Photo by Pranjal Mahna

Many years ago, Bay Area TV commentator Wayne Shannon — remember Wayne Shannon? — told us he supported the dumping of vast quantities of nuclear waste into the ocean just off San Francisco, into the Farallones National Marine Sanctuary. 

Offended viewers responded en masse. But they were missing the point. 

Shannon’s rationale was that someone had to be in favor of dumping nuclear waste into a wildlife sanctuary — because, you know, we did that

So, your humble narrator supports California’s cunning plan to bankrupt local pharmacies and, in the process, deprive patients of medications for AIDS, Hepatitis-C, psychotic disorders and other maladies  — leading to a potential humanitarian crisis and, likely, costing far more money than the state stands to save in the short-term. 

Someone has to be in favor of that. Because, you know, we’re doing that. 

On a recent weekday morning at Mission Wellness Pharmacy, all appears well. It’s a shade chilly, immaculately clean, and there is, understandably, a dry, medicinal odor in here befitting a place with prescription bottles stacked nearly eight feet high. 

Mission Wellness isn’t an old-school pharmacy in the soda fountain and Norman Rockwell sense, but it does offer anachronistically extensive counseling and individualized day-by-day packaging of patients’ complicated multi-drug doses. And it does it all in several languages for, on this day, a guy who looks like he stumbled in from street — because he probably did. 

This pharmacy has a contract with the Department of Public Health to provide patients — often indigent patients on Medi-Cal — with the complex and expensive drugs it takes to fight AIDS and Hep-C; Mission Wellness also provides mental health patients with injectable antipsychotic medications.

Separate and apart from basic human decency — helping people suffering from preventable and treatable diseases — there is a bottom-line, cost-saving motivation here. It’s cheaper to keep people healthy and treated than to deal with them, repeatedly, in the Emergency Room. 

And yet all is not well here. Mission Wellness is hemorrhaging money. Its proprietor, Maria Lopez, informs me that the state summarily sucked some $30,200 out of her account in May. This is money that isn’t going toward helping indigent patients or buying medications but paying back a debt the state claims Lopez — and scads of other independent pharmacists — now owe the government.  

“For a small business, that’s a big hit,” Lopez confirms. And this was just the first of many proposed payments to the state. 

Maria Lopez, Pharm.D, at Mission Wellness has been forced to subsidize AIDS, HIV, Hep-C, and other patients out of her pocket for months. This, she says, is not a tenable situation. Photo by Joe Eskenazi.

This is happening because, after two years of analysis, the state has determined it will reimburse pharmacies, like Lopez’s, at a lower rate than pharmacies pay for wholesale “specialty drugs” for complicated maladies. 

According to numbers provided by the California Pharmacists Association, an advocacy and lobbying group, a pharmacist providing a Medi-Cal patient with the HIV drug Atripla will now lose $123 a year, per patient. A pharmacist providing a Medi-Cal patient with the schizophrenia/bipolarity drug Ziprasidone will lose $533 per year per patient. And a pharmacist providing the injectable antipsychotic drug Aristada will lose $816 per year per patient.  

San Francisco General Hospital alone refers some 1,200 patients to Mission Wellness.

So this is — by design — a losing proposition. Pharmacists are clearly incentivized to cease carrying these drugs and/or providing them to Medi-Cal patients — which, in turn, makes it that much harder for people in need to obtain them. 

But wait, there’s more: The state, which has been mulling these changes since 2017, is demanding pharmacists retroactively pay back the higher reimbursement rates they received over that two-year period — hence that $30,200 clawback from Mission Wellness in May. 

When asked how much longer she can subsidize scads of AIDS, HIV, Hep-C, and mental health patients out of her own pocket, Lopez is frank: “Not much longer.” 

Will our erstwhile mayor forsake us?

Why do this? In a word: “savings.” The state stands to save some $60-odd million by reimbursing druggists less for these drugs. 

Now, $60 million is a good amount of money. But, in the context of the California budget, which is about $209 billion, there’s a term for savings like this: Budget dust. 

Saving $60 million off a $209 billion budget is akin to saving a quarter off a $1,000 purchase. 

But, as noted above, this is a dubious way to save money. Psychotic people acting out in the street and being hospitalized (or worse) or AIDS and HIV patients suffering healthwise will, invariably, result in increased expenditures (though — and this is key — likely not at the state level). 

Despite the term “specialty medications,” by the way, these are not extravagant or cosmetic drugs. “These aren’t luxury medications; this isn’t your expensive weekend Viagra,” says Dr. Annie Leutkemeyer, an infectious disease specialist at San Francisco General Hospital and UCSF. “These are life-saving medications which you cannot interrupt. If a patient misses even one dose, it could be catastrophic.” 

People’s lives will be ruined and the back-end costs will soar. And places like Mission Wellness will struggle to stay in business, which is also a net loss for the community. 

