Funding the Future of Pharmacy In North Dakota
A Report to the Members of the North Dakota Pharmacists Association From The Board of Directors
February 2005
February 2005
Dear NDPhA Members, The future of pharmacy is being challenged on many fronts and we face historical changes to our profession. One key example is the federal government’s overhaul of the world’s largest pharmacy benefit – Medicare. Original cost estimates of $500B now exceed $750B and that does not take into consideration the cost implications for each state’s Medicaid program. Strained budgets are forcing public policy decisions that could significantly decrease patient access to needed medications, as well as lower reimbursement to pharmacists. In addition to these challenges, we are excited about the new opportunities for medication therapy management services in this legislation. But the future of these innovative ideas and new roles for pharmacists depends on our commitment to work with policymakers to help guide and direct the outcomes. Participation in public policy development ensures the future of pharmacy, and is an essential part of the service and leadership we receive from our state association. Federal and state budgets are not the only ones under pressure to meet priorities. At the February 5 meeting, the NDPhA Board of Directors initiated a statewide discussion about the widening gap between revenue sources and expenses for the association. Your Board feels strongly that no decision on funding will be made until the members have had a chance to discuss the challenges and opportunities and provide input. This packet of information is provided to all district leaders to stimulate an in-depth discussion among members at your meetings between now and April 20th. The insights gained at the district level should be forwarded to the association office so all ideas and concerns can be combined into a report and presented during one of the business sessions at the 2005 convention (April 29-30, May 1 in Jamestown). This ongoing dialogue will provide the foundation for a Board decision at their June meeting on how to plan for a progressive and productive future for pharmacy in North Dakota. Thank you for your leadership! We appreciate your assistance in distributing this information to your members, and we look forward to the responses from each district. If you have questions, feel free to call or email Dr. Hill at the association office. Sincerely,
Curt McGarvey, RPh, President – NDPhA
Common questions about NDPhA Funding
What is in North Dakota Law, in
terms of current funding sources for NDPhA?
In 1989, the legislature passed a law that can be found in ND Century Code under section 43-1513.4 : Money’s payable from the board of pharmacy to the ND pharmaceutical association. It states – The association shall annually receive fifty percent of fees received by the board for renewal licenses as a pharmacist in this state. The association may use the funds for payment of expenses of the association including continuing education, pharmacist discipline, the impaired pharmacist program, matters related to pharmacist registration standards, professional service standards, and general operating expenses. The amount provided in this section must be paid quarterly to the association by the board. The association may not receive from the board any portion of fees from out-of-state pharmacists who do not have a renewal license to practice pharmacy in this state and may not receive any portion of examination fees, permit fees, or other fees or funds not specified in this section. Currently, the state board of pharmacy is allowed to increase annual license fees to a maximum of $200 per person. The current license fee is $150 and it has been this amount for the past 15 years. Of the $150, 50 percent – or $75 – is forwarded to the association by the state board. Though the number of licenses issued each year fluctuates, the average is about 700.
Do other states or organizations have association membership through license fees?
In South Dakota the entire license fee of $125 goes to the pharmacy association. Most states have a license fee plus an association fee. ND Attorneys are another group of professionals who have their annual license fee forwarded to their Association to fund operations. The license fee is $400 per year and the association receives 80 percent for operations.
When was the last time the
pharmacy license fees were changed?
License fees in ND have been $150 for 15 years, since the 1989 law passed, and the association has received $75 of the $150 during the same period.
What has happened to the value
of the $75 in 15 years?
2005 estimates compared to $75 in 1989**: $117 $105 $124 $137 $163 using using using using using Consumer Price Index GDP inflator the unskilled wage the GDP per capita the relative share of GDP
Based on the statute for funding (above), the membership in NDPhA is established through this state law.
