Diane Mathews, owner of Patient’s Pharmacy, 300 N. Main St., Jamestown, doesn’t want to be next in line.

Patient’s Pharmacy opened in 2008 and has been in Jamestown since 2012 after moving into the city when the business outgrew its former location in Falconer. The bulk of its business had become filling prescriptions for state-run group homes, with a storefront built up over the years to sell durable medical equipment, wheelchairs, walkers and other items. At its peak, Patient’s Pharmacy serviced 30 group homes in Chautauqua and Cattaraugus counties as well as one in Erie County. In total, she serviced almost all of the group homes within a 60-mile radius.

“We just kept growing and growing because of word of mouth,” Mathews said earlier this week in a quiet space in the business that used to be a hub of activity. “A girl would work at this home and then she’d go to this home and say, ‘What do you mean you don’t have Patient’s Pharmacy?’ And that’s how we grew.”

A change in the state’s contract for prescriptions for group homes, run through the state Office for People With Developmental Disabilities, is threatening to put Mathews out of business — and Mathews isn’t ready to let go of the business she and her family have built over the past 23 years without a fight.

Empty baskets are pictured in the pharmacy room at Patient’s Pharmacy. As recently as March, the baskets would have been filled with prescription drugs Patient’s Pharmacy had assembled and packaged for delivery to state Office for People With Developmental Disabilities group homes in Chautauqua and Cattaraugus counties. Now, the baskets are empty while the company awaits word on a new state bid for prescription services. P-J photo by John Whittaker

“I would hate to be just another number,” Mathews said. “All of the other community pharmacies are gone. … As far as Jamestown, Falconer, Lakewood, it’s me. And I don’t want to go. I don’t want to go anywhere. We were open during the pandemic. … Everything comes out of Pittsburgh and you couldn’t wait two weeks for your wound care. You can’t wait two weeks for anything. That’s why you go to companies like us — because you need it today. We were open. We never closed. And I don’t want to close.”

A QUIET TURN

Little did Mathews know that her business, which was poised to grow as Health Direct discussed adding additional Western New York group homes to its contract with Patient’s Pharmacy, would lose half of its business with the awarding of a bid for prescription services to Omnicare, a national chain owned by CVS. Assemblyman Andrew Goodell, R-Jamestown, said the Office for People With Developmental Disabilities awarded the bid for prescription services to two companies — Omnicare for the western portion of the state and Health Direct for the eastern part of the state. Health Direct had held the state contract for prescriptions for several years, state Sen. Geroge Borrello, R-Sunset Bay, said in a letter to Gov. Andrew Cuomo sent last September. Consolidating providers to two was supposed to make it easier on the state by having fewer billing mechanisms, making administration of a huge system easier and, according to state officials, improving access to prescriptions for group home residents because the automated process used by the bigger chains would reduce errors.

A move that was supposed to increase efficiency had the opposite effect, Goodell said. Goodell has been advocating for Mathews with state agencies for at least the past year.

“It created problems because you then had Buffalo served by Omnicare and Chautauqua and Cattaragus counties served by Health Direct, and of course Omnicare is saying our bid reflects a certain volume,” Goodell said. “You’re cutting into our volume.”

The counter-argument that Sen. (George) Borrello and I made is, ‘Yeah, but you can’t service us well because you have a 2.5-hour drive just from your distribution point. And if we have bad weather and we’re at the end of the delivery line, because you’re going to be sending out a truck or a van that’s going to be dropping off all along the route and we’re at the end of the line, we don’t get good service. While you have maintenance drugs where you might get a delivery every 30, 60 or 90 days, you also have drugs that are fairly urgent because people are pretty sick — antibiotics and stuff like that.”

Initially, state officials told Goodell the issue between Patient’s Pharmacy and Omnicare was a competitive bidding issue and referred the matter to the state Comptroller’s Office. Goodell, who has a background in competitive bidding from his time as a county attorney, then reached out to the Comptroller’s Office, who told him the issue was really an administrative issue within the Office for People With Developmental Disabilities.

