Getting Connected

June 1, 2002
Carol Ukens

Carol Ukens is a senior editor with Drug Topics magazine. Reprinted with the permission of Drug Topics, Medical Economics Co., March 4, 2002.

Pharmaceutical Representative

Pharmacy gears up for electronic prescribing, paperless labeling and other online pilot projects.

In the midst of a pharmacist shortage, rising prescription volume, escalating costs and even more red tape, the profession is watching several electronic initiatives that hold out the promise of more efficient and, with any luck, less costly ways of practicing pharmacy and conducting business.

Electronic initiatives are proceeding on several fronts, including online prescribing, a switch to paperless labeling and a Drug Enforcement Administration plan to permit e-ordering of scheduled drugs. Another federal project is forcing providers and processors to migrate to an upgraded version of the prescription claim transmission standard.

DEA going electronic

The DEA has embarked on a two-pronged foray into electronic commerce as part of the federal paperwork reduction initiative. One effort aims to build a framework to permit the electronic transmission of controlled-substance prescriptions. Some in pharmacy predict that whatever the DEA decrees will become the standard for electronic prescribing of non-narcotics as well.

The DEA is also gearing up for a pilot test on an electronic controlled substance ordering system that will offer an alternative to the paper-based regulation currently saddling drug manufacturers, wholesalers and pharmacists with the infamous Order Form 222.

Several drugstore chains and wholesalers recently signed up to take the controlled substance ordering system for a test drive. Participants will be able to check out their internal ordering systems using the DEA's proposed standards and to identify and fix any technical and operational problems they encounter. The agency expects the system to be up and running by mid-to-late 2003.

Two drugstore chains have signed up so far to participate in the e-ordering pilot study, said Mary Ann Wagner, director of state pharmacy affairs for the Alexandria, VA-based National Association of Chain Drug Stores. She headed the NACDS's effort to recruit members to take part in the study on the theory that it's better to be on the inside with an opportunity to shape the outcome than to be on the outside at the mercy of whatever standards the feds dream up.

"We're very encouraged to see people participating, because if there are any bugs to be worked out or problems that we see early on, maybe we can get them taken care of before the rule is published or the whole thing is implemented," she said. "There will be many benefits when it's operating smoothly. There will still be the paper ordering option, but with the new system, there will be less paper, more efficient order processing for faster distribution, reduced costs, and the computer will determine the validity of an order through a very secure system."

The other DEA e-project is to facilitate the electronic transmission of controlled-substance scripts in a secure environment. The security measures the DEA is considering include requiring the prescriber, but not the pharmacist, to have a digital certificate identification to ensure the controlled-substance script is, in fact, an authentic prescription from that prescriber. While the agency will not dictate which technology has to be used, there is also a provision that the prescriber must use some sort of biometric, such as an iris scan, voice authentication or fingerprints. Pharmacies will have to install software that can authenticate and validate the prescriber's digital certificate ID.

Since physicians are notoriously resistant to innovations and have a reputation for expecting freebies, the DEA's requirements could potentially kill off electronic prescribing before it ever gets off the ground, according to Patrick Gavin, president of a pharmacy consultancy in Grand Rapids, MI. If the DEA makes prescribers jump through too many security hoops, they will simply stick with their pens and paper prescription pads, he predicted.

"I fully endorse that we have to move ahead on electronic prescribing," said Gavin, who retired as vice president of pharmacy after 32 years with Meijer Inc. "I just caution that DEA is trying to go too far on security, and we ought not try to impose more security on the electronic systems than what there is on the current system, because that will stop the electronic systems from happening."

The DEA should make its security requirements even more stringent, not less, countered Benjamin Bluml, vice president of research for the Washington-based American Pharmaceutical Association Foundation. The prescriber, the pharmacy and the pharmacist should all be required to get digital certificates to ensure that scripts will be transmitted in a safe and secure environment. He added that the Health Insurance Portability and Accountability Act regulations on the security of electronic transmissions are not expected to see the light of day until later this year.

Although it would require getting a digital certificate ID, pharmacists would benefit if the DEA beefed up its electronic security requirement, Bluml said. "An ever-increasing workload makes it difficult for pharmacists to be able to detect prescription fraud," he said. "A preferred transaction process where you have authentication and secure transmission is of huge value. If DEA suggests or implements a standard that is really bulletproof, I think the industry will be in good shape to adopt and use that standard in a widespread way."