That is correct. 43-15-13.3. Rights of members of the pharmaceutical association. It states – The members of the association who have secured a current annual license to practice pharmacy in this state are entitled to all of the rights and privileges of the association and may vote, serve as an officer or director of the association, and participate in all the meetings of the association.
Basically, you need $163 today to have a purchasing power similar to the $75 you had back in 1989. For the association, that $163 for every pharmacist in ND (700) would generate $114,100 to fund operations. The fact is, our salaries and businesses have not continued at the same flat rate for the past 15 years, so it is logical to expect funding to our association to change as well. ** Citation: Samuel H. Williamson, “What is the Relative Value?” Economic History Services, April 2004, URL: http://www.eh.net/hmit/compare/
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What do pharmacists in other
states pay for license fees and association dues?
(The data on the chart below was compiled by Shantel Thomas, PharmD Intern, February 2005)
PHARMACISTS ANNUAL RENEWAL FEES
STATE
North Dakota South Dakota Colorado Idaho Illinois Iowa Kansas Michigan Minnesota Missouri Montana Nebraska Utah Wisconsin Wyoming
BOARD LICENSE
$75 ($150 total-50% to association) 0 ($125 total-100% to association) $92.50 ($185/2 years) $90 $75 ($150/2 years) $220 $75 ($150/2 years) $35 ($70/2 years) $165 $80 ($160/2 years) $55 $100 ($200/2 years) $50 ($100/2 years) $48.50 ($97/2 years) $75
ASSOCIATION DUES
$75 $125 $140 $150 $200 $175 $225 $225 $395 $160 $125 $150 $125 $210 $125
What is the annual budget for the
association?
Essentially, revenue comes from 700 pharmacists paying $150 to renew their license and the association receives half from the state board of pharmacy. That amounts to $52,500 to fund all operational expenses. Associate memberships generate about $2500 per year. Support for publications is also provided by the NDSU College of Pharmacy, and paid advertising. The state board provides $300 per Journal for pharmacy technicians to have dedicated pages in each edition, and the Northland Association of Pharmacy Technicians provides $200/issue for postage. NDPhA also receives potential profits from the annual convention. On average, the budget projects about $3,000 in revenue from this source. (Range includes losses a few times and profits to $10,000 once).
The other source of income is limited contributions from wholesale distributors who support the association with grants – often for specific types of activities such as legislative affairs, or promotional events. NDPhA bylaws stipulate reserves of at least $20,000, which is the source of “interest income” in the list below:
Income
Dues Associates Advertising Convention Journal support Grants/gifts Interest/restricted funds Total $52,500 2,500 10,000 3,000 10,000 9,000 400 $ 87,400
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How does the ND Society of Health-system Pharmacists participate in association funding?
NDSHP receives $25 of the $75, based on individuals who select a box on their renewal form – requesting those funds to be forwarded to the NDSHP. NDSHP receives a check from the association based on the number of individuals identified by the state board of pharmacy from their renewal process – typically about 200. NDSHP keeps their own accounts and financial records, which has included income from a Fall CE Seminar and a percentage of the profits from the annual convention (based on the number of hospital pharmacists who attended). The NDSHP has contributed an annual amount designated to support the executive vice president’s salary. In 2004, the annual contribution was $5,590 and in previous years it was $1,000 higher. The transfer of funds from dues in 2004 was $5,125, and the transfer of funds from convention profits was $2,500 (a very unusual year!) for a total of $7,625. So the balance to NDSHP was a gain of $2,035.
The NDSHP would like to receive an increase from $25 to $38 to cover their expenses.
That is correct. NDSHP made this request to the NDPhA Board at the February 5, 2005 meeting. Further consideration is pending full discussion by the membership and recommendations to the Board. Deliberation will include all potential funding needs, as well as the income available.
What are the estimated expenses for the association?
