The Utah Pharmaceutical Association thinks a new drug plan, administered by Deseret Healthcare, more commonly known as Deseret Mutual, is a prescription for failure.
"Utah pharmacists could lose over $1 million in lost DMBA accounts," said C. Neil Jensen, association executive director. "A lot of pharmacies are fearful this will put them out of business, particularly in areas of Utah where there is a high density of Deseret Mutual clients."But Deseret Healthcare officials say their new plan, which reduces payments to pharmacists and continues an optional mail-order program, is financially prudent. It's one of many steps, they say, to stay competitive while managing rising health care costs.
"We are a competitor in the marketplace just like anyone else. If Deseret Healthcare did not administer this employee benefit program, it would likely be administered by another third-party administrator in this community," said Michael J Stapley, vice president, benefits administration. "They would have the same fiduciary responsibilities that Deseret Healthcare has."
Jensen said Deseret Healthcare historically has had a pharmacy reimbursement program that's been both good for the patients and good for pharmacists.
The company administers two basic medical plans, both of which have a prescription drug benefit. Plan A is a basic indemnity plan, designed primarily for and used mostly by employees who reside outside of Utah. Participants can either purchase and pay for their drugs and send their reimbursement requests back to Deseret Health-care, or order by mail.
Plan B, available only in Utah and Hawaii, provides employees with a card allowing them to purchase their prescriptions from a pharmacy of their choice. Although they have the option of ordering prescription drugs by mail, Stapley said 85 percent of the company's Plan B prescription drug business goes through the card program.
Participating employees have been paying 10 percent of the average wholesale price. Deseret Healthcare pays the remaining 90 percent.
But effective Jan. 1, the percentages will change.
Enrollees will still pay 10 percent, and Deseret Health-care will pay 80 percent.
Pharmacists will be asked to absorb the remaining 10 percent. Also, pharmacists' dispensing fees, which typically range from $3.25 to $3.50 per prescription, will be fixed by DMBA at $2.50.
"We are not the first to reduce our reimbursement to pharmacies," Stapley said. "Others have been doing it for some time. We are just responding to the market and keeping our plan competitive."
The Pharmaceutical Association isn't convinced.
"To make matters worse, Deseret Healthcare is changing processing companies. The new company is PAID. It is owned by MEDCO Cost Containment Services, which is the largest for-profit mail order company in the United States," Jensen said.
In the past, pharmacists have been able to fill a 90-day prescription. Deseret Healthcare's new plan will limit that to a maximum of 30 days.
"Translated what this means is: Come in and get your first prescription from us, and then send away for the 90-day supply at a `cheaper' fee," Jensen said. The Utah economy, he maintains, is the loser when local business goes out-of-state.
Stapley disagrees. "In 1987, Deseret Healthcare paid $788,000 to the mail-order pharmacy contractor for Utah participants. This represented about 20 percent of our total Utah-based prescription drug business," he said. "The other 80 percent was spent in Utah and waspaid to Utah pharmacists."
Stapley said most of the $788,000 was used by the mail-order contractor to pay prescription drug suppliers like Squibb, Smith-Kline and French, Merek Dohme and Rugby. He said it doesn't matter whether or not the purchase is made in Utah or another state, these companies still must be paid for their product and the money goes out-of state.
"If you assume that the mail-order contractor margin over and above their cost of drugs is 20 percent, Deseret Healthcare actually caused at most about $158,000 to go out-of-state."
Stapley said the bottom line is that the mail-order program, initiated five years ago, is popular with the employees - and saves them money.
"Deseret Healthcare is a trust that administers benefits for employees in all 50 states. Outside of Utah, the mail-order pharmacy program provides us an opportunity to purchase prescription drugs on a wholesale basis. This results in substantial savings to the trust and to our employees in the other 49 states."
But Stapley insists that Deseret Healthcare wants to be fair to Utah pharmacists.
He said the co-payment in the mail-order plan was increased from $2 to $6, "so that those who live in Utah will have a stronger incentive to use our prescription card, which does direct more business to local pharmacies." Additionally, Deseret Health-care reduced the dispensing limitation on the mail-order program from 180 days to 90 days, and are considering a further reduction to 60 days.
"These changes are also intended to discourage inappropriate use of the mail-order program and increase the use of the card program," Sta-pley said. "We feel we have made a reasonable effort to work with the local retail pharmacy industry."