Why is CALPERS hurting local pharmacies?

April 27, 2010


CALPERS (State of California employees) are about to be forced, by Blue Shield of California, to use only a mail-order pharmacy in New Mexico to receive prescription benefits. Several of the patients from my store that are going to be affected by this are approaching 90 and now they are expected to mail off for their prescriptions to New Mexico?

It is bitterly ironic that a move like this, which will hurt small businesses like myself throughout California, is being made at the same time that our governor, Arnold Schwarzenegger, is traveling around the state promoting small businesses. This shift of about 25 percent of my business to New Mexico means I’m probably going to have to lay off several employees. Multiply that effect by all the pharmacies in California that will likely undergo similar layoffs, and it adds up to a lot of people going on unemployment in the next couple months.

I contacted Congresswoman Lois Capps about the issue. Capps said she only handles federal issues, so could not be of help regarding this. Next, I contacted Assemblyman Sam Blakslee, who has always been a great help in this sort of issue. Unfortunately he said Blue Shield of California is a private entity thus the State of California has no voice in their ways of doing business. But it seems to me that someone in the state government, CALPERS(which provides retirement and healthbenefits for public employees), or somewhere, had to OK this idea. I was told I could try to contact Insurance Commissioner Steve Poizner, but communication efforts to that office have gone unreturned.

I would like to point out to someone that for every $100 spent in independently owned business, $68 returns to the community through taxes, payroll, and other expenditures. How much of the money going to New Mexico will return to California? None.

On a separate note, the Community Health Clinics across the county are medical clinics where Medicaid patients can be seen by doctors. On their way out of these clinics patients are being handed brochures and told by staff to use their “preferred” pharmacies like Ralph’s grocery store in order to get “expedited” services (Their refills are authorized in a more timely manner).

When CenCal,the regional Medicaid agency, and these CHC clinics are partnering together to stonewall small independent business like myself, that is a huge hurdle to overcome. When I called CenCal, all of the representatives I talked to said they couldn’t comment on the issue—they didn’t want to “misspeak”—and my calls to the CenCal Director of Pharmacy have gone unreturned.

CenCal and the Community Health Clinics are state-funded by taxpayers like myself, and I want all people in our community to know about this issue. It might also be noted that CenCal has been allocated an increase of $800-900,000, though not all of that has been disbursed yet. This was without an increase in employee FTE (full time equivalents). All of this information is available on opensecrets.org, which provides to the public CenCal records showing where their money (our money) is going. Also of note is the fact that CenCal contributes $10,000 per quarter towards lobbying, as well as $80,000 yearly in dues to a COHS, which is deducted out of the “per Medi-Cal patient” allocations. (A COHS, which stands for County Organized Health System, is an agency that contracts with the state to administer Medi-Calbenefits. )

Again this is all public record—but is anyone watching these guys? Next up, CenCal (like CALPERS) is about to try to force mandatory mail order, but many CenCal patients that I have are homeless, and I’m wondering: How you are going to mail them a 90-day supply, much less expect them to hang on to it and take correctly for 90 days?

The value of a local pharmacy/pharmacist needs to be recognized, andnot brushed aside for the dollars of lobbyists who are pushing for mandatory mail order. We know the CALPERS mail order facility is in New Mexico: Would the CenCal mail order facility be located in California, at least? No its called Escalante Services and is based out of Nevada. If the current trend is to outsource pharmacy services, we should start outsourcing city/state employees, as well as our politicians. Surely they work for less and provide the same service.

Based on the above, I am hoping that only Doctors, Nurses, Pharmacists, and other Health Care practitioners are consulted for this Health Care Reform that is in the works.

Jason Tewell is the pharmacist for Los Osos Rexall.

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I have used Cal pers mail order for years now, however I still HAVE TO use local pharmacy’s also. There are certain drugs like pain meds that CANNOT be mailed. Also not everyone in this area has Pers for insurance. So what if you have medicare or something else, they can go to you to fill there RX. I go to who is closest to me, but let me tell you mail order is a great deal once you get used to it. NO waiting in line, no calling in refills, no driving over to get it and having to deal with techs who are a bit rude.

Think of it this way, atleast they are not outsourcing this to India

Now why would CALPERS do a thing like this? Why would CALPERS be using a mail-order pharmacy in New Mexico for California public workers? What is the name of this facility? Who are they? I think somebody needs to start asking the hard questions and get all this out in the open. What are the exact connections between this mail-order pharmacy in New Mexico and CALPERS? I smell something here, and it ain’t apple pie.

canative…I am not missing the point, but think that perhaps you are.

