Iowa Medicaid program costs pharmacists "thousands"

Recent changes to Iowa’s Medicaid Preferred Drug List (PDL), requiring pharmacies to stock brand over generic versions of several drugs, are harming Iowa retail pharmacists’ businesses.

Last year and again in January, 2014, Iowa’s Medicaid program altered its PDL to include new brand medications and medication amounts that pharmacies must stock for their Medicaid patients. To reduce drug costs, the state Medicaid
program requires certain drugs to be dispensed in 15-day supplies only. That way, if the patient’s physician recognizes that the medication is not effective and a prescription needs to be changed, Iowa Medicaid will not pick up the extra cost of unused product.

Tony BeraldiHowever, some pharmacists said, they are the ones left holding the bag. One of the most challenging examples occurred in 2011. Pharmacists filling Medicaid scripts were allowed to dispense only a 15-day supply of the daily Daytrana patch prescribed for ADHD. However, the patch is sold to pharmacies in 30-day supply boxes, which expire two months* after they are opened.

“It is around $200 for a 30-day supply. We were sitting with some products that would never get used,” said Tony Beraldi, RPh, president of the Southwest Iowa Pharmacists Association in Council Bluffs, Iowa, and owner of Oard Ross Drug Inc. Fortunately, in the case of Daytrana, many pharmacists complained to Iowa Medicaid, and the 15-day requirement was rescinded.

Monthly pharmacy burden

This ongoing problem is costing Oard-Ross Drug thousands of dollars monthly, Beraldi said, and many other pharmacists in the state have expressed similar concerns.

“We have branded products expiring. They are worthless on our shelves, when we have only one patient on the brand and the patient switches pharmacies. Iowa Medicaid is benefiting at the expense of Iowa pharmacies,” Beraldi said.

Iowa Medicaid did not return Drug Topics’ calls for comment. 

The Medicaid PDL requirements are just the latest financial challenges that the state’s independent pharmacies are facing. The National Community Pharmacists Association (NCPA) is pushing for state legislation that would address reimbursements to Iowa pharmacists by pharmacy benefit managers (PBMs).

“A pharmacy’s acquisition costs for scores of generic drugs are skyrocketing by as much as 600%, 1,000% or more, but the PBMs continue to reimburse community pharmacies at an outdated lower price,” NCPA said in a statement.

Prohibitive costs

Another cost-prohibitive PDL requirement that went into effect January 1
involves the beta-blocker brand Inderal vs. generic propanolol. An Iowa pharmacy owner who did not wish to be identified for this article said that his pharmacy’s cost for Inderal is around $1,150, vs. $250 for generic options. In addition, the cost difference in stocking Provigil (modafinil) for sleep apnea rather than its generic alternatives is around $600 per script, the pharmacist said.

The pharmacist noted several other examples that are costing his pharmacy thousands of dollars each month.

Beraldi is also concerned about the cost of having to stock a specific generic form of Concerta (methylphenidate) for ADHD, instead of other generics.

“Iowa Medicaid pays for the generic Concerta made by Watson, but will not pay for generic Concerta made by the other manufacturer, Mallinckrodt. The cost of the Watson product is substantially more than the cost of the Mallinckrodt product,” Beraldi said. For every patient who takes a high dosage of the generic Concerta, Beraldi estimates, his pharmacy is losing $600 per patient per year.

“Could you imagine if every PBM had its own list of specific generic items we must carry? Caremark might require Dr. Reddy’s Omeprazole, whereas Express Scripts might require us to use Teva’s, for example. Furthermore, all Catamaran members would be required to get the brand Lipitor because they made a deal with Pfizer, the manufacturer. That is basically what the PDL is doing,” Beraldi said.

What to do?

The Southwest Iowa Pharmacists Association may lobby for state legislation to open up the PDL to more generic alternatives, said Beraldi. It is also possible that Iowa Medicaid will adjust the PDL, once pharmacists express their concerns.

“When we worked with the Iowa Pharmacists Association and Medicaid in the past, they did allow a few [brand requirements] to come off the list, such as potassium,” Beraldi said.

Beraldi and other pharmacists agree that something has to change. “The larger pharmacies may be able to absorb the costs, but it is difficult for small pharmacies to do so,” Beraldi said.

He added that the state of Iowa should share with pharmacies rebates it receives for the use of Medicaid PDLs.

“This program saves Iowa Medicaid millions of dollars, but those rebates are not distributed among pharmacies that are providing the care and absorbing the costs,” Beraldi said. 

* Editor's note: This article has been corrected. The original print article incorrectly stated that Daytrana patches expire two weeks after the boxes are opened.