Setting record straight on VA pharmacy system
Setting record straight on VA pharmacy system
Both praise, blame stem from misconceptions
Department of Veterans Affairs chief pharmacy officer Michael Valentino, R.Ph., says much of the praise and criticism his organization's pharmacy system has received in terms of it being considered a model for potential changes to Medicare Part D arise out of misconceptions about VA pharmacy.
Valentino spoke at a Washington, DC, briefing hosted by the American Enterprise Institute and reported on at the American Society of Health-System Pharmacists (ASHP) web site. Among the myths that Valentino sought to dispel was that the VA formulary covers just 1,300 drugs, or less than one-third of the products typically available through a Part D drug plan. "The fact is that VA dispenses 4,778 drugs" from the formulary, he told the briefing. He said the 1,300 figure represents the individual chemical compounds on the VA formulary, some of which are represented by multiple products. "Also, we dispense an additional 1,400 drugs not on the formulary," he said. "If you look at it this way, we offer more drugs" than are typically available through a Part D drug plan.
The VA's track record of negotiating low prices from drug manufacturers has caught the attention of policymakers. Recent government data indicate that VA's costs for commonly prescribed drugs were just 42% of the products' average wholesale price, while costs for Part D plans averaged 73% of average wholesale price. Legislation has been proposed that would allow the federal government to directly negotiate with drug manufacturers to obtain volume based discounts on Part D covered drugs for Medicare beneficiaries, as VA does for its enrollees. Opponents of the legislation have said that negotiation by Medicare would actually be a price-controlling mechanism that would destabilize the prescription drug marketplace and drive up costs outside of Medicare.
Former Centers for Medicare and Medicaid Services administrator Mark McClellan, MD, now an American Enterprise Institute visiting fellow, said VA's system behaves like a staff model HMO that is efficient but cannot be directly compared to most Part D plans. "If you wanted to get costs down for Part D right away, one way to do it would be to get everybody into coordinated care plans—staff model HMOs or one of the PPOs or other coordinated care plans in Medicare," McClellan said. Nearly eight million Medicare beneficiaries were enrolled in Medicare Advantage managed care plans or PPOs at the end of 2006, and some 17.5 million beneficiaries had signed up for standalone drug coverage, according to federal figures.
How VA negotiates prices
McClellan also emphasized that VA obtains good discounts on formulary drugs by limiting the number of products in certain therapeutic classes like statins to get better prices on preferred brands. "The tighter the formulary, the more you can drive down prices in negotiations," he said, also noting that Part D enrollees are "choosing plans with broad formularies" instead of more restrictive plans. Valentino acknowledged that Pfizer's statin Lipitor, the most commonly prescribed drug for seniors in the U.S., is not on VA's national formulary. Rather, he said, VA's formulary includes Merck's Zocor, generic lovastatin (Merck's Mevacor), and Novartis' Lescol. But Valentino also reiterated that VA patients can obtain nonformulary drugs.
"We use evidenced based criteria for use of nonformulary drugs to make sure they're available for people that need them," he said. He said that in the case of Lipitor, VA pharmacies dispensed more than 700,000 30-day prescriptions for the drug last year. Valentino said the VA system scores well in customer satisfaction surveys, and that the majority of veterans are satisfied with the system. McClellan said the same is true for Part D plans.
But the two had differing perspectives on reports that some one million veterans have left the VA system for Part D. "It's not that they're not using the VA coverage at all, but they're also using Medicare coverage when it's more convenient or maybe a different kind of medication, but they're definitely using Medicare coverage as well," McClellan said. But Valentino said the idea of one million VA defections to Plan D is a myth. "We looked at our 4.4 million VA pharmacy users and matched that to CMS data," he said. "There are about 2.5 million VA pharmacy users who are dually eligible for Part D. As it turns out, about 650,000 patients that are using VA have enrolled in Part D, and 400,000 of those were auto enrolled by someone else. They didn't choose to enroll. It was either because they were in Medicaid, other low income subsidy, or their employer enrolled them in a plan. That leaves about 250,000 roughly that appear to have consciously enrolled in Part D. The next step, after we have a year's worth of data for Part D, is to take that cohort and check their reliance on Part D, VA, or both and see what's actually happening."
Department of Veterans Affairs chief pharmacy officer Michael Valentino, R.Ph., says much of the praise and criticism his organization's pharmacy system has received in terms of it being considered a model for potential changes to Medicare Part D arise out of misconceptions about VA pharmacy.Subscribe Now for Access
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