How do Part D plans work with compounding pharmacies?

I have a client, Kate, who is turning 65 soon and uses a compounding pharmacy for her medications. Over the years, Kate realized that medications in hard pill form are not absorbed by her body, so she uses a compounding pharmacy that puts her medications into a capsule, and this works for her.

Kate gave me a list of her medications, taken from the labels on her pill bottles. I went to Medicare.gov and used the Plan Finder to see which of the 26 Part D plans in Arizona would work best for her.

Part D plans have networks

I also had to make sure there are Part D plans that have compounding pharmacies in their network. You see, Part D plans have networks, and if a person goes “out-of-network”, the Part D plan will not work. Most pharmacies are “in-network”, but smaller, local pharmacies might not be contracted with Part D plans.

I always wondered why the Plan Finder requires me to put in a pharmacy, and now I know.  Most of the pharmacies are national chains, but I recognized Avella on the list as being a compounding pharmacy in Tucson. Avella used to be known as The Apothecary Shop. So I chose Avella as the pharmacy Kate would use with her Part D plan.

The list of 26 Part D plans was sorted from least expensive to most expensive.  But since Kate’s medications are all generic, there wasn’t a lot of difference in co-pays. But there were wide variations in premiums and deductibles. However, most of the plans did not have Avella in their network.

The plan that did have Avella in-network was First Health Value Part D. I am not contracted with this company, but I told Kate to call them and tell them her situation and give them her list of medications, so they can confirm that their plan will work for her.

Kate made the call and was disappointed. She called me to say the First Health representative told her they do not work with compounding pharmacies. He could not find her drugs on their formulary. And he said information on Medicare.gov is often wrong.  Yikes!

I told Kate she might have been unlucky to get an inexperienced rep.  I decided check the first Health website and then  called First Health.  I was fortunate to talk to a more experienced person who told me about their pharmacy network, which includes “preferred pharmacies” and non-preferred pharmacies”.

I told the First Health rep that their website shows Avella as a “non-preferred pharmacy”, which means Kate would pay $7 for each generic prescription rather than $0. The rep assured me that Avella is “in-network” and can be used with the First Health Part D Value plan.

The rep then told me to talk to a pharmacist at Avella because that person would know how Avella works with Part D drug plans. So I called Avella in Tucson and spoke to a very helpful pharmacist whose quick and concise answers gave me confidence she knew what she was talking about.

The Avella pharmacist said they had experience working with Part D plans, and she told me how two medications that are put together in one capsule are priced by Part D plans.  When I mentioned Kate’s prescriptions, which Kate said were E-2 and E-3, she knew right away the drug names.

This last point is important to the story because the inexperienced rep at First Health did not find “E-2” or “E-3” when he searched on the plan formulary. He did not know that E-3 is Estradiol, which he would have found on the formulary.  There were three other drug names Kate had given me that the Avella pharmacist knew how to translate into the actual drug names – which are on the First Health formulary.

So maybe the First Health rep wasn’t at fault, because only a pharmacist would be able to translate “E-3” and “T-4” to actual drug names.  But this points out another challenge for finding a Part D plan:  Pill bottle labels may not provide information that matches what is in a drug plan formulary, or choices provided on the Medicare.gov Plan Finder.

Anyway, my conversation with the very helpful pharmacist at Avella gave me confidence that Kate would be able to use this compounding pharmacy if she enrolls in the First Health Part D Value plan.

Most of my work for clients who need a Part D plan is pretty straightforward.  Kate’s situation is quite a bit more complicated. But I learned something new this week about Part D and compounding pharmacies. It’s always good to learn something new.

Have you moved from Lipitor to its generic, Atorvastatin? Until June, many Part D plans (and employer plans) did not allow people to get the generic. Since June 1, things have changed and the price for Atorvastatin has dropped from over $100 for a one-month supply (10 mg) to $17.00 – the price at Costco without insurance.

Lipitor went generic last October – sort of. Until June of this year, when doctors wrote prescriptions for the generic, most Part D plans ignored the doctors’ orders and continued to provide the brand Lipitor, which cost around $150 for a 30-day supply. Perhaps this happened because supplies of the generic were limited, or perhaps because Part D plans were getting rebates from Pfizer, the maker of Lipitor. I’ll write about this soon because it’s a very interesting and complicated story.

