This is the room where chemo drugs are mixed and stored at Logansport Memorial Hospital. Staff photo by Joseph Hinebaugh
This is the room where chemo drugs are mixed and stored at Logansport Memorial Hospital. Staff photo by Joseph Hinebaugh
LOGANSPORT — The theory is that white bagging — insurance companies requiring hospitals to use a specific specialty pharmacy for intensive treatments instead of the hospitals using their own resources — will save money while not changing patient care.

Hospitals in Indiana are finding out that isn’t the reality when it comes to chemotherapy.

On April 1, Anthem Blue Cross Blue Shield Indiana, the state’s largest health insurer, began requiring hospitals and clinics to buy chemotherapy drugs from CVS Specialty, a unit of pharmacy giant CVS Health — or lower their prices to match CVS.

At Logansport Memorial Hospital, eight cancer patients were impacted when it went into effect.

“Not a single one of them was able to get the drug,” said Perry Gay, president and CEO of LMH. “We attempted to adhere to the policy and did everything asked of us by the specialty pharmacy, only to be left waiting for drugs that never came.”

To compensate, LMH staff used medication from their stock, formulating dosages on site.

“We said we’d rather not get paid and keep patients safe,” Gay said.

At Margaret Mary Health in Batesville, every chemotherapy patient has seen a delay in chemotherapy medication delivery, with five patients experiencing a wait of a week or more, said Liz Leising, the hospital’s chief nursing officer and vice-president of Patient Services.

One patient’s medication was delayed more than three weeks.

“We spent multiple hours and made multiple phone calls trying to get the right person on the phone,” Leising said.

Staff made eight to nine calls to both CVS and Anthem and always had to leave a message that was returned the next day.

“When this was originally put in place, we were told it would be easy as ‘call this number or fax this number, and it hasn’t,” she said.

One staff member spent four hours on hold before hanging up, then spent another hour on hold the next day before getting answers.

“There really wasn’t a sense of urgency,” Leising said.


Anthem is the first insurer in Indiana to require chemotherapy drugs be provided by its own recommended pharmacist, but the process has already been done for other medications.

Hospitals or medical providers would normally buy the drugs themselves under a discount program, and then distribute them to the patient. White bagging means the insurer does not pay the medical provider for the drugs, and instead uses a specialty pharmacy which then delivers the drug to the provider to give to the patient.

The practice is similar to brown bagging, where medication goes to the patient, who takes them to the medical provider or administers them on their own or with a visiting provider.

A study by the National Association of Boards of Pharmacy states that these methods give pharmacists more ability to use their expertise, including for dosages and drug interactions.

Tony Felts, senior director of communications for Anthem, Inc., in Indiana, said that the white bagging only changes the way the hospital gets the medications, not the way the patient receives them.

“It’s not an issue about safety. It’s more about the cost of the drugs that are administered,” Felts said.

CVS Specialty Pharmacy has the ability to ship the drugs 24/7, Felts said. And the chemotherapy drugs can be cheaper that way.


The insurance company’s official statement reads, “Anthem’s Designated Network … is designed to address unnecessary mark-up on specialty drugs, which providers can acquire at a discount and then markup as much as 200 or 300 percent when administered to the consumer.”

“This is why specialty drugs are one of the largest drivers leading the increase in health care costs,” the statement read. “Consumers are bearing the brunt of this cost.”

Not everyone shares that belief.

Indiana State Representative Ryan Hatfield (D, Evansville), who served on the Public Health Committee and worked on legislation about white bagging, said that consumers are still bearing the costs.

Often the insurance company and the specialty pharmacy are the same company, such as Aetna and CVS, Hatfield said.

With pharmacies not owned by insurance companies, some medications are marked up 370% to 465%, but according to data from the Indiana Board of Pharmacy, the increase is more than 8,000 percent, Hatfield said.

“So they’re setting their own prices and paying themselves, and their profits have been incredible,” Hatfield said. “It’s sold as a cost-saving measure, but it’s just a cost-saving measure for the insurance companies.”

Gay said that Anthem’s numbers take the highest cost providers, but for smaller, rural hospitals, those mark ups aren’t happening.

“Guys like us who do the right thing always get killed in this,” he said.

Because rural hospitals usually don’t make large mark-ups, white bagging seems like a punishment, said Cara Veale, chief executive officer for Indiana Rural Health Association and former administrative vice president for a rural oncology clinic.


Although chemotherapy dominates the current discussion on white bagging, “there’s a lot of concern about the practice itself,” said Veale.

Kelsey Finch, an oncology pharmacist practitioner at Columbus Regional Health in Columbus, said that the medications in white bagging are “incredibly high dollar and very temperamental.”

