May 13, 2015

(Washington, D.C.)— New York legislation (S.2530 and A.6194) exempting drugstores from certain safety and performance standards threatens to undermine patient safety and could also increase prescription drug costs by $400 million in 2016 and $6 billion over the next decade, according to a new study from the health research firm Visante, released today by the Pharmaceutical Care Management Association (PCMA).

The legislation would undermine public and private health plans’ ability to choose mail-service and specialty pharmacies. These pharmacies lower drug costs by promoting generics, reducing medication errors, and administering biologic medicines that can be injected or delivered intravenously.

“The bill would force public and private payers to include drugstores in their networks that don’t meet basic safety and quality standards,” said PCMA President and CEO Mark Merritt.

Major findings from the Visante study include:

The legislation could increase prescription drug costs and related medical costs in New York by close to $400 million in 2016. Over 10 years, the estimated cost could be more than $6 billion.

  • The legislation would raise costs and undermine care in New York by exempting retail pharmacies from meeting standards related to credentialing, drug utilization evaluation activities, clinical prior authorization, quality-of-care reviews, and formulary compliance.
  • By reducing the effectiveness of pharmacy network contracts, the legislation would undermine the current price concessions offered by mail-service and specialty pharmacies, which are based on superior economies of scale and performance in areas such as formulary compliance.

Read the study.

In addition, a new report by the National Center for Policy Analysis (NCPA) notes that state policymakers should avoid undermining specialty pharmacies’ expertise in dispensing costly specialty medications. The NCPA report states:

“Specialty drugs are very expensive, costing thousands to tens of thousands of dollars per month — creating a gold rush among firms vying to provide these lucrative services.

“Well-managed, exclusive specialty pharmacy networks allow manufacturers to track drugs that require specific or complex dosing and laboratory monitoring. FDA monitoring requirements favor tightly controlled networks for safety reasons. Moreover, the Federal Trade Commission (FTC) agrees exclusive networks are an effective means of cost control. Regulations that inhibit drug plans from establishing highly efficient, preferred specialty networks also make it more difficult to ensure the integrity of these drugs.”