Senate Bill S3901

                                 BILL NUMBER:  S3901A

 TITLE OF BILL :
An act to amend the elder law and the social services law, in relation
to dispensing fees paid to pharmacies in EPIC and Medicaid


 PURPOSE OR GENERAL IDEA OF BILL :
This bill provides for the dispensing fee paid per prescription.

 SUMMARY OF SPECIFIC PROVISIONS :
Section One of the bill amends paragraph (c) of subdivision 1 of
section 250 of elder law related to the dispensing fee paid to
pharmacies for every prescription filled under EPIC program. This bill
adds a new provision related to the dispensing fee paid to pharmacies
required to dispense medications in unit-of-use packaging.

Section two of the bill amends subparagraphs (i) and (ii) of paragraph
(d) of subdivision 9 of section 367-a of the social services law, as
amended by chapter 19 of the laws of 1998 related to the dispensing
fee paid to pharmacies for every prescription filled for persons
eligible to participate in the Medicaid program. The bill adds a new
subparagraph (iii) related to the dispensing fee paid to pharmacies
required to dispense medications in unit-of-use packaging.

 JUSTIFICATION :
              

The enacted 2008-2009 state budget reduces the amount allowed under
Medicaid and EPIC to cover the cost of prescription medication without
a counterbalancing increase in the dispensing fee paid to
participating pharmacies. Other state Medicaid programs such as
California pay higher dispensing fees in order to meet the
"reasonableness" standard in federal statutes governing Medicaid
programs. Unless the dispensing fee is adjusted prior to the enactment
of the new product cost allowance on July 1, 2008, it is possible that
New York will not meet this test.  Moreover, given the high costs of
doing business in this state, publicly-financed prescription benefit
programs such as Medicaid and EPIC should not reimburse pharmacies at
a rate lower than every other state that has enacted deeply discounted
product reimbursement policies.

The actual cost of dispensing a prescription to a beneficiary in the
New York Medicaid program ranges between $8.79 and $14.04 according to
the survey conducted by Grant Thorton released in January, 2007.  We
apply the same survey results to dispensing fees paid under EPIC.
Although the dispensing fees in this legislation are below these
amounts, they are consistent with reimbursement policies that are in
place in other state Medicaid programs that discount the product
allowance as substantially as in the adopted NYS FY 2008-2009 budget.
With the high costs of living and doing. business, New York's Medicaid
and EPIC programs should not reimburse pharmacies at the very lowest
level in the country.  Doing so may reduce the pharmacy provider
network to unacceptable levels. Should that occur, both programs will
fail in their primary objective, to deliver medically necessary
healthcare of acceptable quality cost-containment parameters.

Although the legislature has restored millions to the cuts proposed by
the executive over the course of the past fourteen years, every state
budget has nevertheless left pharmacy providers with less
reimbursement than in the previous year. Virtually every health care
provider in the Medicaid program has faced regular decreases in
reimbursement, but no other provider category has been subject to the
cumulative percentage reductions as have the state's pharmacies. This
year's reduction of two and a half percentage points off average
wholesale price actually represents a 30% reduction in gross merging,
with a 60% decrease in net amounts, for example. Some pharmacy

providers have calculated the loss at $3 per prescription across all
prescriptions filled in both programs.

Pharmacies that provide prescription services for residents in
long-term care facilities and other forms of residential care incur
additional expense associated with preparing "blister packs" and other
forms of unit-of-use packaging that are required by regulation.  This
special packaging provides additional security against misuse or
overuse and enhances patient compliance that in turn reduces
unnecessary Medicaid spending associated with medication errors or
inappropriate use. The differential in the legislation is also based
on policies adopted by other states.

 PRIOR LEGISLATIVE HISTORY :
New bill.

 FISCAL IMPLICATIONS :
None. The changes proposed in this legislation are possible in the
context of the funds appropriated for spending on the pharmacy
benefit.  First of all, national trends suggest that the rate of
growth in spending for prescription drugs has slowed. The proposed 6%
increase in the cost of the benefit is likely to be much lower.
Second, the proposed spending on prescription drugs does not take into
account the additional supplemental rebates generated by preferred
drug programs. In 2006 when the PDP was first implemented, the program
generated $30.5 million.  Although the 2007 supplemental rebate
amounts not yet available, they will be significantly higher than in
the previous year when the Preferred Drug Program had just begun and
the number of therapeutic categories was considerably less than it was
in 2007. Third, although the dispensing fees in this bill appear to be
the same for brands and generics, differences in co-payments actually
provide pharmacy with a slight higher fee for dispensing generic
drugs. In the past, the state Medicaid program realized $21 million in
savings per year when generic utilization improved by one percent.
Savings in FY 2008-2009 will be very significant as a large number of
brand medications are scheduled to lose patent protection without a
comparable number of new branded drugs coming into the market. The
state is poised to realize the savings by virtue of two policies now
in place, namely the generic mandate and the Preferred Drug Program.

 LOCAL FISCAL IMPLICATIONS :
None.

 EFFECTIVE DATE :
April 1, 2010.