Mr. Tewell’s article is factually incorrect! That is the point.

Mr. Tewell stated, “CALPERS (State of California employees) are about to be forced, by Blue Shield of California, to use ONLY a mail-order pharmacy…”

This emphatically states that this is the ONLY option..not just for maintenance drugs, but also for drugs which might be immediately needed for an acute condition. This is false as the mail order pharmacy is just one of many options for maintenance drugs and there is no mail order advantage for short term or one-time prescriptions.

As has always been the case since the inception of the mail order pharmacy benefit over a decade ago, subscribers can receive a three month supply of long-term maintenance drugs for the same copayment that would get them a one month supply from a local supplier. Mr. Tewell would imply that this is a new program whereas it has actually been the status quo for a very long time.

Blue Shield has been offering mail order pharmacy services to their subscribers for decades. Prior to the current supplier, Prime Mail based in New Mexico, they used Medco Health Solutions which is based in New Jersey. I don’t know that there is even a mail order pharmacy service based in California.

CalPers has an obligation to balance the needs of their subscribers against the cost of their benefit plans. They are constantly in a struggle to maintain benefits while mitigating the cost to the state and to their subscribers in the form of premiums and copayments. In that regard, they are obligated to shop for the best prescription drug services at the lowest cost. It they have to use an out-of-state supplier to do so, so be it. If they utilized a California based supplier at greater cost, government watchdogs would be screaming that they aren’t getting the best value for their money.

Also, and as I previously mentioned, the pharmacies at many of the large chain “Big Box” stores, drug stores, and even grocery stores, will now fill prescriptions at the same price, and under the same terms, as the mail order pharmacy service(s). I’m sorry that this does not bode well for the small “local” independent pharmacy but their numbers have been dwindling, as they have been unable to compete with the mass merchandisers, for a very long time. The last independent pharmacy in my community closed almost twenty years ago and the proprietress/pharmacist went to work managing the pharmacy for the newly opened RiteAid. Several entrepreneurs have tried to open new independent pharmacies in the last few years, but none have survived. This is the way it is for small businesses, of every variety, everywhere.


Your apathy is disheartening. Small businesses struggle and that’s just the way it is, so we should put a Kmart and a Rite Aid on every corner and deal with it? Entrepreneurs are the heart and soul of the American economy. It is the tenacity, creativity and spirit of the entrepreneur that made this country the preeminent leader in commerce and trade. While the economy might be currently struggling, it is the innovation and fortitude of small business owners like Mr. Tewell that will bring it back to life. Mr. Tewell’s overall point is just that, that support of small businesses is crucial to the restoration of California’s (and the rest of the country for that matter) economy and that as citizens we should be concerned or at the very least aware that the level of support the state is currently offering to small businesses like Mr. Tewell’s is minimal at best.

An interesting story, with heart wrenching implications. Too bad that much of the information contained therein is incorrect.

Blue Shield of California is not “forcing” anyone to use a mail order pharmacy in lieu of their local supplier.

Subscribers can still purchase all of their prescriptions from a local source albeit, in some cases, at a higher copay than previously. Blue Shield increased the copayment for “maintenance drugs”, taken over the long term, and after the initial three month supply, in order to encourage mail-order purchases. The mail order pharmacy, wherein the subscriber receives a 90 supply with a greatly reduced copay, has always been the least expensive alternative.

In regard to Mr. Terwell’s comment that elderly patients cannot handle his implied complexity of using the mail order pharmacy, my parents, both in their 80’s, one a retired teacher and the other a retired California Highway Patrolman, have the used the CalPers mail order pharmacy for many years. Their physicians’ staffs are also more than willing to help them with the paperwork. As they have limited mobility, and my mom is reticent to leave my father alone for any extended period of time, they find it convenient to have their maintenance prescriptions delivered to their house with automatic refills. They still get all of their short term prescriptions, for acute rather than chronic conditions or illnesses, from a local pharmacy. My wife also gets her “brand only” or “non-formulary” prescriptions filled via the mail order pharmacy in order to save money on the copayments.

Additionally, many chain store pharmacies will meet the copayment prices of the mail order service and will fill prescriptions at the mail order price. Our local KMart does this though we still choose to use RiteAid and the mail order service.

Mr. Tewell says all of this is a matter of public record, and so it is.



I think you might be missing a point that Dr. Tewell is trying to make…. taking business out of local business and out of the state. For many people in this financial crisis that all of us are facing, paying three copays for a 90 day supply at a pharmacy may be too much for the budget. They then are “forced” to take their precsriptions through mail-order.

Tough issue, Mr Tewell. Thank you for bringing our attention to it.