Prescription drug coverage next issue for West Virginia public employees' insurance

The Joint Standing Committee on Insurance and PEIA heard testimony from Matt Walker, the executive director of the Independent Pharmacy Association of West Virginia, about the state’s Pharmacy Benefit Management program and independent pharmacy Reimbursements.

The Independent Pharmacy Association of West Virginia represents more than 100 community pharmacies across the state, with more than 200 local pharmacies serving their communities in West Virginia.

PEIA uses a pharmacy benefit management program, Express Scripts Inc., to process prescription drug claims. While he said it is important to PEIA to use a PMB program to process the large number of claims, Walker believes that the way PEIA has used its PMB program has caused headaches for pharmacists.

“There is a lack of trust between West Virginia’s pharmacies and PEIA’s PBMs that they have used in the past, currently, etc.,” Walker said. “There have been complaints filed since the Pharmacy Audit Integrity Act was put into code with the West Virginia Offices of the Insurance Commissioner. That is then the regulator in West Virginia for PBMs. There have been some fines and orders issued…there have been some issues, but we’re hoping PBMs follow the law.”

According to Walker, pharmacies are reimbursed by PEIA well below the costs of purchasing the prescription drugs of 95% of brand drugs. While pharmacy reimbursements for generic drugs allow pharmacies to make a small profit, those profits are wiped out due to the losses ordering brand name prescription drugs.

For example, a pharmacy that orders Humalog, a form of insulin, pays $537.83 for the drug, but PEIA’s reimbursement is only $478.16, or 12.48% less than the cost to purchase the drug. With PEIA’s mandatory 90-day fill for brand name prescriptions, the financial loss to pharmacies can triple.

“They’re losing money on every one of those prescriptions,” Walker said. “That’s just not something that is sustainable.”

Walker warned about a pharmacy access cliff, where even large pharmacy chains are balking at the disparity in prescription drug reimbursement rates. Kroger recently left Express Scripts, meaning it now longer accepts PEIA to full prescriptions. Kroger left $100 million in monthly revenue leaving the Express Scripts nationwide PBM network because of reimbursement issues.

“The more things like that happen around the country and in West Virginia, you’re going to see pharmacies just not able to take those benefits,” Walker said. “I think, and I think my members would agree, that PEIA is very close and maybe has fallen off in some instances a pharmacy access cliff, meaning West Virginians don’t have access to fill prescriptions.”

Walker said smaller pharmacies are also considering dropping PEIA coverage, but to do so they also must leave Express Scripts. Walker said local pharmacies don’t want to drop their friends and neighbors who are PEIA members, but they are causing their own businesses financial harm by participating in PEIA. The issue helped exacerbate the closure of small-town pharmacies, with 10-12 independent pharmacies closing their doors or being absorbed in the last year.

The pharmacy issue mirrors the issues hospitals had with PEIA up to this year with reimbursement rates far below that of Medicare, culminating with Wheeling Hospital threatening to stop accepting PEIA. To address those concerns, the Legislature passed Senate Bill 268 earlier this year.

SB 268 sets the reimbursement rate for all healthcare providers at a minimum level of 110% of what Medicare reimburses providers, sets numerous requirements for members of the PEIA Finance Board, requires a five-year analysis of potential future costs to the program and an actuarial study of the plans offered by PEIA.

The bill also requires PEIA to return to an 80/20 employer-employee match beginning in July and a 70/30 match for out-of-state medical care for non-contiguous out-of-state counties. The bill would change the price of the plan for spouses of PEIA plan participants who have access to health insurance coverage to the actuarial value of the PEIA plan, which could cost plan participants an additional $147 per month during the next plan period according to PEIA.

Walker recommended PEIA consider a model used by West Virginia’s Medicaid program using the National Average Drug Acquisition Cost (NADOC) plus $10.49 reimbursement system. NADOC is a national survey showing what pharmacies are paying for prescription drugs.

“We think this is a pretty good model,” Walker said. “West Virginia Medicaid immediately saved $54 million per year the year they did that and increased pharmacy reimbursement.”

Steven Allen Adams can be reached at sadams@newsandsentinel.com.