                                 BILL NUMBER:  S3901B

 TITLE OF BILL :
An act to amend the elder law and the social services law, in relation
to dispensing fees paid to pharmacies in EPIC and Medicaid


 PURPOSE OR GENERAL IDEA OF BILL :
This bill provides for the dispensing fee paid per prescription.

 SUMMARY OF SPECIFIC PROVISIONS :
Section One of the bill amends paragraph (c) of subdivision 1 of
section 250 of elder law related to the dispensing fee paid to
pharmacies for every prescription filled under EPIC program. This bill
adds a new provision related to the dispensing fee paid to pharmacies
required to dispense medications in unit-of-use packaging.

Section two of the bill amends subparagraphs (i) and (ii) of paragraph
(d) of subdivision 9 of section 367-a of the social services law, as
amended by chapter 19 of the laws of 1998 related to the dispensing
fee paid to pharmacies for every prescription filled for persons
eligible to participate in the Medicaid program. The bill adds a new
subparagraph (iii) related to the dispensing fee paid to pharmacies
required to dispense medications in unit-of-use packaging.

 JUSTIFICATION :
              

The enacted 2008-2009 state budget reduces the amount allowed under
Medicaid and EPIC to cover the cost of prescription medication without
a counterbalancing increase in the dispensing fee paid to
participating pharmacies. Other state Medicaid programs such as
California pay higher dispensing fees in order to meet the
"reasonableness" standard in federal statutes governing Medicaid
programs. Unless the dispensing fee is adjusted prior to the enactment
of the new product cost allowance on July 1, 2008, it is possible that
New York will not meet this test.  Moreover, given the high costs of
doing business in this state, publicly-financed prescription benefit
programs such as Medicaid and EPIC should not reimburse pharmacies at
a rate lower than every other state that has enacted deeply discounted
product reimbursement policies.

The actual cost of dispensing a prescription to a beneficiary in the
New York Medicaid program ranges between $8.79 and $14.04 according to
the survey conducted by Grant Thorton released in January, 2007.  We
apply the same survey results to dispensing fees paid under EPIC.
Although the dispensing fees in this legislation are below these
amounts, they are consistent with reimbursement policies that are in
place in other state Medicaid programs that discount the product
allowance as substantially as in the adopted NYS FY 2008-2009 budget.
With the high costs of living and doing business, New York's Medicaid
and EPIC programs should not reimburse pharmacies at the very lowest
level in the country. Doing so may reduce the pharmacy provider
network to unacceptable levels.  Should that occur, both programs will
fail in their primary objective, to deliver medically necessary
healthcare of acceptable quality cost containment parameters.

Although the legislature has restored millions to the cuts proposed by
the executive over the course of the past fourteen years, every state
budget has nevertheless left pharmacy providers with less
reimbursement than in the previous year. Virtually every health care
provider in the Medicaid program has faced regular decreases in
reimbursement, but no other provider category has been subject to the
cumulative percentage reductions as have the state's pharmacies. This
year's reduction of two and a half percentage points off average
wholesale price actually represents a 30% reduction in gross merging,
with a 60% decrease in net amounts, for example. Some pharmacy

providers have calculated the loss at $3 per prescription across all
prescriptions filled in both programs.

Pharmacies that provide prescription services for residents in
long-term care facilities and other forms of residential care incur
additional expense associated with preparing "blister packs" and other
forms of unit-of-use packaging that are required by regulation.  This
special packaging provides additional security against misuse or
overuse and enhances patient compliance that in turn reduces
unnecessary Medicaid spending associated with medication errors or
inappropriate use. The differential in the legislation is also based
on policies adopted by other' states.

 PRIOR LEGISLATIVE HISTORY :
New bill.

 FISCAL IMPLICATIONS :
None. The changes proposed in this legislation are possible in the
context of the funds appropriated for spending on the pharmacy
benefit.  First of all, national trends suggest that the rate of
growth in spending for prescription drugs has slowed. The proposed 6%
increase in the cost of the benefit is likely to be much lower.
Second, the proposed spending on prescription drugs does not take into
account the additional supplemental rebates generated by preferred
drug programs. In 2006 when the PDP was first implemented, the program
generated $30.5 million.  Although the 2007 supplemental rebate
amounts not yet available, they will be significantly higher than in
the previous year when the Preferred Drug Program had just begun and
the number of therapeutic categories was considerably less than it was
in 2007. Third, although the dispensing fees in this bill appear to be
the same for brands and generics, differences in co-payments actually
provide pharmacy with a slight higher fee for dispensing generic
drugs. In the past, the state Medicaid program realized $21 million in
savings per year when generic utilization improved by one percent.
Savings in FY 2008-2009 will be very significant as a large number of
brand medications are scheduled to lose patent protection without a
comparable number of new branded drugs coming into the market. The
state is poised to realize the savings by virtue of two policies now
in place, namely the generic mandate and the Preferred Drug Program.

 LOCAL FISCAL IMPLICATIONS :
None.

 EFFECTIVE DATE :
April 1, 2011.