From November 2011 through May 2012, only one company was allowed to make and sell Atorvastatin, and the retail price was somewhere between $80 and $120, depending on the Part D plan. As of June 1, more companies were allowed to produce the drug, and the price has come down – a lot. But again, what you pay will depend on your Part D plan.

I went to Medicare.gov and found that costs for Atorvastatin have indeed come down since I last checked in early-June. But some Part D plans seem to have negotiated prices similar to Costco, while others did not. And some plans call Atorvastatin a preferred brand drug, while others treat it as a generic.

Whether a drug is labeled as a brand drug or generic has cost implications for people who go into the donut hole.  Medicare beneficiaries buying brand drugs in the donut hole get a 50% price cut, while people buying generics get just 14% off the retail cost.

There are 30 stand-alone Part D plans available in Arizona. Here are the Atorvastatin costs for five of them. You can see how widely the retail price and member co-pays vary according to the Medicare.gov Plan Finder:

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New generics already available, or coming soon, include Plavix, Singulair, and Seroquel. People with a Part D plan who take these drugs will need to pay attention during the upcoming Annual Election Period (October 15 – December 7).  They’ll need to make sure their Part D plan has the best pricing for new generics. And they should tell their doctor to change them to the generic for potential savings of thousands of dollars in 2013.

I’ve asked questions about Part D before, but I’ll ask them again. Why is Part D so complicated? And why are there over 1,100 Part D plans available across the country? Does this help seniors? Does this save Medicare money?

I recently wrote about the generic replacement for Lipitor and the large pricing discrepancy among Part D plans for Atorvastatin.  One Part D plan charges an $8 co-pay for Atorvastatin while most other plans charge $43 or more. The retail value is reported by the insurance companies as between $90 and $100. At Costco, Atorvastatin can be purchased without insurance for $17 for a 30-day supply of the 10 mg dosage.

Now five drug and grocery chains are suing the maker of Lipitor, accusing Pfizer Inc. of delaying sales of the much cheaper generic, Atorvastatin.

Walgreens and Kroger (parent company of Frys) are part of the suit. According to an AP story:

The lawsuit also accuses Pfizer of making deals with companies that manage prescription benefits, giving them big discounts on brand-name Lipitor in exchange for those companies limiting sales of generic versions.

I received an email from a woman who has also been asking questions about getting Atorvastatin instead of Lipitor. Here is what Marian wrote to me:

I am currently enrolled in Cigna Medicare Advantage.  I get my prescriptions filled at a Cigna Clinic.  My last Lipitor prescription was filled for 90 days.  When I got my May Summary from Cigna it says the plan paid $431.75  and I paid $15.00 for my co-pay.  A total of $446.75 that counted against my Part D total for the year.  I am now only allowed $992.66 for the rest of the year.  They filled the prescription with brand name Lipitor, telling me that it would have cost me more if they used the generic .  What is wrong with this?  It’s been 7 months since this drug went generic.  Does Cigna have a deal with Pfizer or what?

A week later, Marian wrote me again with an update:

I found out another piece of the puzzle today.  I took a chance and called the phone number on my Summary that I get from Cigna each month.  I said to the person that answered for Cigna, “ I think I over paid for Lipitor.  Would you please check my account?”

He looked it up on the computer after asking for my ID.  No, he said that price is right.  $541.00 + 15.00.  I asked him why I could go to Costco and get a 90 day supply of generic for $42.00.  After I repeated the question he simply said “We can’t compete with Walmart or Costco because they deal in volume”.

I’m not so sure the answer Marian got from the Cigna rep is correct. It looks like Pfizer has a deal with Cigna so Cigna has continued to provide her with Lipitor rather than the generic.  So Marian is headed into the donut hole because her Part D account is being charged for the expensive brand drug.

I feel bad for Marian, but I am angered at the effect on the Medicare budget – because Medicare pays for the drugs, not Cigna. Is Medicare paying the brand price, which is ten times the generic price? Multiply $400 times 1 million Lipitor prescriptions and you get…. $400 million! And this is just for 90 days! And there are probably more than 1 million people buying Lipitor through their Part D plans.

Is Medicare paying out hundreds of millions of dollars for Lipitor because of the deal Cigna and other insurance companies have made with Pfizer?  That’s a question somebody needs to answer.