What the Unions Can Do

Bloomberg Could Save Millions If City Seized Slush Funds

Simultaneously, Yasser was the pivotal player in the award of a second contract to NPA. The city agreed in 2000 to carve out four categories of drugs (psychotropic, injectable, chemotherapy, and asthma) from fund coverage and pay for them with city money set aside in a Stabilization Fund, created through collective bargaining and jointly controlled by the city and the unions. The plan was designed to lighten the load on the welfare funds, stretched thin by rising drug prices, and to cover 425,000 employees and retirees, or "850,000 lives." With $141 million spent under this contract since July 2001 and another three and a half years to run, it could easily cost over $400 million due to rising drug prices. Not only is NPA paid millions in administrative fees for this and the DC 37 contract, it also collects rebates from pharmaceutical companies for preferring their high-priced drugs.

In addition to her DC 37 role, Yasser also ran the Municipal Labor Committee's Technical Health Subcommittee, which was charged with overseeing the award of this carve-out contract, together with Hanley's office. While MLC chair Weingarten initially attempted in a Voice interview to claim that Yasser had "recused" herself from the contract, she soon conceded that Yasser had in fact "run the names" of the three union representatives on the six-member selection committee past her and "played a role" in the discussions.

One of the union reps, Bob Croghan, president of the Organization of Staff Analysts, said that Yasser "put me on" the selection team knowing he was an unhappy prior customer of Merck-Medco, NPA's primary competitor and a national company that covers 65 million lives, nearly 10 times as many as NPA. "The first time I ever went to the MLC, I assailed Merck," recalled Croghan, who maintained he still fairly considered their bid. Another of the three union reps, the United Federation of Teachers' Arthur Pepper, also used NPA and met with Ullman every Tuesday for eight years at the union's offices to discuss business. Pepper was actually listed as one of three references on the NPA application, as was the administrator of the PBA fund, which also used NPA.

Randi Weingarten, whose teacher-union fund provides real health benefits, is open to talking about structural change.
photo: Richard B. Levine
Randi Weingarten, whose teacher-union fund provides real health benefits, is open to talking about structural change.

The third reference was Yasser herself, who brought the case for NPA personally to the full MLC steering committee meeting on May 10, 2001, asking the committee to endorse her own subcommittee's recommendation of NPA. Yasser's argument, according to minutes obtained by the Voice, was that NPA, which supposedly already handled prescriptions for 80 percent of the families that would get the new four-drug plan, would only have to issue new identification cards to the remaining 20 percent. Having priced out what it would cost to mail new cards to all the families if another bidder were chosen, she pushed for a vote for NPA. She did not mention that other bidders promised to produce cards at no additional cost. Nor did she tell the steering committee that NPA wasn't the lowest bidder, though Weingarten, Pepper, and others conceded it wasn't, even after NPA had dropped its initial price to get closer to Merck's.

Neither Yasser, Ullman, or McEntee would answer Voice questions, but Hanley says the cost of the carve-out program has been so astronomical that he listed its demise among the proposed concessions he put before the unions. Pepper swears by NPA, whose service record is strong but whose high costs prompted a recent end to its omnibus contract with the state of Illinois, as well as New York City's PBA.

In addition to these problems, a federal judge in Illinois ruled in 2000 that a letter the company sent to 500 or 600 prescription plans could be read "as an attempt to skim off by false pretenses" millions of dollars due third-party participants in a federal lawsuit. The judge said NPA's letter "might well constitute mail fraud or attempted mail fraud as well as violations of various state fraud statutes."

Ullman's other recent conduct that led to a legal complaint—this time from the Federal Election Commission—was his decision to sign off on $6 million in dividend payments to Doug Forrester, the 2001 Republican candidate for U.S. Senate in New Jersey. Forrester immediately funneled most of the dividend into his campaign committee, an act that state Democrats branded illegal in a letter to the Federal Election Commission. A repeated donor to Jersey and national GOP committees, Ullman, a 49/51 percent partner of Forrester's in another PBM (Benecard), was at that point releasing the funds that could finance the race many thought would decide the Senate.

Just as Ullman sold NPA in early 2002 to Express Scripts, another losing bidder in the city's carve-out contract, Lillian Roberts, the new DC 37 executive director, forced Yasser out of her job. Roberts promised a forensic audit of the fund but reneged, as recently disclosed in a New York Sun story. Roberts claimed the audit was unnecessary because Manhattan District Attorney Robert Morgenthau, then city comptroller Alan Hevesi, and KPMG, a top-flight accounting firm hired by AFSCME, had investigated the fund and found no wrongdoing. In fact, KPMG had been instructed by AFSCME not to look at the fund except for possible credit card abuses, and Hevesi mysteriously bypassed the NPA contract, though he regularly faulted other unions for not bidding major contracts.

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