Office and Policy Management Secretary Ben Barnes was surprised Monday when an Appropriations Committee hearing on projected budget deficiencies turned into a lawmaker grievance session on a provision of the labor agreement they said is hurting independent pharmacies.
After Barnes concluded a briefing on deficiencies expected in state accounts, several lawmakers said they had been contacted by constituents complaining a provision in the 2011 state employee concessions package was killing jobs in their communities.
At issue is a requirement that state union employees get their maintenance prescriptions through a mail order service owned by large pharmaceutical companies. While the requirement is expected to save the state about $20 million a year for the next two years, independent pharmacy owners have said the provision cuts them out of the loop and negatively impacts their profits.
One drug store in Storrs closed its doors before state employees had even approved the deal.
Since the provision went into effect, lawmakers from both sides of the aisle have been hearing about it from constituents. Sen. Edith Prague, D- Columbia, described it as a huge problem for independent pharmacies.
“We are pushing for jobs in this state and if these small businesses close it is a matter of jobs,” she said.
She asked Barnes to closely monitor the savings generated by the provision and look for a way to scrap it if those savings don’t materialize.
Rep. Marie Lopez Kirkley-Bey, D- Hartford, asked whether the provision “flies in the face” of Gov. Dannel P. Malloy’s stated jobs agenda.
“If we put these pharmacies out of business, this is contrary to what he’s trying to do,” she said.
Rep. Catherine Abercrombie, D- Meriden, suggested the state look into whether it could find a way to support small pharmacies through rebates or a greater use of generic drugs.
Barnes conceded that the provision’s impact on small independent pharmacies was a problem but said it was a matter of spending taxpayer dollars responsibly.
“I’m not going to deny that it’s a problem but I don’t think that the best way for us to support a group of businesses in Connecticut is by structuring overpayments in one of our programs,” he said. “I mean when we go out to buy goods and services on behalf of Connecticut residents we should do it in the most cost-effective way available to us.”
He noted that State Comptroller Kevin Lembo’s office has launched a maintenance drug network which allows independent pharmacies to distribute the drugs to state employees, so long as they match the rates of the mail order company.
Margherita R. Giuliano, executive vice president of the Connecticut Pharmacists Association said matching those rates are a problem for small pharmacies. Local pharmacies can’t purchase the medications at the same rate as CVS Caremark, so if they chose to take part in the network, they would be doing so at a loss, she said.
Guiliano said that pharmacies and mail order drug companies represent two separate trade classes and combining the two completely changes the industry. Mail order companies have a number of advantages that local pharmacies can’t compete with, she said. CVS, for instance, operates as its own wholesaler.
“The moving of the mail order class of trade into the community world, we can’t play in that space,” she said.
The provision also raises health concerns, Rep. Pamela Sawyer, R- Bolton, said. Sawyer said that, aside from calls about widespread power outages after recent storms, most of the calls she has gotten from constituents are regarding the mail order requirement.
Seniors and mothers of young children have called with fears that, without input from a pharmacist, they may wind up taking drugs that shouldn’t be taken together.
She said many small towns don’t have corporate pharmacies where constituents can get questions about their medications answered.
“In Hebron, a town of 9,000 people, they’re never going to get a CVS,” she said.
Sawyer told Barnes she wanted to let him know about the concerns “because these calls are not stopping.”
Barnes said that if the legislature wanted to decide to support local pharmacies at a higher price, the Appropriations Committee could certainly look at that.
“I’m not opposed to that ideologically. I’m just opposed to it because we didn’t have the money,” he said.
He said the Malloy administration does not want to see small pharmacies go out of business. They have continued to talk with independent pharmacists to find a way to allow more of them to participate, he said. If the provision does not yield the projected savings, Barnes said they would reconsider.
“If the savings turn out not to be as expected then we would presumably backtrack on the whole issue. I’m not doing it to put people out of business,” he said. “We’re doing it because it saved $20 million a year, which is real money.”
Asked after the hearing, Barnes said the focus on mail order prescriptions was not what he was expecting from the committee.
“I guess I am surprised to some degree. But that may just be a reflection of how naive I am,” he said.