Kansas Health Institute | Information For Policy Makers. Health for Kansans.

TOPEKA — The Kansas Health Policy Authority will revisit its recommendation on a bid for the state’s pharmacy benefit program after an announcement last week about a significant change in the program’s providers.

The Health Care Commission, which oversees the design of the state employee health insurance plan, approved last month a three-year contract with CVS Caremark scheduled to start Jan. 1.

But last week, news broke of a disagreement between CVS Caremark and Walgreens. The two pharmacy giants have been unable to reach agreement on reimbursement rates, certain drug plans and how prescriptions are transferred between their pharmacies.

Walgreens announced it would no longer participate as a CVS Caremark pharmacy provider for contracts issued after July 7. Two days later, CVS Caremark announced that it would no longer include Walgreens locations as in-network pharmacy providers beginning July 9.

The health policy authority, which administers the state employees' health insurance plan, notified the nearly 100,000 members of the change last week. The state is finishing the final year of a three-year contract with CVS Caremark, which ends Dec. 31.

The vendors who bid on the new contract were notified of the commission’s decision to stay with CVS Caremark, but the contract approval process hasn't been finalized, said Secretary of Administration Duane Goossen, the committee’s chairman.

CVS Caremark has signed the contract, he said. But he has not.

The commission met Thursday for an update on the pharmacy benefit contracts and to discuss whether further action should be taken.

The commission agreed to adopt a “wait-and-see” approach.

Doug Farmer, deputy director of the health policy authority and the health insurance plan’s manager, said he remained optimistic CVS and Walgreens would continue negotiations and work something out.

About 24 percent of the benefit plan members fill their prescriptions at Walgreens, Farmer said. But an analysis shows that in all but one case, there were three other in-network pharmacies within three miles of a Walgreens.

Access to other in-network pharmacies likely wouldn't be a problem, Farmer said, though plan members who shopped at Walgreens – particularly those pharmacies with 24-hour service – would be inconvenienced.

“This happens with our medical contracts all the time,” Farmer said. “This very conversation we’re having has occurred before with these companies and others. In the past, it has been resolved.”

Commissioners asked the health policy authority to reevaluate its recommendation to choose CVS Caremark for the new, three-year contract.

Farmer said the review would take place in the next two weeks.

CVS Caremark was one of two bids that were close in scope, pricing and network access, Farmer said. He declined to name the other company.

If the agency reaches the same conclusion to award the contract to CVS Caremark, the commissioners agreed, the already approved contract would be signed. If staff members reach a different conclusion, a meeting would be called to discuss the commission’s next steps in securing a contract.