September 30, 2002
Time 07:00 AM - 08:00 AM
Station WBIX-AM Radio
Boston, MA

(Transcript)

DAVE ANTHONY, anchor: And now someone who knows a thing or two about Biogen and biotech in general is Allison Connolly, who is the reporter who covers that industry for the Boston Business Journal. Allison, good morning.

Ms. ALLISON CONNOLLY (Boston Business Journal): Good morning, Dave.

ANTHONY: Of course, you also are looking into several other things, not just Biogen. I mean, it's been a tough year in a lot of respect for biotech companies, but maybe a real tough year in store for pharmacies.

Ms. CONNOLLY: Right.

ANTHONY: Because this--this whole debate over Medicaid reimbursements has not been settled yet.

Ms. CONNOLLY: Right. And won't be for another couple weeks, but everyone's on the edge of their seats, let me tell you, especially those big retail chains like Walgreen's and CVS.

ANTHONY: And when you get into this story--now, you've written a piece in the Journal this week about "Medicaid Cuts Could Send Pharmacies Packing." What about long-term care? That seems to be what you focused on here in your story.

Ms. CONNOLLY: Right. It's a little niche--retail niche that I hadn't really known much about before I started this. But they're a group of companies called long-term care pharmacies and what they do is they dispense subscrip--prescriptions, sorry, for nursing home residents exclusively. And it costs more for them to do so, so they're saying that they should be exempt from any pe--pending reimbursement cuts because they're not the same as CVSs and Walgreens, who can actually make up cuts to reimbursements through retail sales.

ANTHONY: Right. I mean, the--they just deal with--in a lot of cases their customers are gonna maybe even almost all of them be on Medicaid or something. (Unintelligible)--

Ms. CONNOLLY: Right. I think about 70 percent of the 50,000 patients that they serve in Massachusetts are Medicaid patient, so they would be hit pretty hard.

ANTHONY: What these pharmacies are talking about, one of them is--are they all from PharMerica?

Ms. CONNOLLY: Oh, no. PharMerica is one of the--there are five big national chains and most of them have local companies here. PharMerica has a local facility in Brockton, for instance and now service Medicaid patients in this area, nursing home patients in this area. They have about 300 people at this facility and about 50 pharmacists on staff. And what they do is just like the others. There are a few independents as well. They will--they'll make up specific packaging for each nursing home patient. And sometimes these patients are on eight or 10 medications at once. So, they'll actually, you know, put the package together for each patient, deliver them around the clock, seven days a week. And they're reasoning is that, yes, it's gonna cost us more. It costs us to--to dispense each prescription about $11.37 when the retail chains like CVS and Walgreen's they say cost about $7 per dispensal (sic). So they're saying that it costs them more to do a certain speciality that's needed by these nursing homes.

ANTHONY: Now, the--the CVSs and the Walgreens and Brooks, these are the big chains that are using their leverage as big parts of Medicaid in Massachusetts to--to change the policy that was put in place and they already got a--basically a hold on what the state wanted to do. As we get into October, there are going to be more hearings and my understanding is that some of these chains are now giving some of their data on what they pay to the state to help this whole rate being set.

Ms. CONNOLLY: Right. They balked for a long time, but the deadline actually was Thursday for submitting public comment and at about 5:00, according to published reports, they did send in that pricing information. And as you--one can see that, you know, this--these retail chains didn't want to give over that information for proprietary reasons, but they did. Their reasoning is that the state doesn't realize how much it does cost per drug to dispense it for a patient. And even with that $7.05 number that's been tossed around that it costs them to dispense a drug, the state would be giving them, basically the wholesale acquisition cost minus 2 percent. So, they wouldn't even make the full amount on each drug. That's what they're saying.

ANTHONY: Right. And, of course, some of the--some in the state are disputing that and maybe these numbers can help with that. We--you talked to Senator Richard Moore, who is from Worcester, he was the one that tried to make the exemption for these long-term care pharmacies. Is he optimistic that anything could change in the--least the governor's decision to veto that part of the bill?

Ms. CONNOLLY: I think that's a great summary. Anything can change at any moment. Basically the public comment period ended Thursday and it's now up to the Division of Heath Care Finance and Policy to, A, decide whether these cuts will go through as planned and, B, whether the long-term care pharmacies will get an exemption. And I spoke with the Division of Health Care Finance and Policy who said, `You know, we really can't say anything, obviously, until the legis--our ruling comes out.' But anything's game. Ex--exemptions still could come through or it may not come through and then these pharmacies will have to find a way to--to keep up with those cuts and--and make money on those drugs that they're--they're dispensing.

Again, another complaint among these pharmacies is that pharmacists are so hard to keep these days, they can--you know, in--in general they're competing with the CVSs and Walgreens to keep these pharmacists. So, it's just another thing that they're gonna have to keep up with.

ANTHONY: All right, it's an interesting story that will come to a conclusion, we think, sometime next month. Allison, thanks a lot.

Ms. CONNOLLY: Thank you, Dave.

ANTHONY: Allison Connolly, who's written the story, "Medicaid Cuts Could Send Some Pharmacies Packing." It's in this week's Boston Business Journal.