By Bill Britt
Alabama Political Reporter
MONTGOMERY—In June 2013, Governor Robert Bentley, established the Alabama Medicaid Pharmacy Study Commission to gather information on how to best provide prescription drugs to the State’s Medicaid recipients.
The finding of the commission suggested that the state could receive significant saving by utilizing a Pharmaceutical Benefit Management group (PBM). The estimated saving could reach as high as $35 million depending on which PBM the state chose to engage. According to the commission’s finding, pharmacy costs are approximately 11 percent of the total Alabama Medicaid medical expenditures. Alabama Medicaid pharmaceutical expenditures are composed of two areas; “ingredient cost and dispensing fees.”
American Pharmacy Cooperative, Inc. (APCI)
CVS Caremark, Express Scripts, and MedImpact Healthcare Systems, Inc.
Walmart’s Preferred Pharmacy Network.
APCI is the only Alabama company that made a recommendation to the committee.
Over the last year and a half, APCI has used many tools to promote itself as the one company to handle through a vast lobbying campaign in the state legislature and through editorials in major newspapers and online advertising.
So, eager has APCI to secure the state contract, that it hired Speaker of the House Mike Hubbard as the firms’ lobbyist. The company refers to Hubbard as a consultant, doing business for APCI in other states but Hubbard during the 2013 legislative session took extraordinary steps to pass legislation that would have secured the Medicaid Pharmacy contract for his client APCI.
During the 2013 session, Speaker Mike Hubbard cast repeated votes in favor of House versions of a bill, giving exclusive rights to manage Alabama’s Medicaid prescription drug purchasing to APCI. In a series of eleven YES votes cast on April 23rd on State House versions of the General Fund budget, Hubbard actively sought to ensure his public relations client – American Pharmacy Cooperative Inc. – became the sole company eligible to provide Pharmacy Benefits Manager services to Alabama’s Medicaid agency. Though he voted multiple times in favor of the legislation, Hubbard never publicly disclosed his financial ties to American Pharmacy Cooperative Inc. (APCI), the company that stood to profit from Medicaid provisions of the budget; nor did Hubbard declare a conflict of interest or abstain from taking official action on the bill, titled SB143. The measure to favor APCI failed in the legislature after some on the Governor’s staff became suspicious of the agreement between Hubbard and APCI.
Hubbard’s official actions favoring APCI appear to violate state ethics laws regarding conflicts of interest. The actions taken by Hubbard on behalf of APCI are believed to be a part of a Special Grand Jury investigation in Lee County.
So far during this campaign cycle, APCI has given almost $150,000 in donations to republican political candidates, much of it going to Alabama 2014 PAC, controlled former Gov. Bob Riley, Mike Hubbard and Senate President Pro Tem, Del Marsh.
In what may be a further attempt by Hubbard to help his client APCI, HB237 is being offered to help preferred vendors.
According to the bill co-sponsored by Hubbard, the State would require that if a bid of a preferred vendor is no more than 5 percent greater than the lowest bid of a responsible bidder, the awarding authority shall award contract to the preferred vendor.
A preferred vendor is a person, firm or corporation that makes the product in the state, has a plant or distribution facility for the product in the state, or was incorporated or formed in the state. The Bessemer-based APCI could certainly benefit from this new legislation.
While Governor Bentley is considering his options for how to reform the Medicaid Pharmacy System, the debate is hotly discussed within the State House. The governor and legislators have to weigh the saving that might occur under a PBM with the potential loss to small pharmacies across the State against what is in the best interest of the state’s taxpayers.
State Senator Billy Beasley (D-Clayton), who is also a pharmacist, says he believes that the state’s Medicaid recipients being well-served in its current program. In fact, the study commission’s finding show that Medicaid in Alabama runs very efficiently.
The problem is that the State’s General Fund’s revenues are woefully inadequate to keep pace with Medicaid’s growing demands.
In a statement issued by the Pharmaceutical Care Management Association, they said they believed the commission’s report showed how PBM could, “reduce wasteful spending while engaging a robust network of independent pharmacies and protecting patient access to prescription drugs.”
They also added, “Alabama’s Medicaid program can dramatically reduce costs by simply applying best practices already used by Medicare and other large payers that offer pharmacy benefits,” said Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt. “Fortunately, this can be done in a way that protects patient benefits and avoids cutting payments to hospitals and doctors.”