HARVARD PILGRIM: Begins Flat-Fee Pharmacy Payments

      Beginning Monday, Harvard Pilgrim Health Care Inc. "started to pay pharmacies a flat fee of just under $30 per prescription, regardless of whether the drug wholesales for $1 or $150," the Wall Street Journal/New England Edition reports. The move is an attempt by New England's largest HMO to get pharmacies to "economize when filing prescriptions." Dr. Joseph Dorsey, Harvard Pilgrim's medical director, said, "We are bringing (pharmacies) into the community of parties who have to figure out the best way to stay within a budget." Among the drugstore chains in Massachusetts that have agreed to the new reimbursement system are CVS Corp. and Walgreen Co. The Wall Street Journal/New England Edition notes that "[s]ome say it's hard to say no to a plan that covers 1.2 million enrollees in four New England states."

Alarm Bells
      Nevertheless, the plan is raising alarm in some quarters. "Steve Grossman, past president of the Boston Association of Retail Druggists, says the policy will 'jeopardize a lot of patients.'" University of Minnesota pharmaceutical economist Stephen Schondelmeyer, who called the plan "very unusual" and "a great risk," said that Harvard Pilgrim should try a pilot project before unrolling the project "en masse." Harvard Pilgrim officials countered that physicians "will still have control of the prescription-writing process, and decisions about which drugs the health plan covers will continue to be made by a committee dominated by doctors." They note that unless the health plan stabilizes rapidly rising drug costs, "the costs will exceed its spending on inpatient hospital care, now about 24% of total spending, in just four years" (Gentry, 3/18).