Kansas: House panel grills health agency official

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March 29, 2010

Anonymous The Joplin Globe Mon Mar 29, 2010, 10:02 PM CDT

The Associated Press

TOPEKA, Kan. — A Kansas health administrator tried Monday to reassure legislators that his agency is working aggressively to hold down prescription costs for the state and its government workers after a union group raised some concerns.

Doug Farmer, director of the state employees’ health plan, faced numerous questions from a House committee about Kansas’ contract with CVS Caremark Corp. The Woonsocket, R.I., company manages prescription drug benefits for about 100,000 state employees, local school and government workers and their family members.

The Government Efficiency and Fiscal Oversight Committee called Farmer to testify after Change to Win, a Washington-based union federation, said the state and government workers are paying too much for many generic drugs. CVS contends Change to Win has presented misleading information.

Farmer said the Kansas Health Policy Authority, which oversees the state employees’ health plan, is pleased with the company’s performance. He expressed confidence that the authority negotiated the best overall deal it could.

The state’s contract with CVS expires at year’s end, and Farmer’s agency is reviewing proposals for a new contract from 10 companies. The authority expects to recommend a firm in May to the state commission picking the vendor.

Kansas spent $61 million last year on prescriptions and paid CVS about $1.6 million in management fees.

“Their customer service is good,” Farmer said. “They have delivered on all the prices they have guaranteed.”

Allen Horne, a CVS vice president, said the company’s contracts with Kansas and other states are shaped by “a very competitive environment.”

Horne had little to add to Farmer’s defense of the contract, telling the committee, “Their response is our response.”

Change to Win, which represents 5.5 million workers in five unions, including the Teamsters and the United Farm Workers, is pushing Kansas to change contractors.

CVS has suggested the group’s interest stems from the company’s refusal to end secret ballots in elections on whether employees unionize. Casey Cabalquinto, coordinator of Change to Win’s Pharmacy Initiatives, said it has no program to organize CVS workers and the real issue is lowering health care costs.

Cabalquinto said Farmer’s agency should audit CVS to see whether it’s giving Kansas the deepest possible discounts on drugs.

“If the minimum guarantee gives you $6, maybe it should be $10,” he said. “You need to go and recapture that $4.”

Change to Win says its research shows that for 269 generic drugs, the cost to Kansas and its government employees is higher than the $9.99 for a 90-day supply offered by CVS pharmacies to uninsured participants in a discount program.

But Farmer suggested the cost of name-brand drugs is a bigger concern.

He said 0.3 percent of the drugs covered by the prescription plan account for more than 10 percent of the state’s costs. And the price for name-brand drugs under the contract is 17 percent below the average wholesale price, he said.

“We’re not just contracting for 200 or 300 generic drugs,” Farmer said. “We’re contracting for thousands of drugs, and we’re trying to get the best price collectively.”

Farmer also said auditors have told the Health Policy Authority that it’s far more productive to audit the company’s claims processing, which the authority has done, than its discounts.

House committee members’ reactions varied after their two-hour hearing. Several said CVS has fulfilled its contract with the state, while others said Change to Win raised issues worth examining further.

Rep. Melody McCray-Miller, a Wichita Democrat, said many of the questions were directed to Farmer because his agency negotiates the management contract.

“I’m looking at it from a long-term perspective, not just as a spat,” she said.

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Kansas: House panel grills health agency official

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