“I said, ‘What’s going on here, guys?’ and they said ‘It’s not our fight,'” Goodell said. “It really was an administrative issue. They have nurses that travel throughout Western New York and they want their nurses to have one contact person and organization and one format ordering these prescription drugs to reduce errors and simplify procedure and all these other factors. Our recommendation to Patient’s Pharmacy was that they reach out and touch base with Omnicare as well as Health Direct and offer to be a subcontractor for both of them, because Patient’s Pharmacy doesn’t care who they’re a subcontractor for as long as the price is reasonable. That way we could get high quality service for Chautauqua and Cattaraugus counties and Patient’s Pharmacy would run their billing through Health Direct or Omnicare. That’s where we left it.”

POST-PANDEMIC PLUNGE

Taking Goodell and Borrello’s advice, Mathews reached out to Omnicare and Health Direct. Mathews was able to secure a subcontract with Health Direct to fill prescriptions for group homes serviced by Health Direct, but has been unable to reach a similar contract with Omnicare. While the change was supposed to take effect in September, Mathews didn’t see a huge impact until earlier this year.

That’s because Omnicare wasn’t able to service the entire territory at the start of the contract period, which meant Patient’s Pharmacy simply continued filling prescriptions for its typical clients. Then, earlier this year, regular prescription orders slowly dried up. At a time when most businesses were ramping up business to take advantage of the end of COVID-19 restrictions, Mathews found her business going in the opposite direction.

“We’ve been plugging away since last August trying to fight this thing because Omnicare didn’t have all of the prescriptions to fill,” Mathews said. “Here we were in March and they were supposed to take over in March. Well, it didn’t happen, they didn’t have all the scripts. So we were still filling through March. Then they didn’t have them all in April, so we were still filling in April. Then slowly in May they little-by-little (took over), but they still don’t have all the scripts. So I’m still filling some of the ones they don’t have scripts for.”

As Omnicare has taken over more and more of Mathews’ prescription business, Patient’s Pharmacy has shrunk.

“It’s put a big crimp,” Mathews said. “I’ve had to lay people off. I’m a small business to begin with. When you have to lay people off, some of them are family members. This is pretty much family ran. That’s hard. … That’s hard.”

‘QUESTIONABLE PRACTICES’

In his letter to Cuomo in September, Borrello asked for the impending contract change to be immediately halted. The senator had concerns about the switch to Omnicare and what it would mean for Patient’s Pharmacy on the local level and what it would mean for group home residents on a statewide level.

Centralization has not worked out as intended in many cases, including Borrello’s oft-cited example of the Non-Emergency Transport System that uses transportation brokers to arrange trips for medical transportation. Rather than use local public transit services, the state’s transportation brokers arrange contracts with single-rider taxi services — leading costs to increase by more than 1,000% in some regions and opening the door to criminal fraud charges. One of those cases involved trips from Jamestown to Buffalo.

Borrello took issue last year with what he termed as Omnicare’s record of applying hidden fees and charges for services that Patient’s Pharmacy doesn’t apply for the same service.

Borrello also questioned why the state would award a bid to a company that was the subject of legal inquiries from the U.S. Department of Justice. In May 2020, the company agreed to pay several western states $15.3 million to settle allegations that Omnicare violated the federal Controlled Substances Act in its handling of emergency prescriptions, its controls over the emergency kits and its processing of written prescriptions that lacked required elements such as the prescriber’s signature or DEA number.

The Associated Press reported in 2019 that Omnicare had agreed to pay more than $28 million in 2016 to resolve allegations that it accepted kickbacks for pushing an anti-seizure medication on doctors treating nursing home patients and $124 million in 2014 to settle lawsuits alleging the company gave kickbacks to some facilities to keep Omnicare as its drug provider for elderly Medicare and Medicaid patients.

CVS purchased Omnicare, which is based in Cincinnati, for more than $10 billion in 2015, but took a $2.2 billion charge in the final quarter of 2018 from the Omnicare business.

