A proposal to create an in-house pharmacy at Scotland County Hospital met some resistance Thursday evening, as more than 30 area residents were in attendance for the SCH Board of Directors meeting.
After hearing public comments, the board approved with a majority vote, a 340B Pharmacy Services Agreement with IMG Rx East, LLC. The board also approved a Pharmacy Commercial Lease with IMG Rx East, LLC for six years initial term, with cause option to follow after the six-year period.
According to the official board minutes, 11 SCH employees and 34 community members joined the board for the January 26th meeting.
Comments were heard from five community members, including Scotland County Pharmacy owner and operator Matt McKee.
McKee expressed several concerns with the hospital’s plan to lease space at the facility to house a new pharmacy, noting he believed the decision was being made without all of the facts and encouraging the hospital to consider canceling the proposed contract.
Other citizens highlighted Scotland County Pharmacy’s commitment to the community and voiced concerns the hospital’s decision would ultimately force the local business to close its doors.
Hospital officials indicated that an inability to reach a new agreement between the hospital and pharmacy to administer the 340B federal drug program, ultimately led to the decision to pursue alternative pharmacy services.
The 340B program requires drug manufacturers, as a condition of Medicaid participation, to offer the drugs at a discounted price to eligible hospitals, such as SCH. It allows hospitals like SCH to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services”, according to the Health Resources and Services Administration, which oversees the program. According to the U.S. Government Accountability Office, roughly 1/3 of the nation’s hospitals participate in the 340B program.
SCH CEO Dr. Randy Tobler briefly explained the program to the meeting attendees.
“The program buys the drugs from a third party vendor that buys the drugs at a greatly reduced rate from drug manufacturers that are required to make the rate nearly the same as what is sold to the Veterans Administration,” he explained. “The hospital contracts with a pharmacy, or multiple pharmacies, to dispense the drugs for a mutually agreed upon dispensing fee, which the pharmacy retains.”
Tobler stated that this fee and the financial terms of the agreement are what SCH and SC Pharmacy could not mutually agree upon.
According to the board minutes, a previous agreement between the hospital and Scotland County Pharmacy to administer the program, was ended by mutual agreement in June.
McKee contends that the contract was not mutually terminated.
“Dr. Tobler actually terminated on June 1, 2016 with a June 30th termination date,” he said. “We submitted a nonrenewal on June 2, 2016 based on the hospitals request so we could renegotiate a more fair contract to us. We agreed to continue until the original date of July 14, 2016. Dr. Tobler terminated the contract early.”
McKee also expressed frustration with the negotiations, stating he and representatives of his company, met the hospital administration as late as December, when McKee stated he felt that an agreement had been reached.
“I am extremely disappointed at how this has transpired,” said McKee. “After the offer from the hospital which we rejected, we countered with and offer which they rejected. They then never countered again or offered me another contract offer until this December, which I did accept. I was never contacted a single time by a board member to ask me any questions about this program. Over this whole process, I made numerous contacts trying to get a contract worked out. The hospital never once told me that they were thinking about bringing a pharmacy in if we didn’t come to an agreement. I feel if they were seriously wanting to work with me, they would have told me that. The fact that it was so hush, hush, leads me to believe the decision was made a long time ago.”
Hospital officials noted that no tax money was being used for the creation of the new pharmacy, which would actually generate the hospital revenue from its lease agreement and significant direct revenues from the program. They also stressed that hospital and clinic patients would still have the ability to have prescriptions filled by any pharmacy of their choice.
The hospital currently maintains similar lease agreements with service providers such as Blessing Cardiology and International Eye Care.
Board member Lori Fulk expressed frustration that an agreement could not be reached between SCH and SC Pharmacy, noting the hospital board made the decision it thought was in the best interest of the hospital. She went on to note that nothing was preventing the two entities from reconciling their differences so that they might work together in the future.
Later in the executive portion of the board meeting, the board accepted a letter of resignation, effective immediately from Matt McKee from the position of SCH Pharmacy Director.