Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, May 13, 1994                   TAG: 9405130076
SECTION: EDITORIAL                    PAGE: A14   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

DRUG BILL

The bill would let consumers go to the pharmacist of their choice, even those outside an insurance company's network of drug providers, as long as the pharmacy agreed to accept the reimbursement rate set by the customer's insurance plan.

It sounds great. Consumers get the convenience of going to their friendly neighborhood drugstore, and realize the same savings they would get if they had been forced, by cost, to switch to a company that participates in their insurance company's plan. It sounded so good to Virginia lawmakers that the bill passed in the House of Delegates 92-1 and in the Senate 38-0.

There threatens to be one big glitch, however. Blue Cross and Blue Shield, which opposes the legislation, asserts the savings would evaporate if Virginia's "any-willing-provider" statute is extended to pharmacies. And its argument is compelling.

Now, health-insurance companies can negotiate and contract with pharmacies for lower prices on drugs in exchange for a promise of high-volume sales. The insurance companies can deliver on that promise only if they are able to encourage consumers to buy from the pharmacies participating in the insurance plan, and they do that with reimbursement incentives. In the first year that the Blues negotiated in this way, a spokesman said, it saved about $17 million on drug bills.

Remove the incentives for consumers, however, and you remove the presumed stampede of business headed for the pharmacies in the plan. Remove that high volume of business, and you remove the preferred pharmacies' ability and willingness to discount its prices. Over time, the discounts disappear.

The bill now on Allen's desk is backed by the Virginia Pharmacists Association and lobbyists for organizations representing the elderly. Old folks would like to be able to get lower prices without the inconvenience of going to a new pharmacy. And, indeed, inconvenience hardly covers the problem for an older person faced with transportation barriers who relies on a pharmacy that delivers or one that is easily accessible.

But pharmaceutical costs are a critical problem for the old, who tend to need more drugs than they did when they were younger, and particularly for those living on low fixed incomes that can be eaten up by rising prices. Elderly people facing the choice of buying food or buying prescription drugs are of graver concern, even, than those who have trouble finding a way to the drugstore.

The principles at work in the health-insurance plans covering drug reimbursements do not sound far from the managed-competition principles used in bringing doctors and hospitals into health-maintenance organizations and preferred-provider organizations. There is some lessening of consumer choice in these plans, but this is balanced by lower costs.

Allen understands what is at issue. He signed this legislation earlier, but only after amending it with a re-enactment clause that required the General Assembly to pass the bill again in 1995 before it could go into effect. That would have allowed its impact to be assessed as part of a comprehensive study of the state's "any-willing-provider" statute.

The House rejected his amendment, however, and passed the original bill again, 63-35, leaving the governor with the choice of signing it as is or vetoing it.

Given the cost questions raised by insurance companies and the lack of study on the real effects the measure is likely to have, the assembly has left the governor no choice. He should veto it.

Keywords:
GENERAL ASSEMBLY 1994