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George Pennebaker, Pharm.D.

I have been writing this column since 1985, and I have enjoyed writing it and receiving occasional comments from readers. However, the premises that have generated these columns are no longer part of my life. I have truly retired from working with pharmacy computer systems. In fact, I no longer do what pharmacists do. The one exception is the medicines that are needed to keep me functioning. Those medications, along with sharing time with my family members and my musical activities, are supporting my “retired” status quite nicely.

I am glad to report that none of the medications involve diseases that worry me. They are maintaining a steady control of relatively minor medical situations that should be expected at my age.

My career in pharmacy has been very rewarding. Staying active in associations and alumni activities has opened many fascinating doors.  Because of my involvement I have served on the University of California’s governing board, which created a deep appreciation of my alma mater’s service to California, our nation, and many other parts of the world.

A number of the positions I held gave me the opportunity to move our profession forward. For example: While I was on the staff of the California Medicaid program (Medi-Cal), we needed to set up a prior authorization system that allowed nonformulary drugs to be covered when individual circumstances required them. The physicians I worked with agreed when I suggested that pharmacists do the authorizations. It worked well because we made sure that the pharmacists were familiar with practices in the geographical area that they were covering. (However, one pharmacist did get a bit too aggressive in his desire to “correct” the practices of some local physicians.)

I am proud that we implemented a cost-plus-professional-fee reimbursement system that pointed out that the service pharmacists provide is not just a function of the cost of the drug. It is also gratifying to see how that system has been adopted by every private and public third-party drug program.

We also had some opportunities to reduce expenses generated by manufacturer manipulations. At the time there were several tetracycline antibiotics made by several manufacturers and combination products of tetracyclines and antifungals. As I recall the numbers, the plain tetracyclines cost about $12.00 for 100 pills and the combination products were about $18.00 per 100. One of the leading manufacturers changed its tetracycline HCL price to about $4.00. We brought this to the attention of our advisory committee, and they responded by saying that we should establish a ceiling price of $4.25 per 100. They added that the other tetracyclines had the same action and should be deleted from the formulary. The antifungal prices were about $7.00 per 100, and the committee said to drop the combination products. They were of the opinion that the antifungals were seldom really needed, and if they were, they could be prescribed separately at a saving price. The bottom line was that the Medi-Cal program deleted all of the combination products and the expensive members of the tetracycline family.

We were surprised when, within a year, all of the combination products were discontinued by their manufacturers.

In the late 1960s we needed to redo the reimbursement system for pharmaceuticals. At the time the pharmacies were telling the program how much they paid for the drug product. A percentage markup and a small fee were added on to create the total payment. The problem was the lack of a standard cost for individual products. The thousands of pharmacies in California knew that we could never get around to auditing all of them, and many abused the system.

We knew we needed to establish a good definition of the cost of the drug — one that could be explained and understood and not meet too much resistance. We knew the cost needed to be the price at the wholesale level to the pharmacies and that it needed to be a standard regardless of who was the wholesaler. So we decided to call it the “average wholesale price,” soon to be known as the AWP. We announced that we would pay the average wholesale price plus a fixed fee. Thank goodness the publishers of the Red Book and Blue Book, in their next editions, listed an AWP price along with the other data in their well-referenced publications. The AWP system has significant problems. However, despite many attempts, a better system has yet to be created.

I am proud that we implemented a cost-plus-professional-fee reimbursement system that pointed out that the service pharmacists provide is not just a function of the cost of the drug. It is also gratifying to see how that system has been adopted by every private and public third-party drug program.

So it seems that this last column is an attempt to relive parts of a career that has been very rewarding and satisfying. I have been in positions that enabled me to develop and implement changes that I am proud of.

This also has been a good time to sort of sum things up while I evolve into an age where I get joy from being with my memories of the past, while enjoying my daily life of miscellaneous putterings.  CT

George Pennebaker, Pharm.D., is a consultant and past president of the California Pharmacists Association. The author can be reached at george.pennebaker@sbcglobal.net;  916/501-6541; and PO Box 25, Esparto, CA 95627.