'SURVIVAL' TACTICS THEME OF PPSI MEETING

JANICE ZOELLER

BOSTON -- In manner, the two attorneys couldn't be more different. The flamboyant former mayor of San Francisco paced at the front of the room. The younger, buttoned-down general counsel for the National Association of Chain Drug Stores, based in Alexandria, Va., spoke from behind a podium.

But antitrust attorney Joseph Alioto and NACDS's Robert Waspe sounded a similar theme at a breakfast meeting here of the Sausalito-based Pharmacists Planning Service Inc.: Community pharmacy is in a fight for its survival. The PPSI meeting was held during the annual NARD convention.

Alioto, whose law office is in San Francisco, represents independent pharmacies in several lawsuits now pending against pharmaceutical manufacturers. Among the charges are price discrimination and price fixing.

Seventeen lawsuits, filed in federal court against pharmaceutical manufacturers, have since been consolidated in Chicago. The cases are not expected to be heard until late 1995 or early 1996.

Seven additional cases have been brought in California under state statutes and have been consolidated in San Francisco.

"There's no way you can survive the kind of competitive environment where someone pays $2 for the same product that costs you $114, unless we win," Alioto told the gathering of mostly independent pharmacists, but which also included Jack Futterman, a pharmacist who is chief executive officer and chairman of Pathmark, Woodbridge, N.J., and chairman of NACDS.

"I haven't the slightest question that ultimately we're going to win this fight," Alioto said. One of the California suits brought by Alioto targets the Merck-Medco merger. It was scheduled to go to trial Nov. 14. Alioto described Medco as a "buying cooperative," with 85 million people who are enrolled in Medco plans as customers. Unless deals for Medco and PCS are stopped, said Alioto, it would not be possible to have a competitive economy with two manufacturers controlling so many buyers.

"The problem of managed care is the problem of discriminatory pricing," said Waspe. "We are forced to compete for managed care patients directly against the beneficiaries of discriminatory pricing," he explained, "and we are paying for that better price.

Waspe said while managed care is "the current fad," it is "a shortsighted remedy. "Employers, insurance companies, public employee groups are all looking to managed care programs to help control the rising costs of medicine," he said. Rising costs, he explained, "have very little to do with whether health care is delivered in a managed care setting.

"The problem is that we have unlimited demand pressing against limited resources, causing inflation," said Waspe.

Health care reform is not dead, said Waspe, although he acknowledged that a national, comprehensive health care reform bill probably is. The action is moving to the states.

"The next big group to go to managed care will be state Medicaid recipients," predicted Waspe. With the Dec. 31 expiration of the OBRA '90 provision that states can't reduce pharmacy reimbursement for Medicaid, "every state that has not done so will move to reduce reimbursements," he said.

To avoid being bound by a provision in the federal Social Security Act that requires that Medicaid reimbursement to providers be "reasonable," Medicaid programs will push their Medicaid population into, at first, optional, and then mandatory HMOs or closed panels, said Waspe. In doing so, he explained, the pharmacy reimbursement component "gets lost.

"The urgent need now is to get the thinking off community pharmacies as distributors and prove our value in disease remediation and therapy management," said Waspe.

"We need to develop the integrated data network to track and coordinate disease remediation for drug therapy," said Waspe. "We have to establish and prove to the payer community that we save them money by managing the drug therapy of that patient because they are not going to pay for it until they see it saves them money."

In doing so, community pharmacy is also going to have to put its money where its mouth is, said Waspe. "We're going to have to look at capitation programs or formulary control programs or shared-risk programs to demonstrate that through our provision of professional pharmacy care, we lower overall drug costs to the payer community. Until we do that, the rest is rhetoric."

The biggest myth is that HMOs, hospitals and mail-order pharmacies move market share, said Waspe. "I ask you, who moves market share? Who implements formularies? You do. HMOs don't, except maybe with formularies inside their own clinics. The reality is that when PCS or PAID or any of the others establish a formulary, it's the community pharmacist who has to pick up the phone and call the doctor, get him to change the prescription and then dispense the formulary product," said Waspe.

"Nobody moves market share like community pharmacy. And nobody gets paid like community pharmacy for it, either. Unfortunately," said Waspe.