[Congressional Record Volume 153, Number 126 (Thursday, August 2, 2007)]
[Senate]
[Pages S10802-S10804]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BAUCUS (for himself, Mr. Grassley, Mrs. Lincoln, Mr. 
        Roberts, Mr. Conrad, Mr. Enzi, Mr. Schumer, Mr. Cochran, Mr. 
        Salazar, Mr. Smith, Mr. Bingaman, and Ms. Snowe):
  S. 1954. A bill to amend title XVIII of the Social Security Act to 
improve access to pharmacies under part D; to the Committee on Finance.
  Mr. BAUCUS. Mr. President, today I am introducing the Pharmacy Access 
Improvement Act of 2007. This is an updated version of a bill I 
introduced last year, and I am proud to bring it back.
  I am excited that this year's bill is bipartisan. I am happy that 
Senator Grassley has joined me in introducing this bill. Given all of 
our work together on the Medicare prescription drug benefit, I am glad 
he is a cosponsor. I also am pleased to have our Senate colleagues join 
us on this important piece of legislation.
  The Medicare prescription drug benefit got off to a bumpy start last 
year. A lot of the problems have been fixed, and the benefit is 
providing millions of seniors with access to affordable prescription 
drugs. Unfortunately, a number of the problems facing pharmacists 
remain. We need to help them.
  The Medicare drug benefit brought about big changes to the pharmacy 
business. Dual eligible beneficiaries switched from Medicaid to 
Medicare drug coverage. Many more seniors have drug coverage. Dozens of 
new private drug plans are available.
  I have heard from pharmacists in Montana who are struggling. They are 
trying to help their patients. But they face great difficulty. The 
success of the Medicare drug benefit depends on the pharmacists who 
deliver the drugs. So we have to help them. We must act now, before 
pharmacists find that they are no longer able to provide drugs to 
Medicare beneficiaries, or to provide drugs at all.
  The Pharmacy Access Improvement Act would do several things to help 
pharmacies. First, it would strengthen the access standards that drug 
plans have to meet. It is important that the drug plans contract with 
broad and far-reaching networks of pharmacies. This bill would ensure 
that the pharmacies that drug plans count in their networks provide 
real access to Medicare beneficiaries.
  It would also help safety net pharmacies to join drug plan networks. 
These pharmacies serve the most vulnerable patients and should be able 
to continue to do so. Drug plans should not be allowed to exclude 
safety net pharmacies. Excluding them does a huge disservice to needy 
beneficiaries. This bill would rectify the problems that safety net 
pharmacies have encountered in participating in the Medicare drug 
benefit.
  The Pharmacy Access Improvement Act would speed up reimbursement to 
pharmacies. The delays in receiving payment from drug plans have forced 
pharmacies to seek additional credit, dip into their savings, or worse, 
as they try to continue operations. This bill would require drug plans 
to pay promptly. Most claims would be reimbursed within 2 weeks. And 
the bill would impose a monetary penalty on plans that pay late.
  One of the most common complaints from beneficiaries has been how 
confusing the practice of co-branding is. Co-branding is when a drug 
plan partners with a pharmacy chain and then includes the pharmacy's 
logo or name on its marketing materials and identification cards. This 
is confusing, because it sends the message that drugs are available 
only from that pharmacy. That is not true. To help end this confusion, 
the Pharmacy Access Improvement Act would prohibit drug plans from 
placing pharmacy logos or trademarks on their identification cards and 
restrict other forms of co-branding.
  This bill would also require that plans provide pharmacists with more 
accurate and updated information about reimbursement rates. Currently, 
some plans do not divulge to pharmacists how much a particular 
prescription will be reimbursed prior to dispensing. This bill would 
require disclosure before a pharmacist dispenses. It would require 
regular updating and disclosure of pricing standards.
  The problems that pharmacists are facing are real. And they are not 
going away. We must act on the Pharmacy Access Improvement Act before 
it is too late for many pharmacists and the beneficiaries whom they 
serve. We have a duty to make the Medicare drug benefit as strong and 
robust as it can be. And the Pharmacy Access Improvement Act presents 
an opportunity for us to do just that. My cosponsors and I urge our 
colleagues to support it.
  Mr. GRASSLEY. Mr. President, I am pleased to join my good friend and 
colleague Senator Baucus, as well as Senators Lincoln, Roberts, Conrad, 
Enzi, Schumer, Cochran, Salazar, Smith, Bingaman, and Snowe, to 
introduce the Pharmacy Access Improvement Act.