Expenses
Salaries, taxes, retirement 2 FT 1 PT communications Rent Technology services Phone Office supplies Accounting services Insurance Journal Newsletter Postage Convention Committees, Board Meetings/registration Travel Meals/entertainment Dues, fees, publications Professional development Total Less Income Deficit $68,000 $10,000 6,000 3,200 1,900 4,500 1,600 500 15,000 7,900 7,500 5,000 1,000 3,200 5,000 1,500 1,400 2,000 144,750 87,400 $ 57,350
Are these funding activities also identified in statute?
No. These are based on a “gentlemen’s agreement” made about the same time as the 1989 law. No documents are in place to verify these practices; they continue based on history.
Do only hospital pharmacists choose to have $25 of the $75 forwarded to NDSHP?
No. They work in several different practice settings, as well as hospitals. Some work in long-term care facilities. In smaller communities the local retail pharmacist is usually the contracted provider for the hospital and/or longterm care facility. These pharmacists are included in the total number of contributions.
How does the association make up the difference between income and expenses?
The ND Pharmacy Service Corporation has provided the balance of funding required. For example, NDPSC has always funded the compensation package for the administrative assistant, though this position is critical to both organizations. In other instances, NDPSC provides 2/3rds or more of the support need for most operational costs (salaries, equipment, rent, travel, etc).
Do pharmacists in other practice settings receive a portion of the $75 from license fees, or convention profits?
No.
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What is the ND Pharmacy Service
Corporation (NDPSC)?
NDPSC was created as a for-profit subsidiary of the association in the early 1990s. NDPSC members pay dues of $1,250 per year. Typical services provided to members include network contracts. Network negotiations can secure better reimbursement rates for NDPSC members. For example, the CCRx Medicareapproved discount drug card was negotiated for all members at a rate higher than any other paid in the U.S. The “expenses” presented on the previous page are based on a new funding formula that would require increased support from the association than has been provided in the past. When NDPhA and NDPSC move to more equitable (not necessarily equal) funding of association activities, it will provide some reserve funds for NDPSC to invest in new pharmacy initiatives.
funds at their December 2004 meeting. Further discussion at their January 2005 meeting included strong support for the association’s plans to provide information to members and opportunities for thorough discussion. The state board has current authority to increase license fees to $200 but will delay any decision about an increase until after NDPhA members have received information and discussed the issues at their district meetings and forwarded comments and suggestions for inclusion in a business session at the annual convention. The state board is interested in knowing what funding is needed to meet the goals and priorities of the association. They were not concerned with whether or not a portion of the license fee was necessary to sustain their own funding (they receive funding from various other fee sources). Current law allows license fees to increase to $200, with 50 percent going to the association. Any increases beyond either number (the amount of the fee or the percent to the association) would require a legislative change of statute.
What kind of “initiatives” would NDPSC reserves providing funding for?
A good example is the disease state management proposal to the ND Public Employees Retirement System that was presented last November and is currently going through the legislative process to secure funding. The NDPSC has committed an initial, start-up investment of $68,000 to ensure that the NDPERS project can be delivered. The goal with this project is to demonstrate to NDPERS the value of intervention and prevention services through our existing network of ND pharmacists, which will ultimately lower their overall healthcare costs. Once the benefit is proven through NDPERS, the program would be marketed statewide to other employers and groups.
How do other associations address special interest groups and funding?
Many associations have members who work in different areas of an industry – like pharmacists in various practice settings. As requested, the unique interests of these subgroups are addressed by providing opportunities to interact with colleagues, exchange ideas, and share best practices. These special interest groups are optional, and made available to members who pay an additional fee to participate in activities focused on their unique interests and expertise.
Questions? Or send comments to:
Does the State Board of Pharmacy know about these discussions? And if so, what is their reaction to the need for more funds?
Yes. The state board was presented with the initial information and potential need for more
Dr Patricia Hill, Executive Vice President ND Pharmacists Association 1661 Capitol Way, Suite 102 Bismarck, ND 58501 (701) 258 4968 Office (701) 258 9312 Fax phill@nodakpharmacy.net
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