Md. may act today on drug benefits Budget agency favors PCS Health Systems

September 04, 1996|By M. William Salganik | M. William Salganik,SUN STAFF Staff writer Michael Dresser contributed to this article.

The state's Board of Public Works will be asked to approve today a contract with PCS Health Systems to provide pharmacy benefits to state employees.

The Department of Budget and Fiscal Planning is recommending approval of the bid from PCS, of Scottsdale, Ariz., which was the lowest in cost and which received the highest technical rating.

PCS has held the contract for several years. Last September, however, PCS was underbid by Merck-Medco Managed Care of Montvale, N.J., and the Board of Public Works voted to award the contract to Merck-Medco.

Several major drug chains then said they would not participate because Merck-Medco was offering too low a reimbursement rate. Saying there were not enough pharmacies participating to serve the 92,000 employees and retirees and their dependents, the state canceled the contract in December and said it would seek new bids.

Merck-Medco, in response, sued Rite Aid and three other pharmacy groups -- NeighborCare, Giant Foods and EPIC -- in February, charging they had illegally conspired to organize a boycott.

Eloise Foster, deputy secretary of Budget and Fiscal Planning, said yesterday that the state had avoided the problem of pharmacies dropping out of the network in the new round of bidding. "The major thing we did," she said, "is that we required all vendors to make sure they had signed agreements with participating pharmacies, and these had to be submitted with their proposal."

According to the department, PCS' "proposed network provides superior access with 912 participating pharmacies located in Maryland. The network contains all pharmacy chains, including CVS, Giant, Safeway, Rite Aid, Weis and EPIC."

The estimated four-year cost of the PCS bid is $297,910,000. Merck-Medco's bid was estimated to cost $306,116,000. (The exact cost will depend on how many state employees get prescriptions filled.) Reviewers gave PCS a technical score of 53.30 and Merck-Medco a score of 50.75. There were 11 other bidders, all with higher estimated costs and lower technical scores. The contract would run through the end of 1998, with two one-year renewal options.

Merck-Medco's bid last year was estimated to cost $266.6 million. Merck-Medco would have reimbursed pharmacies at 15 percent below a published "sticker price" called average wholesale price, plus a $2 dispensing fee on each prescription for "name-brand" drugs. The pharmacies that refused to participate said they could not make money at that rate.

The new contract, Foster said, will pay pharmacies 13 percent below average wholesale price plus a $2.50 dispensing fee. The PCS bid, Foster said, will mean state employees will continue to receive prescription drug coverage as they have been, with no changes in premiums or co-payments.

She said Merck-Medco, along with other bidders, had been notified last week that PCS had submitted the top-rated bid, and "we haven't received anything regarding a protest or to request a debriefing."

Kevin Colgin, a Merck-Medco spokesman, said "we haven't made any determination" regarding a potential protest.

The Budget and Fiscal Planning Department also is recommending that the Board of Public Works approve a contract for mental health and substance abuse services to Green Spring Health Services of Columbia at a cost, for 1997 and 1998, estimated at $16.2 million. Two bidders offered lower costs: Sheppard Pratt Health Plan of Towson at $14.7 million and Merit Behavioral Care of Maryland at $15.7 million, but Green Spring had the highest technical score.

Merit achieved notice when its CEO, Albert S. Waxman, conducted a $1,000-a-person fund-raiser for Gov. Parris N. Glendening in New York while the contract was pending. Glendening said he was unaware of the bid, and would not accept any contributions from Waxman, although he would accept them from other people attending the event. Later, his staff said he would not accept any money from the fund-raiser.

Pub Date: 9/04/96

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