  I am pleased with how well the Medicare Part D program is working. It 
has demonstrated how effectively private sector competition can work in 
delivering an entitlement benefit. The program has defied official 
predictions and come in under budget by $113 billion compared to the 
baseline projected in 2006. Premiums, initially estimated at $37 for 
2006, in fact averaged $23; in 2007 they fell to an average of $22. We 
understand that this year's bids are even lower and that premiums are 
expected to fall again next year. The vast majority of Medicare 
beneficiaries have enrolled in the program, and while there were some 
troubling start-up problems initially, beneficiaries are very pleased 
with their plans.
  At the same time, the first years of implementation of the Part D 
program have revealed some areas in which the program can be improved. 
One is related to pharmacy participation in the program. Changes are 
needed to ensure that Part D treats pharmacies as Congress intended and 
to make the program friendlier to pharmacists and independent 
pharmacies.
  As Senator Baucus, Senator Lincoln, and my other colleagues and I 
talked to beneficiaries, pharmacists, pharmacy owners and prescription 
drug plans about changes that would make Medicare Part D work better, 
many of our discussions centered around how to make sure that Part D 
works not just

[[Page S10803]]

for the beneficiaries, the chain drug-stores, and the plans, but also 
for the local, independent pharmacies, the long-term care pharmacies, 
and the safety net pharmacies that many beneficiaries rely on. That is 
exactly what this bill is intended to do.
  My colleagues and I hope with this bill to improve contracting for 
pharmacies, increase CMS's and prescription drug plans' customer 
service, and give beneficiaries better access to pharmacies. Let me 
give you some of the specifics of the bill.
  First, the Pharmacy Access Improvement Act would strengthen standards 
for ensuring convenient beneficiary access to pharmacies. During the 
first two years of implementation, CMS has permitted some plans to meet 
the pharmacy access requirements in the law by counting non-preferred 
and out-of-network pharmacies. The plans charge higher cost-sharing at 
these pharmacies to discourage their use and drive utilization to 
preferred pharmacies. Counting non-preferred and out-of-network 
pharmacies to meet the access requirements is clearly not what Congress 
had in mind in establishing the beneficiary access guarantees in the 
law. To correct this problem, this bill would require that plans, with 
certain exceptions, count only ``open'' pharmacies, those that are 
accessible to the general public, in meeting the Medicare pharmacy 
access standard.
  It also would require plans to count only their preferred in-network 
pharmacies, not the non-preferred pharmacies, in determining whether 
they meet the access standard.
  The bill would allow pharmacies to initiate negotiations with plans 
under the ``any willing pharmacy'' provision regardless of whether they 
had already rejected, or failed to act on, previous offers from the 
plan.
  The bill also would help ensure the inclusion of safety-net 
pharmacies in a prescription drug plan's network by preventing plans 
from specifically excluding 340B entities in the terms of their 
contracts. 340B entities include federally qualified health centers, 
migrant health centers, health centers for residents of public housing, 
school health centers, as well as black lung clinics, entities 
receiving grants for early intervention for HIV under the Ryan White 
Act, disproportionate share hospitals, and others. They serve more than 
ten million people.
  Many of these entities operate their own pharmacies, which operate 
under different constraints than other retail pharmacies. They may have 
abbreviated hours or be available only to patients of the 340B entity. 
If 340B entities' pharmacies are not available as in-network pharmacies 
in Part D, these patients may have difficulty getting their 
prescription drugs.
  The Model Safety Net Pharmacy Addendum was developed by the Centers 
for Medicare and Medicaid Services and the Health Research and Services 
Administration to facilitate 340B entities' participation in Medicare 
Part D. Because it takes the 340B entities' special circumstances into 
account, it has appropriate contract language for Part D plans to use 
when contracting with safety net pharmacies. Under the bill, plans 
would have to apply the Model Safety Net Pharmacy Addendum to their 
contracts if a 340B entity so requests.

  The bill also would require plans to include a contract provision to 
allow these safety net pharmacies to waive cost-sharing if the entity 
so requests. Many safety-net pharmacies waive cost-sharing for their 
patients, but the Part D plan contracts typically prohibit this. Given 
that 340B entities serve low-income and poor populations, we believe 
those entities should be able to waive cost sharing for drugs, and our 
bill would facilitate that.