Medications can be sensitive to light, need refrigeration or react badly when jarred and harshly shaken, and some are caustic.

“Our concern about white bagging is that we’re no longer able to monitor each hand (that handles the medication),” she said. The specialty pharmacies also hire their own delivery vendors who may not know where they’re delivering.

“People who aren’t familiar with our hospital have been known to leave the medications unattended with the patients’ information,” Finch said.

Her hospital had seven specific documented instances of specialty pharmacy deliveries not fully completed, including a package left outside the hospital department and not with any hospital personnel.

Indiana law requires medical providers to verify it’s safe for patient use, said Finch.

“If we can’t say the medicine is safe, we have an obligation not to give it to them,” she said.

Most of those interviewed said that it’s common for chemo patients to need an adjustment in medications due to changes in weight, progress or reactions, which hospitals with labs or pharmacies can do on site.

Although Anthem is the only insurance company white bagging chemotherapy in Indiana, Tabor expects an increase in frequency and the insurance companies broadening the programs.

He’s watching what’s happening in other states — including California (which has done white bagging for a while), Georgia, Texas and Massachusetts.


Gay said there have been added costs at Logansport Memorial Hospital due to white bagging, including extra staffing without an increase in income.

And the hospital also recently made a large investment in its cancer center, including the chemotherapy formulation area, which would become redundant if all insurance companies insist on white bagging.

The NAPB study included concerns similar to the medical providers.

“Under the white bagging model, physicians and dispensing pharmacies face the unpaid expense of safeguarding and storing patients’ medication until drug administration,” it stated.

Because specialty pharmacy medications are so specific, if a patient needs a treatment modified, the formulation can’t be used on another patient.

Some of the drugs are highly toxic and require special handling to dispose of, according to the study.

In Anthem’s emailed statement, Felts said, “The safety of our consumers is paramount as we work to provide access to quality, affordable health care.”


According to Felts, Anthem requires medical facilities which are not part of its Designated Network to purchase certain specialty drugs from CVS Specialty.

“However, if facilities agree to specific terms with Anthem to participate in the Designated Network, the facility will not be required to acquire the specialty medication through this program, and may continue acquiring the specialty medications directly from their own suppliers,” he said.

Logansport Memorial decided it couldn’t continue with white bagging, Gay said.

But if a hospital doesn’t do it, Anthem wants to control prices on a number of drugs on a formulary, he said.

LMH negotiated prices with Anthem to continue using its own pharmacies for chemotherapy medications.

Felts’ email said, “As with all of our partner facilities, Anthem has met with Logansport Memorial on multiple occasions. We remain hopeful that they’ll see the value to the consumer and agree to the terms of participating in our Designated Network, as many other Indiana hospitals have already done.”

Some concerned medical groups have formed Hoosiers for Safe Medicine to speak with legislators, said Veale.

But individual hospitals and medical centers are limited in what they can do together because it would look like they’re breaking anti-trust laws, Gay said.


Chemotherapy did not start the conversation on white bagging.

In March 2020, the Indiana Board of Pharmacy had a meeting to talk about the gradual increase in white bagging, said Brian Tabor, President of the Indiana Hospital Association.

“Indiana was starting to have that conversation,” he said. “The pandemic disrupted it.” Veale said that Hoosiers for Safe Medicine recently wrote the Indiana Department of Insurance and received a reply where it declined to get involved, and some state legislators they contacted felt it was more of a contractual issue than a legislative issue.

Rep. Hatfield has brought up a few bill amendments, and there’s been about six total bills addressing white bagging, he said.

But they haven’t passed this latest session. The legislation was mostly in the last two weeks of the session as people became aware of the white bagging practice.

Senate Bill 325 would have required insurance companies to give 80 percent of rebates in cost back to the insured.

That was removed in the conference committee process, Hatfield said.

The Indiana House did put an amendment on HB 1405, a bill that covered multiple medical situations, to create a study on white bagging.

The Department of Insurance, the pharmacy board, the Indiana State Department of Health and Indiana Family and Social Services Administration would create a report to find best practice guidelines.

Hatfield said the study is required to go to Gov. Eric Holcomb by Dec. 31, 2022.

It’s not what he hoped for, but he hopes it will lead to action and safety guidelines.


Tabor said the next step for the medical coalitions is to prepare to bring its concerns to the state legislature and to look at what other states are doing.

Although the state legislature reconvened this week specifically to address vetoes by Holcomb and will again in the fall for a special legislative session specifically for redistricting, Hatfield doesn’t foresee white bagging to be brought up either time.

Hatfield said he still plans to raise issues and legislation on white bagging, though.

“I’ve been offended by the practice that delays care and increases the cost of care for sick Hoosiers, especially Hoosiers with cancer,” Hatfield said.
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