Setting standards for electronic prescribing creates a chicken-or-egg situation, Bluml said. Should a standard and value proposition be created that will entice providers to get on board with electronic prescribing? Or should all providers first be armed with digital certificate IDs and then wait for the technology vendors to create solutions that will use those IDs? "Right now, I'd be hard-pressed to come up with a compelling reason, other than e-mail encryption, for a digital ID for either the physician or pharmacist," he added.

Even though controlled substances account for only 15% of all scripts, many in pharmacy have a hunch the agency is going to be the drummer setting the cadence for the electronic transmission of all prescriptions. Prescribers, third parties and pharmacists are not going to want to deal with different security requirements, so the DEA could well become the de facto standard setter, said consultant Gavin. "We have to be cautious to not try to fix all the problems of the old [paper and telephone] systems as we develop the new [electronic] one," he added. "Those fixes could cause the old system to stay in place even longer."

Rather switch than fight?

Although the shakeout in the physician connectivity industry saw the demise of several companies during the past two years, more physicians are looking with favor on electronic prescriptions. An estimated 11% of physicians were using handheld personal digital assistants to write prescriptions last year, according to a survey of 44 medical group practice managers conducted by Forrester Research. By 2003, an estimated 86% of physicians will have shed their paper prescription pads in favor of the handheld.

Even if that projection is overly optimistic, a lot of physicians are going to shift to electronic prescribing. But if that's going to happen, it's generally agreed that a pathway has to be forged between the prescriber and the pharmacist. Agreement goes out the window, however, when it comes to who will have their finger on the switch.

The big three pharmacy benefit managers, Irving, TX-based AdvancePCS, St. Louis-based Express Scripts and Franklin Lakes, NJ-based Merck-Medco Managed Care, unveiled RxHub about a year ago. Their ambitious plan was to create an independent company to act as a central clearinghouse that will stand between the prescriber, the PBM and the pharmacy. Prescribers will transmit their scripts to RxHub to be checked for drug interactions and compliance with the health plan's formulary. After the script is routed back to the prescriber for any changes, it is then transmitted to the patient's pharmacy of choice. Based in St. Paul, RxHub expects its first transaction to be routed through its switch in April.

Community pharmacists kicked up a fuss about RxHub, but it is not about pharmacy. Rather, it's about the PBMs forging electronic connectivity with physicians and patients as a value-added service for their clients, said Perry Cohen, principal, The Pharmacy Group, a managed care pharmacy consultancy in Glastonbury, CN. A decade ago, PBMs went after drug companies and pharmacies for discounts. Perhaps sensing that they're hitting the discount wall, PBMs are now turning their cost-cutting attention to drug utilization.

"The next big thing for PBMs is utilization management for appropriate drug usage," said Cohen. "They don't deal with the drug company or the pharmacist for that because it's impacting the prescriber and the plan member."

Shifting the PBMs' focus to prescribers is one of the drivers of electronic connectivity. The PBMs need to be able to influence the physician at the point of care with drug utilization review to promote better, more cost-effective prescribing and to put a plan's formulary top-of-mind to ensure better compliance by prescribers and rebates from drug companies.

"The bright light is moving on to the physicians," said Cohen. "The PBMs are saying, 'OK, Docs, we need to manage prescription utilization and a manual, paper-based system isn't going to do it. It's got to be electronic.' But the physicians are saying, 'There's no single PBM out there that affects enough of my practice that I'm going to link to any of them individually.'"

Building the critical mass of a central operation that prescribers want is where RxHub enters the e-connectivity picture, Cohen said. He compared e-prescribing to the ATMs that revolutionized banking. As part of a network, all ATMs can accept the cards of different banks because they all operate under the same standard. "The architecture of the system has to be standardized, and I think that's what RxHub is about," he said. "People are missing that point. Electronic prescribing won't happen without something like RxHub. We've got to have a single voice or standard to go outside of pharmacy. RxHub is a way to go.

"The thing that frustrates me is that pharmacists don't understand that the same thing happened to them 15 years ago when the third parties and PBMs forced them to computerize," Cohen continued. "I'm not sure physicians will embrace computers as quickly as pharmacists did, but now they need to integrate with the rest of the system."

When RxHub was announced, chain drugstore and independent pharmacy leaders made it quite plain that they distrusted the initiative. They feared that the PBMs will try to steer scripts away from retail pharmacies and into their own mail-service pharmacy operations. Their answer to RxHub is SureScript Systems, an independent joint venture set up by the NACDS and the Alexandria, VA-based National Community Pharmacists Association last August. A pilot test is planned this summer before a national rollout.

Unlike the PBMs' connectivity model, SureScript will be an electronic link between the prescriber and the pharmacist, without any third party intervening in the communication. The system will allow prescribers to order prescriptions, authorize refills and transmit patient information through a direct link to the patient's pharmacy of choice, untouched by PBM hands.

