Media Release

FOR: Immediate Release
DATE: December 2, 1998
CONTACT: Donald C. Williams, 222-6015

Department of Health Approves Blue Cross - Pharmacare Program; Modified Proposal Corrects Access and Rebate Features

The Department of Health approved revised proposals by Blue Cross - Blue Shield ("Blue Cross") and Coordinated Health Partners ("Blue CHiP") to modify their pharmacy benefit programs. Changes vary by individual health plan, but generally include limiting prescription drugs to a list (formulary), altering the network of participating pharmacies and modifying copays and other fees.

The Health Care Accessibility and Quality Assurance Act requires the Department of Health to review modifications to certified health plans. The Department rejected a previous proposal on October 16 due to access and rebate provisions. It found that the Blue CHiP HMO product, marketed to primarily elderly citizens, did not satisfy requirements of the law related to the accessibility of services. The original proposals also included a provision for manufacturer and/or wholesaler volume related rebates to PharmaCare, Inc., the company that administers the pharmacy program. PharmaCare is a subsidiary of CVS, Inc. with 45 licensed pharmacies in the state. Blue CHiP is an HMO operated by a for-profit subsidiary of Blue Cross.

In the revised applications, all rebates are routed to Blue Cross and Blue CHiP instead of Pharmacare—satisfying the legal prohibition against inducements or incentives concerning specific medications for individual patients. In addition, Blue CHiP modified its Medicare plan to enhance access through free mail order and free or low cost delivery services for prescriptions.

During the public hearings concerning the original proposals, many individuals filed complaints with the Department of Health about the pricing of prescription services. The Health Care Accessibility and Quality Assurance Act does not allow the Department to include specific criteria for pricing.

Blue Cross and Blue CHiP expect to implement their revised pharmacy plans by January 1, 1999, and will notify individual subscribers, by mail, about any changes affecting their benefits.

For speech or hearing impaired,
1-800-745-5555 (TTY)
Department of Health Website: www.health.state.ri.us