The chairman of the Mashantucket Pequot Indian tribe, which operates the Foxwoods Casino, is seeking to reassure federal officials that the tribe’s mail-order pharmaceutical business is not doing anything illegal. In a letter the tribe has denied it is reselling drugs acquired at a deep federal discount.
In the letter addressed to George T. Patterson, executive director of the National Acquisition Center for the Department of Veteran Affairs, Tribal Chairman Kenneth M. Reels said that although the tribe is exploring an agreement to help the state of Connecticut save money on pharmaceuticals, the proposal does not include provisions in which the Pequot Pharmaceutical Network would resell drugs it gets directly from the federal government’s supply schedule.
“Network (executives) assured us that state officials clearly understood this, and that the state would have to establish its own independent authority for accessing the federal supply schedule and could not do so through the tribe,” Reels said.
Under the Indian Self-Determination and Education Assistance Act of 1975, tribes were given access to federal pricing schedules for pharmaceuticals through the Indian Health Service.
Drug manufacturers have different price schedules for different customers. For example, hospitals typically get a lower price than drug store chains. As the biggest consumer of pharmaceuticals in the world, the federal government — and, through the government, the tribes — get the lowest price of all.
Tribal spokesman Arthur Henick says the network keeps separate inventories for patients who qualify for the federal discount and those who do not. For non-eligible patients, the tribe pays a higher rate — similar to that paid by HMOs — for medicines, he said.
To qualify for the federal discount, the government has a number of requirements: a client must be a tribal member or be on a federally funded program, and the government must save money in allowing that person to get the cheaper rate.
The pharmaceutical company is only a sideline business for the Pequots. The tribe’s main source of revenue is the Foxwoods Resort Casino, which generates upwards of $1 million a day.
Started 10 years ago as a small health service for members of the tribe and their employees, the Pequot Pharmaceutical Network today is a $15 million business, handling 250,000 prescriptions annually, many for its own tribal members as well as other tribes.
The network also has private clients, including submarine builder Electric Boat and Connecticut College, which are sold drugs from the separate, higher-priced inventory.
Reels’ letter came in response to questions about how the company operates. A Washington, D.C., law firm representing drug makers complained to Patterson last month about the proposed contract between the state of Connecticut and the tribe to cover 85,000 elderly and disabled Medicaid patients. And State Attorney General Richard Blumenthal recently told officials at the Department of Social Services to be wary of entering into a contract with the tribe.
However, in his letter to Patterson, Reels said state officials already have contacted the federal Health Care Financing Administration to determine if the state qualifies for access to the federal supply schedule for Medicaid patients on its own.
“We were assured by our representatives that no part of our arrangement with the state would in any way involve the tribe’s authority to access the federal supply schedule,” Reels wrote.