And while San Francisco often advocates for twee, independent businesses for emotional and altruistic reasons, that doesn’t apply here. Independent pharmacies are often the only ones willing to accept indigent people’s health plans — hence the Mission Wellness contract with the Department of Public Health. “My patients don’t go to Safeway,” says Leutkemeyer, who works out of General Hospital. “They have to go somewhere that accepts their insurance.” 

And this leaves Sen. Scott Wiener troubled. Gov. Gavin Newsom recently signed into a law a Wiener-penned bill that enables Californians to buy HIV-prevention drugs without a prescription. It is, simply, both the humanitarian choice and cost-beneficial to get these drugs into people’s hands. 

So Wiener is confused why, under that same governor’s watch, a move is underway to render it more difficult for people to get HIV medications — and bankrupt local pharmacies to boot. 

“What the state is doing here is terrible,” he says. “It’s going to harm people and it needs to change. This is not rational.” 

Mission District Supervisor Hillary Ronen agrees: “This is so bizarre. This is so weird. There is no scenario under which this decision makes any sense.” 

Ronen and Wiener likely also agree with one another that it’s a bad idea to mix beer and wine or drive on the railroad tracks (or both). But, by and large, they don’t agree on all that much. 

So, if Ronen and Wiener both tell you something is a bad idea and you should stop — it’s probably a bad idea and you should probably stop. 

If Hillary Ronen and Scott Wiener both tell you something is a bad idea and you should stop — it’s probably a bad idea and you should probably stop.

Again, why is this happening? Nobody thinks it’s a conspiracy to bankrupt the local pharmacies or deprive Medi-Cal patients from their life-saving drugs. That’s not the intent. Yet that stands to be the outcome. 

Under Gov. Jerry Brown, the state began searching for ways to save money. A consulting firm was contracted to undertake a survey that would help determine Medi-Cal reimbursements. 

That survey was faulty, complains the California Pharmacists Association (CPA), which filed suit against the state in May. That legal action froze the retroactive “clawbacks,” like the $30,200 appropriation Maria Lopez experienced earlier this year.  

Arguments are complete regarding that suit, according to CPA executive director Jon Roth; a judge’s ruling could come any day. Either the state will be forced back to the drawing board or it could begin once more demanding dollars from affected pharmacies. 

In the meantime, Roth is hoping Newsom can intervene. “If he were inclined to direct the Department of Healthcare Services to make the change, that would presumably happen,” Roth says. “They work for him.” 

Ronen agrees. And, again, so does Wiener. 

“This was a move by the Brown administration, so we’ve been waiting to see if the Newsom administration keeps with that same approach,” he says. But it may be time to stop waiting. 

“I think the LGBT caucus will get involved. The last thing we need is for community pharmacies that serve people with HIV to either go under or stop providing HIV medication. It’s really upsetting to me that the state has taken this approach.” 

Someone has to be in favor of the common-sense, decent, and bottom-line beneficial thing to do. Because, you know, we’re not doing that. 

Joe Eskenazi

Joe was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left. “Your humble narrator” was a writer and columnist for SF Weekly from 2007 to 2015, and a senior...

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3 Comments

  1. Great article. If this is what government spending looks like to reimburse doctors and pharmacies, I’m really scared of Medicare for all or single payer. With the price of schooling and the possibility of government reimbursements, becoming a doctor in the future could be like becoming a teacher now. Lots of work and little pay. You do it for the joy of your profession and not to make a decent living. This will lead to crappy doctors over time.

  2. “Arguments are complete regarding that suit, according to CPA executive director Jon Roth; a judge’s ruling could come any day.”

    This article summarizes the argument made by CPA. What are the arguments made by DHS? Is there a case number for pleadings accessible online?

  3. Is it “possible” the reimbursements are problematic by design because those meds are not in favor and possibly the plan is to incentivize the guideline driven meds +/- rebates or negotiated better prices? I don’t deal with these meds frequently, but my understanding is Atripla (mentioned) isn’t a common current therapy and there are other AAPs and maybe another one has good reimbursement compared to the one listed? Therapeutic interchange to an effective med at better cost/better reimbursement might be part of the future we have to practice in.

    As a pharmacist, but also as a concerned citizen, we have to be cognizant of the price of care and do what’s financially solvent. If the reimbursement models truly are some version of a “line of best fit” and many drugs end up costing more than they are reimbursed for, than we have to advocate for ourselves. The wholesalers, PBMs, and financially woke practitioners on the front line have the real power to change the problems we face with health care costs. Not a president/president-candidate or a policy. We have to stand up for ourselves and find why the pricing is wrong or unable to be purchased for the contracted prices. Do any other non-health businesses face this challenge where they buy raw ingredients, include physical and cognitive work, and then are forced to take a loss for the whole thing? It’s absurd that we’ve let this happen to ourselves—but I believe it is changeable if we unite and demand a changed system.

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