Could pill-packaging save $30M?

Mar 6, 2009

By Christine Jordan Sexton
3/6/2009 © Florida Health News

With consolidation on the minds of cash-strapped state officials, some are jumping on a new report by government auditors suggesting a joint effort on buying and packaging prescription drugs. 

Five state agencies spent $232 million on prescriptions last year for thousands of Floridians, according to the report by the Office of Program Policy and Government Accountability. Many receive the prescriptions through health-department clinics, but the state also provides drugs for prison inmates, the developmentally disabled, the mentally ill and others.

If agencies worked together, the report suggests, the savings could be considerable. Rep. Kevin Ambler of Tampa, who chairs the House Health Appropriations Committee and plans to work on a bill that would adopt the recommendations, says they could be as high as $30 million the first year.

‘The savings are substantial; the efficiencies are profound,” Ambler said at a joint meeting of three committees involved in health and human services spending.

It’s “imperative” to do it now, Ambler said, because “every dollar we save is going to be a dollar we can put into services for our most vulnerable” Floridians. 

The report would place Florida’s Department of Health in a pivotal role in coordinating purchasing and repacking of drugs. It comes just as discussions are heating up about merging DOH with the state Agency for Health Care Administration – an idea pushed by Gov. Charlie Crist as a ways of saving money. A budget “conforming” bill that includes the merger is expected to be released today, but without details.

The nine-page OPPAGA analysis suggests a variety of administrative changes that could be made to save the state money when it comes to drug purchasing. One would have the Agency for Persons with Disabilities and the departments of Juvenile Justice and Corrections contract with DOH’s central pharmacy, which purchases, repackages bulk-orders of drugs into smaller containers and fills prescriptions for the county health departments. 

The repackaging service could also be used for prison inmates, mental health patients and those who are disabled. APD, for example, pays $4.23 per prescription while DOH pays no more than $2.50. 

The OPPAGA report says DOH may be the most “cost-effective option,” but suggests that the agencies issue a joint invitation to negotiate with a private vendor to see if DOH’s prices can be beat.

The report notes that while DOH’s central pharmacy recently expanded, it will take further study to see whether it could handle the additional volume and how much that would cost. 

The OPPAGA report notes two other ways DOH could help other agencies save money. If its physicians agree to treat patients who are detained in prisons and juvenile detention centers, then DOH could possibly purchase the drugs for those departments. 

DOH gets a better price on drugs because it can tap into the federal 340B drug pricing program as administrator for federally qualified health centers in the state.
Florida already is among a handful of states that do group-purchasing through the Minnesota Multistate Contracting Alliance for Pharmacy, or MCCAP program. However, the federal 340 B program is even more economical, according to the report. 

Prices under 340B would have been $7.4 million less over a three year period than the MCCAP prices for the 50 most-prescribed medications, the report says. 

Rep. Juan Zapata, chairman of the House Human Services Appropriations Committee, gave Ambler kudos for the proposal. Zapata suggested that the Legislature shouldn’t focus on the “big headlines” that department mergers bring. Instead, he said, the Legislature should look at consolidating agency functions. 

“I think the pharmacy issue is a great place to start,” Zapata said.