Plus Participating Pharmacies
Northeast Pharmacy Service Corporation:
Thirty Years of Supporting Independent Pharmacies
- NPSC was founded in July of 1991 in Massachusetts by a group of independent pharmacies that wanted a voice in the future of their businesses by gaining access to insurance company pharmacy contracts. The company began very humbly as an offshoot of the Massachusetts Pharmacists Association occupying an office above one of the founder’s pharmacies. Initially it recruited pharmacies in Massachusetts and succeeded in putting a network together for John Hancock. Soon after a group from the Connecticut Pharmacists Association called and asked to join. A small team of employees moved into 1661 Worcester Road in Framingham and began running meetings in Connecticut and continued recruiting pharmacies there. By the end of 1992, the network numbered approximately 700 stores. Initial oversight was provided by an “Operating Committee” of pharmacists, but in 1995 NPSC established a true Board of Directors.
- PBM Contracts
In those early years, NPSC also had contracts for the Federal Employee Program and ValueRx. NPSC, acting as a PBM, was successful in gaining a managed care contract in CT. In MA, the company had one union contract and several agreements with municipalities. The municipal contracts in MA helped to break CVS’s exclusive arrangement with Baystate and later any willing provider legislation opened the Harvard Pilgrim network. In CT, NPSC succeeded in winning a bid proposal for a network to serve BCBS- CT that included all of NPSC pharmacies’ and a small network of chains. This contract represented millions of dollars in business revenue that would now stay in independent pharmacies because NPSC managed the contract!
In the middle decade, NPSC managed network agreements with numerous PBMs through its official NCPDP chain code. Express Scripts, Optum and PCS were among the most important. NPSC took on the responsibility for distributing funds to the stores, which lowered the PBMs’ costs and increased pharmacy reimbursements. At one point, the company was handling ten million dollars a month of fiduciary funds for the network.
Because NPSC was handling and paying out so much money on behalf of the network, the Board wanted to be sure that all systems were in check so the company paid out approximately $330,000 over the years for accounting services and audits of its finances in order to document to the Board of Directors the integrity of its financial operations. In 2018, Optum Rx and Express Scripts both made decisions to exclude the majority of the PSAO’s including NPSC. The number of PBMs has been reduced by consolidation placing extreme control of pharmacy benefits with just a few benefit managers. Take it or leave it contracts have become the norm. The few remaining PSAOs, largely wholesaler affiliates, compete for customers at the cost of ever further reduced reimbursements. Not a pretty picture!
The organized prime vendor wholesaler buying programs began at NPSC in 1994 when there were at least 12 wholesalers serving the area. Because the company included all pharmacies, its buying program offered a choice of 3 prime vendor wholesaler programs. The contracts established baseline pricing, which could be improved upon by market competition. The baseline pricing was reestablished through a competitive bidding process every three years. The number of competitors today is much lower than 30 years ago. The wholesalers each have a split personality these days; they have their sales force and routine business and some have a preferred relationship that conducts business on their behalf at an arm’s length. Choices have become limited for independent pharmacies. The pressure from PBMs and the advent of DIR fees, has caused a significant decline in the number of independent pharmacy stores.Consolidation among wholesalers has been an ongoing process for most of our 30 years. Starting with Neumann Wholesale and Commons Brothers to Bindley Western and Gould in the 90’s to Bergen. Kinray, H.D. Smith and then Burlington Drug followed suit. The pressure on pricing from PBMs has caused wholesalers as well as pharmacies to close leaving only the biggest players: Amerisource, Cardinal and McKesson. Only a few regional wholesalers are left in the country.
It is easy to understand that the wholesaler contracts that NPSC entered into on behalf of their network, lowered pharmacies’ cost of goods, because at contract implementation we were forcing acquisition costs down. While we cannot know how much value was actually created, it is easily in the tens of millions of dollars. Beyond this, wholesalers not awarded NPSC contracts, often improved their offers and in many cases covered the stores’ fees for NPSC participation. Today, NPSC is in a prime agreement with McKesson until the end of 2024.
- Regulatory Challenges
As the company grew, it became clear that NPSC had to offer more in the way of services and support to its pharmacy network. Clearly, regulatory affairs and the continual changes in that area along with legislative affairs and the importance of the independent pharmacy voice became extremely important to our network participants. We have celebrated several successes.
In 2003 HIPAA requirements for all pharmacies led us to have our health care attorney write the guidance for independent pharmacies initially for HIPAA Privacy and two years later for the Security Rule. In late 2012 our attorney merged the Privacy and Security Rule into one manual along with updates and we provided the consolidated manual at no cost to the network pharmacies.
NPSC faced a number of challenges along with their network of pharmacies as the business of pharmacy changed over the years. From the $1.30 tax case in 2003 that nearly became law in MA until NPSC, together with the state organizations and the chains, filed a lawsuit against the State of MA. Thankfully, the judge ruled in pharmacy’s favor. In 2007, the idea that WAC was going to take the place of AWP and what that would mean for purchasing and reimbursements was debated, but nevertheless became law.
The Med D program launched in 2006 and pharmacies were asked to help the government launch the program. Pharmacy was proud of its performance. “Preferred networks” became the buzz in Med D stimulating the drive for medication synchronization. In 2016, DIR fees were in place for the majority of Part D plans and major PSAO’s abandoned profit for volume. The financial pain of low reimbursements and DIR takebacks caused many pharmacies to close.
