Our friends at NCPA are making great progress in their never-ending efforts to advocate for the independent pharmacy industry. In this newsletter from NCPA’s CEO, Doug Hoey, they are highlighting some great work done with the Arkansas Pharmacists Association (APA) in the battle against Pharmacy Benefit Managers (PBMs). Great job, Arkansas!
Sometimes it’s hard to believe your own eyes.
That had to be the reaction from many in the room at a press conference held by the Arkansas Pharmacists Association this week when they heard of a $484 difference between what a Caremark-administered plan paid a community pharmacy for a 30-day supply of aripiprazole versus what it paid itself!
For years, community pharmacists have suspected that chains, especially CVS/Caremark (since it is a price giver and a price taker as a PBM and drugstore chain), are reimbursed more for prescriptions than community pharmacies are. The example shared with Arkansas legislators, patients, and pharmacies this week was eye-popping even as it verified our suspicions, and mind-boggling for the legislators and patients in the room who, directly or indirectly, are paying that whopping difference.
The aripiprazole example wasn’t an outlier, either. Scott Pace, the APA Executive Vice-President, and CEO held up a folder with 270 more examples of self-dealing. On average, he said, those examples showed a difference of over $60 more per prescription being paid to CVS than was being paid to community pharmacies!
So far, there is no word from Caremark on these payment discrepancies. And, no word from other mega-PBMs so far suggesting that they don’t follow the same practices.
Arkansas has an active state association, very active pharmacist members, and has historically been very politically active, making sure to sustain relationships with their local legislators. Couple those strengths with the extreme payment cuts to local pharmacies and this new information about inflated payments to out-of-state competitors, and you have a firestorm.
Local news stations covered the press conference, and the entire event was posted on Facebook. The governor has called a special session, and Arkansas Attorney General Leslie Rutledge is investigating the low reimbursement rates:
“The change in reimbursement rates by the Pharmacy Benefit Managers has hurt Arkansans in every community across the state,” said Attorney General Rutledge. “Local pharmacists are critical members of Arkansas’s communities. Due to these changes, pharmacists are facing tough decisions because the reimbursements do not cover the actual cost of the medications. When public health is threatened, all Arkansans suffer.”
Even before these latest examples, evidence has been piling up indicating that PBMs are contributing to the increasing costs of prescription drugs rather than saving their customers (employers and local, state, and federal governments) money. I’ve written here about this issue a couple of times already this year (Jan. 19, “A Coincidence That May Not Be a Coincidence,” and Feb. 9, “Let the Sun Shine In”). These revelations coming out of Arkansas show a proverbial henhouse that is being raided rather than guarded.
The payment discrepancy information revealed at this week’s press conference will reverberate through many state houses. It looks to any reasonable person that local pharmacies are being forced to subsidize higher payments to CVS pharmacies. Couple that with solicitations from CVS to buy the same pharmacies they are reimbursing below the cost of the drug, and it paints an ugly picture that should be of great interest to federal and state legislators and regulators.
Arkansas isn’t the only state where pharmacies—at least community pharmacies—are seeing extreme cuts in prescription reimbursements and are responding with legislative action. In fact, almost every state has introduced PBM legislation this year. The new, specific information about the yawning gaps between payments to community pharmacies and to CVS should make those statehouse debates even more compelling.
Pharmacists in Arkansas have joined hands and raised their voices. If you have been quietly rooting your own state on, now is the time to stand up, take part, and open the eyes of your state officials.
Pharmacy Owners: You can join the conversation and connect with like-minded independent pharmacy owners in our industry only message board. Click and be a part of the elite knowledge-sharing culture that has become synonymous with Pharmacy Development Services.
What we’re about to show you will likely make your blood boil. It did ours. These are pictures you must see to affirm your sneaking suspicion that yes, you are in fact getting duped by PBMs, such as CVS Caremark.
The images below were provided by a fellow pharmacy owner and were obtained during the process of filing a MAC appeal with the Medicaid HMO, Molina. Like many owners who bill to CVS Caremark, she noticed a consistent pattern of being underpaid on reimbursements. In response to the complaint, she received the following files which show the charges to Molina for the prescription, a stark contrast to what her pharmacy received.
|Prescription||Amount Submitted by Pharmacy||Molina Paid Caremark||Pharmacy Reimbursement||PBM Spread|
|Guanfacine HCL ER 2 MG tablets ER 24H||$320.00||$121.55||$7.60||$113.95|
|Neomycin-Polymixin-Hydrocor 3.5-10K-1 solution||$106.00||$50.32||$5.40||$44.92|
Images one and two show what Molina paid CVS Caremark for two prescriptions while images three and four show what the pharmacy was paid. This highlights the reality that pharmacies are regularly underpaid for prescriptions while the insurance plans are charged far more, and the PBM gets to keep a considerable spread of profits in their pocket.
We’ve also attached the documents for download here.
What This Means
There are approximately 22,000 independent pharmacies in the United States. If we looked at the Guanfacine prescription alone, the yearly payout to PBMs is $29,832,000 if the baseline assumption is that pharmacies nationwide fill this script once a month.
MAC list pricing by PBMs puts independent pharmacy owners at a considerable disadvantage. Adding insult to injury, the majority of the pharmacy owners on the PDSadvantage message board are in agreement that the appeals process is ineffective. A best-case scenario is periodic price adjustments depending on the appeal, which, in the long run, never affect changes in pricing for pharmacy owners as a whole. Overall, this process is designed to force busy owners to choose between below cost reimbursements or an endless cycle of appeals with little change in outcome. Many argue that the effort invested in submitting appeals isn’t worth it because the core of the problem isn’t addressed, and it takes up precious time that should be spent on growing the business, not in the pharmacy.
Fight Smarter, Not Harder
CVS Caremark and other Pharmacy Benefits Managment companies, such as the other 2 of the “Big 3,” OptumRx and Express Scripts, will continue to intentionally narrow the gap between reimbursement and acquisition cost while keeping the appeals process ineffective in the face of repeated price adjustments. This leaves independent pharmacies underwater. We at PDS don’t count ourselves among those who think fighting is futile. The answer is fighting smarter, not harder by making these issues and any other unfair regulations IRRELEVANT to how you operate your pharmacy business. Here and now, we can affect change that will make issues like unfair MAC pricing a blip on the radar. If we come together, our own collective and individual success will be exponentially greater than any threat the PBMs can sling. Filing appeals is a start, but alone it is not the answer. Informed pharmacy owners know that the focus should be on putting effort toward strategies that directly impact your bottom line.
Taking Matters into Our Own Hands, Together
There are over 1,800 pharmacy owners and professionals that know the value of fighting smarter with a proven plan, backed by a community that supports and stands with them. This gathering happens every February in Orlando, Florida.
Independent pharmacy owners just like you gather with the experts and titans of the industry to:
Give owners proven, sustainable strategies that will pay immediate dividends
Light the passion for pharmacy most owners lose in the landscape of this unfair game
Give you the confidence to battle MAC pricing, DIR fees, below-cost reimbursements and any other obstacle in your way – and win
Find your people. Fellow owners that are walking the same path as you. The value of this support and knowledge-sharing is priceless. If you’d like to continue to file appeals and disputes on your own, we commend you. At least you’re doing something and making your voice heard, but that is not your only recourse.
Attend the PDS Super-Conference and see for yourself why we are so confident in our ability to change your life that we have a conference guarantee. If you don’t see the value of after the first day, we’ll reimburse your travel up to $500 and give you an additional $300 — no questions asked.