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State workers’ $2B pharmacy contract could impact where you get your prescriptions filled

Starting Jan. 1, 2023, over 200,000 state workers under the Office of Group Benefits could see a change in where they go to fill their prescriptions and get vaccines.

This potential change comes after the state decided to move forward with a $2 billion pharmacy contract between the OGB and CVS Caremark for state employees, despite repeated opposition from both lawmakers and pharmacists.

“This is a pharmaceutical monopoly facilitated by the State of Louisiana,” said District 28 State Senator Heather Cloud.

Cloud is one of many Louisiana lawmakers arguing on behalf of independent pharmacies that could not only take a financial hit come the new year, but also lose their state employee clients due to what they call inadequate reimbursement rates in the new contract. She added that the only groups that are benefiting from this contract are the Office of Group Benefits and CVS Caremark, while those residents that rely on local pharmacies for health care will suffer.

“The average cost to fill a prescription is $10 on top of ingredient costs, and this would not only not cover our ingredient costs but also only give us a 10-cent dispensing fee,” said Rachel Lacroix, the Vice President of Ray’s Pharmacy. “Every prescription we process, we also have to give every 10 cents to the state, so it’s really a wash there. In essence, there will be no dispencing fee really.”

Lacroix said that based on the new contract from the state, their business would lose upwards of nine dollars for each prescription that is filled. To put into perspective, Lacroix added that Ray’s Pharmacy filled 15,000 prescriptions over the last three months that they would now no longer be able to make a profit off of.

According to the Advocate, the Louisiana Independent Pharmacies Association filed a lawsuit aimed at blocking the contract between OGB and CVS Caremark, but a ruling in the 19th Judicial District Court tossed that suit last week. That ruling is being appealed to the state First Circuit Court of Appeal.

As a result, several independent pharmacies, especially in rural areas like Ray’s Pharmacy, have resorted to opting out of the state’s contract. This mainly impacts the state employees that rely on those particular pharmacies, as they could potentially have to travel further to receive their prescriptions at big box pharmacies.

“Even the pharmacies that did opt into this contract, they won’t be able to fill their brand names, because that’s an even bigger loss under the contract, so even if they opted in, they would only be able to fill your generic medications,” said Lacroix. “For those that live in those rural communities where there’s only one independent pharmacy, and there is no other option and no other chain pharmacy, that is going to be quite a drive for them, sometimes over an hour, just to get their flu medication or that vaccine they need.”

Aside from travel, Sen. Cloud said customers will be blindsided on Jan. 1 when they find out their pharmacies will no longer be able to fill their prescriptions, and they will have to be transferred to already overwhelmed locations. She described what could become a “mass chaos” when a backlog builds up at chain pharmacies due to thousands of prescriptions being sent there at one time instead of independent pharmacies.

She also stressed that lawmakers had worked hard in recent years to improve healthcare availability, especially in rural areas, but this contract from the state sets them back a few steps.

“This is going to take a key component out of that continuum of care,” said Sen. Cloud. “This could completely change the tables.”

Pharmacies, including Ray’s, said they have offered their state employee clients that will be affected the option to pay with cash for generic medication, but also admits that brand names are not so affordable to pay with cash.

“They feel like they pay such big premiums for insurance and have this lack of access to care and lack of choice,” said Lacroix. “They don’t want to go anywhere else.”

If you are a customer with La. State Group Benefits, you are advised to contact your local pharmacy before the beginning of the year to see if your prescriptions will still be provided there or if you will have to switch pharmacies.

Last week, Sen. Cloud requested help from the state’s auditor to review the new pharmacy contract and see if it meets the provisions. She expects this process to take some time to properly sift through. An oversight committee was also composed of four senators, including Cloud, and four representatives to look through the contract as well.

Sen. Cloud is asking Governor John Bel Edwards to pause the contract to give time for the auditor’s office and the committee to monitor the issue.


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