“The flimsy argument they stated was that the in-state bidders weren’t able to meet the labeling standards,” Borrello said in an interview this week. “However that’s just not true. Because they have awarded the contracts to other in-state bidders in other parts of the state for the same OPWDD clients, their group homes, and they’ve met those standards. That was the excuse why Omnicare wouldn’t use subcontractors like Patient’s Pharmacy would be because of labeling standards. They aren’t even the cheapeast bidder. So to me this is all about just some very flimsy arguments that lead back to this company that’s got a lot of questionable practices. They’ve been sued bythe federal government. We’ve had, I’ve received directly, stories from people who have spoken to me in confidence about people that are nurses at group homes that are saying they’re not getting critical medication needed for their patients in a timely manner, that they have been pushed by Omnicare to do certain prescriptions in a certain timeframe without doing the proper due diligence. So there’s no question there are some safety issues there with Omnicare and the way they do business.”

Borrello has introduced legislation, S.5479, to try to place in-state bidders on state contracts on a level footing with out-of-state competitors. Borrello proposes amending the state Finance Law so that if a New York state contract bid by an in-state supplier is not more than 10% more than the lowest responsible bid from an out-of-state supplier, the in-state supplier will have the opportunity to match the out-of-state bid.

In the case of Health Direct and Patient’s Pharmacy, that would have meant Health Direct could have matched the out-of-state bid.

The Sunset Bay Republican also said there is another issue with the bid process that should change, in his view.

“Nobody’s looking holistically at this,” Borrello said. “And that’s where I think even in the end it’s not a good financial decision in addition to not being a good decision for the people they’re supposed to be serving. … You have these group homes and the health care providers that operate them that are speaking out against the poor service they’re getting from Omnicare. Us stepping up and advocating as their legislators are really the only line of defense they have. It’s not in the bidding process. It’s just not. They should have an opportuniitiy to submit their comments on these bidders.”

WHAT HAPPENS NEXT?

The state Office for People With Developmental Disabilities is accepting a new bid for prescription services in its Developmental Disability Service Office. Mathews is one of the final five bidders, with Health Direct also among the top five. While it is a longshot that Mathews is given a Western New York-only contract, Goodell said he would prefer to see a contract awarded that requires the winner to contract with local vendors.

“In my opinion, the optimal situation I think from the state’s perspective would be to award the contract to whoever they want but as part of that contract require they contract or subcontract with the local vendor,” Goodell said. “So you have high-quality delivery. That way you can get the best of both worlds. You get prompt, efficient delivery and all the patient safety, and patient sevice ought to be the first and foremost priority, right? You don’t want to jeopardize anyone’s health and safety while they wait hours for a delivery that may or may not come because of a snowstorm between here and Rochester — and that’s the strength of Patient’s Pharmacy. That’s why they pick up so much business over time.”

Borrello agreed with Goodell, though he said the bid process is not going smoothly on the state’s end.

“In the meantime you have situations like this,” Borrelllo said. “The new bids are out and I’m not sure Omnicare is even bidding. But right now OPWDD is dragging their feeet and they just added on a three-month extension while they evaluate the bids. I don’t know what could be so different they need so much extra time. … She won’t make the final final cut, but if Health Direct does tha’ts still good for her because they’ve agreed to use her as a subcontractor. Ultimately, it’s not just about her, it’s about the fact that this is the best, safest way for these group homes to get their medications — through a local provider that can turn things around quickly and has everything they need. At one point, and we called OPWDD every time we heard these stories, at one point they said they weren’t going to be able to provide insulin. And they actually went for a peirod of time without filling insulin prescriptions for people in these group homes. It doesn’t get much more basic than insulin. It’s a basic daily need for people.”

Not knowing how the bid will turn out made this bidding process a difficult one for Mathews. The news that OPWDD needs three more months to evaluate the bids makes this process even more heart-wrenching for Mathews and her employees. For Patient’s Pharmacy, time is one prescription they can’t fill.

“I don’t know,” Mathews said when asked how much longer her business can hold on. “I don’t know. To be honest this is a week-to-week thing since we’ve lost the contract.”