2012 was a banner year for challenges at NPSC. We parted company with the Connecticut Pharmacists Association after many years of financially supporting them, forcing NPSC to engage our own lobbyist for CT government relations. ESI and Medco merged. The New England Compounding Center was in the headlines for gross disregard of pharmacy law and practice – giving pharmacy a black eye for years to come. In Massachusetts, we fought the battle to keep regulators from making compounding extinct while 49 other Boards of Pharmacy watched and followed closely.
There were tremendous disappointments as well along the way. NCPA sold Community Care Rx to Caremark after independents made it their #1 choice. Then there was RxAlly, a Medicare plan that was owned by NCPA and Walgreens that NPSC had to fight to get our network into, only to watch as it all fell apart with admonishments from Medicare and ultimately be taken over by Walgreens.
- Geographic Growth
In 2005, those of us at NPSC thought we had an opportunity to grow into the northern states when the pharmacy group, PGNE, decided to sell the business. Unfortunately, most of their network did not know they even belonged to PGNE as the only connection they had was to sign up for a vendor program that PGNE got rebates on! The pharmacies were located all over the country and beyond. Ultimately, PGNE had nothing of value to sell and we didn’t buy.
But NPSC eventually added Rhode Island, then Maine to its network and more recently New Hampshire and Vermont, predominately through wholesaler relationships. From the inception of this organization, the founding fathers saw NPSC as a regional group representing the New England marketplace. 30 years later we’re just about there.
Early in 2017, NPSC became aware and very interested in the newest version of pharmacist payment for services Community Pharmacy Enhanced Services Network (CPESN). A small but enthusiastic group had established a Massachusetts chapter. We supported the group with administrative participation and member recruitment. The next year, NPSC hosted what became the formative meeting of the CT chapter. Simultaneously, we also stimulated the foundation of a RI chapter. We have actively recruited pharmacies into these chapters, with MA and CT reaching 40 members each.
In 2019, NPSC pulled together 4 New England chapters to competitively bid on a grant. The Community Pharmacy Foundation in collaboration with CPESN was financially supporting (with real $$) practice transformation. The top 20 applications were funded. Unfortunately, the New England application was #21. The experience was very useful when the MA chapter entered into the same process in 2021 and was successful. Their Flip the Pharmacy program is underway. NPSC, is once again providing administrative and training support for this innovative, forward-thinking project.
From March 2020 through to now, which we call the “COVID years”, NPSC was front and center in delivering information to our pharmacy network that we knew was as true and accurate as possible in contrast to a lot of information circulating that was neither. There was so much that impacted our network stores’ businesses from access to supplies for PPE, to changes in the third party rules, to approved testing equipment, PPP loans, regulatory changes and so much more. Over the past 19 months there has been a mountain of information (that changed weekly or more often) that the network needed to understand in order to operate their business and care for their patients. We delivered it through our field consultants, by fax and by email.
Once vaccines became available, the fight to get the vaccine, and then approvals to allow pharmacists to give the vaccine was our main focus. The rollout of the vaccine was poor and hindered with more problems than it should have had, but we worked with our network stores, and the states DPH and others to get access to vaccines so they were able to play their role in fighting the COVID battle. Many of our network stores continue to participate in testing and vaccinating as the job isn’t done yet. While doing the testing or giving vaccines has been a boon to their bottom line, what it showed the country is that pharmacists are in the most optimal position to be able to deliver care needed when a public health emergency occurs. So now we fight for provider status that actually means more than the words on a legislative bill. This is a fight for the ability to provide and be paid for services beyond the prescription; for pharmacists to be identified as health care providers and to serve patients at the top of their license!
- The Future
NPSC would not be here without the relentless and awesome work of our staff, many of whom are with us over 20 years. The entire team at NPSC are outstanding professionals focusing their efforts on doing their best for our pharmacy network, regardless of time or difficulty of task. Many of our network pharmacy owners have told us they don’t know what they would do without us!
Our field service consultants are rock stars who have given generously of themselves through all the trials and tribulations of these years! For each new challenge they were there to learn so they could help, guide, and direct our pharmacy network through just about everything. We can say confidently that without the connection to our network through our field support staff, NPSC would not have remained viable for all these years.
Our 30 year history has shown us that what we do is important and has value. We know that provider status for pharmacies must become the norm for all states and pharmacists should be identified as part of the health care team and able to bill for services. Pharmacists must be allowed to operate at the top of their license so they can deliver cost saving services all while providing great care to patients.
Our targets have changed but our vigor to fight has not diminished. They say that you can’t win them all. So learning to pick the right fights has become important. All of this history is important because it can help you see where independent pharmacy was and hopefully give you a sense of where we go from here. Pharmacists have a role as healthcare providers that goes way beyond the medications they dispense. Medications are now a commodity, there is no changing that. But the future is bright for you and your business if you choose a path that embraces the many new opportunities that are before you. …..
We would be remiss if we did not take this opportunity to say THANK YOU to every one of our participating pharmacies and the companies that have supported us for the last 30 years! Here’s to the next 30 years and beyond!