanation of how this happens.

I wonder if NACDS will lobby against this bill because it would devastate the retail strategies of two large association members?

NOT COMMON WEALTH

Naturally, the Pennsylvania legislation is very careful not to require that a retail pharmacy offer the same discounts to payers as a mail pharmacy. Thus, it dodges the uncomfortable reality for retail pharmacies that mail pharmacies charge less to plan sponsors for filling a prescription than a retail pharmacy.

The bill also goes far beyond the retail-friendly “level playing field requirements” within Medicare Part D by prohibiting anything that limits the “right” of a consumer to choose any pharmacy, regardless of cost to the payer.

Of course, this "right" ignores the fact that consumers pay very little out of their own pocket. (See Who Paid for Prescription Drugs in 2009?)

If you ask someone else—such as your employer or the American taxpayer—to pay for your drugs, why shouldn't they want you to save them some money? George Van Antwerp expands on this point in Who Should Decide Rx Location – Payer Of Course.

I’m personally appalled at this brazen legislative overreach. It is unnecessary and wasteful to drive up health-care costs by protecting the profits of local pharmacists.

So, what do you think? (Shields up! Fire away!)