  We have found that long-term care pharmacies similarly operate under 
conditions different from those of retail pharmacies serving the 
general population. For institutionalized populations, each resident's 
daily drugs must be specially packaged to help ensure that each gets 
the drugs meant for her, not for other residents. Long-term care 
pharmacies specialize in this, but the Part D rules to date do not 
adequately reflect how long-term care pharmacies work with long-term 
care facilities, which affects residents' access to these pharmacies. 
Our bill would require the Secretary to establish rules that include 
pharmacy access standards for long-term care residents.
  Another problem that has arisen in the implementation of Part D 
concerns the ability of beneficiaries to obtain extended supplies of 
their drugs from a local pharmacy. Our bill therefore would ask the 
Secretary to establish standards for access to pharmacies that dispense 
extended supplies of covered drugs.
  We have also heard from our local independent pharmacies that many, 
despite contract terms, face delayed payments from prescription drug 
plans. Given that the pharmacies must pay for their drugs on a more 
abbreviated schedule, these delays have created cash-flow crises for 
some pharmacies and put some at risk of closing. As much as I hate to 
legislate contract terms, I would hate more for the independent 
pharmacies in my State to close and my beneficiaries to be left without 
a pharmacy. In our bill, we would require plans to pay most pharmacies 
within 14 days upon receipt of an electronically submitted clean claim. 
For paper claims, they would have 30 days. If they were late, the 
prescription drug plans would have to pay the pharmacies interest. If a 
pharmacy submitted claims electronically and requested electronic 
payment, the plan would have to pay electronically.
  Because long-term care pharmacies operate under unusual circumstances 
compared with retail pharmacies, our bill would allow pharmacies in 
long-term care facilities, or that contract with long-term care 
facilities, at least 30 days but no more than 90 days to submit their 
claims for reimbursement to the plans.
  Another problem involves how plans use maximum allowable prices as 
the upper limit of what they will pay a retail pharmacy for the cost of 
a drug. What has come to light is that some plans will not disclose to 
the contracting pharmacies exactly what the maximum allowable prices 
are either when the contract is proposed to them or even after they 
sign the contract.
  It seems unconscionable to me that a pharmacy would be expected to 
sign a contract where the price term is hidden and not disclosed. In 
the Medicare program, no other health care providers are subject to 
signing a contract in which they don't know what they will get paid.
  Another abusive practice by some plans occurs when they do not update 
their maximum allowable prices in a timely manner. When a 
pharmaceutical company raises its price for a drug the pharmacy has to 
pay that new higher price right away. But the plan might not update 
what it pays for weeks. That leaves the pharmacy to absorb the 
difference. The plans that do this know exactly what they are doing. 
They know they are making the pharmacies eat the higher cost while they 
delay updating their payment rates. To address these concerns, the bill 
would require plans to disclose to pharmacies their ``maximum allowable 
cost'' pricing, and also to update those prices as they change, through 
an Internet website and a toll-free phone number.
  Similarly, the bill would require plans to update their prescription 
drug pricing standard at least every seven days. The drug pricing 
standard changes frequently, and the price the pharmacy is paid is 
based on that standard, and so it seemed fair to us that the 
prescription drug plans' payments should reflect recent changes.
  Our bill is intended to improve CMS's and prescription drug plans' 
service to pharmacies. It would require the HHS Secretary to establish 
a pharmacists' toll-free hotline. Prescription drug plans would have to 
establish separate pharmacists' and physicians' toll-free hotlines, and 
would have to comply with customer service standards established by the 
Secretary. We hope this will prevent pharmacists being placed on long 
holds when they have customers standing at the counter waiting for 
their drugs.
  We have some questions about pharmacists' average dispensing fees, 
and under the bill the HHS Inspector General would conduct a study of 
dispensing fees, including studying whether the pharmacist is 
dispensing a standard prescription or an extended one; whether the 
pharmacist is in a chain store or an independent pharmacy; whether the 
pharmacy dispenses specialty pharmacy products, or is a

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long-term care pharmacy. The Inspector General's report would be due 
October 1, 2008.
  I believe that with these changes, the Medicare Part D program will 
work even better for beneficiaries and for the pharmacies that serve 
them. As we refine the Medicare Part D program, we want to build on its 
success even as we hope to make it fairer to all the stakeholders 
involved, the beneficiaries, the pharmacies, the PDP plans, and the 
manufacturers. I believe this bill does just that.
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