Although some have cast SureScript as a rival to RxHub, the community pharmacy venture is not competing directly with the PBM entity, said David Weinstein, who came on board as president in January. Pharmacists will use SureScript to communicate directly with prescribers, and if they choose to participate, they will use RxHub to submit prescription claims for adjudication.

"The pharmacy will still have adjudication as a separate operation," Weinstein said. "SureScript is primarily responsible for delivering authorization to the pharmacy, then the pharmacy continues its existing relationship with the PBMs for things such as claims adjudication. Some issues are best resolved between the pharmacy and the PBM. That's not part of our mission."

SureScript's first e-target will be to soothe a major sore point for both physicians and pharmacists: refill authorizations. When a refill request is entered into the pharmacy's computer, it will be sent to SureScript, which routes it to the prescriber's e-mailbox. After the doctor reviews the request, it's sent back to the pharmacy for review and filling, if the refill is authorized.

SureScript's game plan to ease physicians into electronic prescribing by first concentrating on those pesky prescription refill requests is a smart move, according to the NACDS's Wagner. "If we're going to wait for doctors to adopt a new model, we're going to be waiting a long time," she said. "But once they get accustomed to getting refill requests electronically, it's got to be a lot easier for them than taking phone calls all day. That will get them in the habit, and pretty soon the idea of sending a script electronically will not be a big deal for them."

There has been talk of détente between the PBM-backed company and community pharmacy, but SureScript is not in discussions with RxHub at this time, said Ken Whittemore Jr., SureScript's vice president of professional affairs. While he declined to categorically rule out cooperation someday, he added that the two firms have very different business models that may not mesh.

"Our orientation is more on the healthcare side for the prescriber, the patient and the pharmacist," said Whittemore. "That's one of the reasons we're pursuing prescription renewal first, and that's really not an interest of theirs. I understand that they're going to be more focused on new prescriptions because that's how they see being able to influence the process."

Even though it has generated a certain buzz, electronic prescribing is currently in limbo, said Susan Winckler, group director of policy and advocacy. Question marks remain about whether the infrastructure will be built by RxHub, SureScript or both of them, and the unknown security requirements vis-à-vis the DEA and HIPAA make it difficult to know how to proceed. An additional roadblock may be physicians themselves, she added.

"I've heard of physicians who are saying, 'I want to put my [electronic prescribing] program in the local pharmacies and have it be exclusive,'" Winckler said. "If physicians are seeking exclusivity, they may talk themselves out of business. SureScript and RxHub are trying to address the question of infrastructure. But if you have two systems, how will that translate into practice? It could be a challenge for pharmacy because it means they would have costs. Electronic prescribing is going to take some reengineering of the physician's practice, and that is outside of our control."

Healthcare players who put too much faith in technology may be making a mistake, Winckler cautioned. "Sometimes technology is presented as a fix, but technology can create its own set of problems. For example, with electronic prescribing, the prescription will look nice, but that could create the perception that it's less likely to have errors. It's not enough to take the existing prescription and transmit it electronically. It's time to add an indication for use, so the pharmacist has more information."

HIPAA hoo-ha

President Bush signed legislation in December that allowed covered entities to request a one-year extension of the deadline for compliance with the electronic data interchange requirements of HIPAA. There was, however, a kicker to the new deadline of Oct. 16, 2003. In order to qualify for the extension, an entity must submit a compliance plan to Health and Human Services before Oct. 16, 2002. Failure to submit a compliance plan by that date could get a healthcare provider or insurer booted out of Medicare and fined, at the discretion of the HHS secretary.

Although the EDI requirement could be delayed a year, the April 14, 2003, deadline for meeting HIPAA's privacy provisions still stands. During the six-month period between April and October, 2003, health information sent electronically has to comply with the privacy rules. It's anticipated that the agency will unveil the security regulations by midyear.

Organizations may think that President Bush granted them a reprieve, but just because Uncle Sam may give them another year doesn't mean their partners in industry will do the same, cautioned Benjamin Loy, senior vice president of industry relations and privacy officer of PDX/NHIN, a Fort Worth technology firm. They still have to be ready to conduct EDI using the new Version 5.1 standard developed by members of the National Council for Prescription Drug Programs and mandated by HHS as the HIPAA transaction standard for pharmacy.

"The extension doesn't really do anything for retail pharmacy," Loy said. "The HIPAA police won't lock you up if you're not ready, but PBMs and claims processors plan to stay with their original schedules, and retail will have to go along with them in order to conduct business. Some PBMs plan to start [using the new transmission standard] as early as June. Almost all of the major players plan to be using the HIPAA standards by September. And providers need to be ready."

Free testing is being conducted by NHIN to ensure that the new transmission standard mandated by HIPAA is workable for both processors and providers. Some of the claim switches are also providing testing, although a fee may be involved. Version 5.1 is more robust than its predecessor Version 3.2, incorporating new segments such as partial fills, multi-ingredient compounds and numerous new data elements, said Loy. Testing has been a little slower than he would like, and he feels there's still work to be done by all the parties involved. He added, "Everyone realizes they need to get ready for HIPAA. It's real, and it's not going to go away."

Getting up to speed with Version 5.1 is not an issue for drugstore chains, agreed Roy Bussewitz, NACDS vice president of managed care and telecommunications. The real HIPAA headache is how Version 5.1 relates to the regulations governing patient privacy. Health and Human Services stipulated that communications must contain only the minimum necessary information to communicate the information in the optional data fields of Version 5.1.

"The biggest issue is that HHS probably should never have adopted Version 5.1 as the HIPAA standard," said Bussewitz. "We have to make a determination of what information, if any, we're going to send in those optional fields. It's going to be terribly disruptive for us, because the payers, naturally, want as much information as they can possibly get from the pharmacy. The pharmacies don't want to send any more than the HIPAA privacy regulations allow. Our guys are concerned not only about being sued for any alleged breach of confidentiality, but also having their names associated with such a breach on the front page of a major newspaper. There's tremendous tension there. It's created a real mess."

To try to bring some order out of the HIPAA chaos, community pharmacy leaders are currently developing a standard protocol document that pharmacies may independently decide to use to help them figure out what information they should be disclosing to PBMs on the Version 5.1 standard. It's expected that each PBM will develop its own standard protocol document and offer it to pharmacies as well.

"The resulting protocol documents are proof that 5.1 is not a standard at all because of the optional fields," Bussewitz said. "One software vendor told me recently that they are supporting more than 40 different 5.1 implementations. This is not the HIPAA way. There will be no cost savings or efficiencies without one true standard that does not have any optional fields. And with the current pharmacist shortage, efficiencies do matter."

The folks at HHS also created another problem by dribbling out their HIPAA regulations instead of presenting the privacy and security aspects as a package, said Bussewitz. The privacy piece will go live on April 14, 2003, but the security requirements haven't yet seen the light of day, so payers and providers don't quite know what additional demands they'll be facing.

"We have no sense of the HIPAA security regulations," said Bussewitz. "It's very hard to get our guys to invest millions of dollars in things that aren't final, that aren't thought through. The security regulations have to be coordinated with privacy, and the final privacy regulations keep evolving."

Looking to invent a better mousetrap at no cost to pharmacy, the pharmaceutical industry is preparing to conduct a pilot test of electronic labeling that they hope will be an improvement over the current paper system.

The biggest plus electronic labeling offers pharmacy is that it puts the latest information about a drug in the hands of pharmacists, said Alan Goldhammer, vice president of regulatory affairs for the Washington-based Pharmaceutical Research and Manufacturers of America. The current paper-based system is flawed to the extent that it can take months before labeling changes make their way into the medical mainstream. In addition, e-labeling is stored as bytes on a central database, not as flimsy pieces of paper stored in the pharmacy.

"Electronic labeling means that pharmacists will have access to the most up-to-date prescribing information," Goldhammer said. "It's in an exciting format that lets them quickly move around the label. For instance, if they're interested in contraindications, they can get it with just one click. Besides, electronic labeling will save a few trees."

The Pharmaceutical Research and Manufacturers of America plans to conduct a pilot test in a handful of pharmacies slipped from last December to spring of 2002. The test will focus on the top 200 drugs on the market. After evaluating the results of the pilot, PhRMA will not select the winning vendor, said Goldhammer. Instead, the association will indicate whether the vendors have met their criteria. Then it'll be up to the vendors to duke it out in the marketplace to win the e-labeling business of pharmaceutical companies that decide to go the electronic route.

At the same time PhRMA is forging ahead with its plans, the association will tap into the Food and Drug Administration's initiative to set up an online central database of drug labeling that will be free to the public. The DataPharm Foundation, which is helping the FDA develop the project plan, intends to break ground this spring for its own public database of prescription drug and over-the-counter labeling to be posted at

Given the number and scope of electronic connectivity initiatives, most in pharmacy agree that such technology will impact the practice and business environments. But at this point, many electronic pilot projects have yet to clear the runway, let alone fly. So the questions remain, when will they take off and how far will they take the profession? PR

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