On February 17, the Federal Trade Commission voted be opposed to Research committee on the relationship of Pharmacy Benefit Mangers (PBMs) with affiliated and independent pharmacies. The study will examine the competitive impact of PBM pharmacy contract terms, reimbursement and fees on drug prices that adversely affect independent pharmacies. With the status quo ruling, the FTC decided to take a back seat and force independent pharmacies to fend for themselves to ensure fair prices so they can stay in business and continue to serve the well-being of their local communities and patients.
While the FTC remains on the sidelines, it is time for program sponsors and their members to take a hard look at PBM and its oppressive practices that have the potential to cause the collapse of independent pharmacies and, as a result, reduce patient access to trusted and talented healthcare provider. We can all sit down and criticize the FTC’s inaction, or as health care consumers, we can stand up and do what we can to show local pharmacies that we value them and that we’re here to help them gain safe access at a fair price.
Why Independent Pharmacies Matter
Independent pharmacies are the lifeblood of community health, and in most rural areas, independent pharmacists are the only providers within a short drive.Gallup poll finds pharmacists second trustworthy Across all occupations in the U.S. (after nurses), many people spend more time with pharmacists than with primary care physicians. Putting independent pharmacies at risk isn’t just about shutting down local small businesses; it can reduce patients’ access to trusted healthcare providers and critical information that enables patients to make informed decisions about their healthcare.
The ongoing Covid-19 pandemic has revealed the importance of pharmacists to national health. Thanks to a series of emergency laws, executive orders and mandates, independent pharmacists are able to administer millions of Covid point-of-care tests, vaccines and Covid treatments (monoclonal therapy) that are essential to saving lives and keeping people healthy . In fact, according to the 2021 NCPA Digest, more than 100 million doses of Covid vaccine have been administered by pharmacists, and independent pharmacists have played a major role in the frontline battle against Covid-19.
Looking back on past Covid, independent pharmacies have been well-positioned to provide enhanced services to local communities, including long-term care services, treatment adherence services, point-of-care testing (e.g. influenza) and other clinical services. Currently, there are more than 23,000 independent pharmacies serving their local communities, but that number could soon drop to a level that could threaten the delivery of quality care to rural patients and those living in underserved communities.
PBM’s attack on independent pharmacies
When you look at the original purpose of PBM – processing prescription claims and saving employers the trouble of dealing with paper claims and receipts – the value of PBM seems clear and essential. Since its introduction in the 1960s, PBMs have moved from claims processing to more complex functions such as retail, mail order and specialty pricing and access, prescription management, rebates, and drug use review. Combined with years of mergers and acquisitions, we now have a system in which three PBMs control 80% of the prescription drug market. The three PBMs now own their own pharmacies and have ties to major insurers, leading many critics to claim that the PBMs acted as monopolies and used that power to drive independent pharmacies out of the prescription drug market.
Before deciding not to investigate PBM, the FTC invited independent pharmacies to submit examples of abusive PBM practices. The response was overwhelming, and at one point, a flood of submissions brought down the FTC’s website.I would encourage you to visit the FTC’s Place Review these PBM abuse stories to fully understand what independent pharmacists have to deal with every day. Here are a few examples from the testimony:
- A generationIn my pharmacy, after 10 years of working with a beloved patient, I found that due to these [GER] Fee, her apparent profit on 393 prescriptions a year is not the $2,000 the claim transmission would suggest. But it’s actually a loss of $2,000 a year. This is due to the so-called Universal Effective Rate, a PBM financial engineering strategy that I now know a lot more than I want to know. While I was trying to make the pharmacy financially sustainable while continuing to serve this patient, she became frustrated and left our pharmacy and never came back. GER, despite its boring shield, comes at a price in damaging the relationship between the healing pharmacist and the patient.
- I am the owner of two pharmacies in rural New Mexico and we have been serving the community for the past 50 years. The contract negotiations when I bought the pharmacy two years ago were astronomical. No phone calls, just emails. After going back and forth throughout the year, I received three cease and desist letters. Two threats of lawsuits. My patients have received multiple letters. Three letters to my patients telling them that they need to transfer prescriptions immediately because I am not contracted. that is not real. After a full year, they finally gave me 25 cents instead of 0 cents, because that was part of what I was fighting for in that contract. just part of it.I ended up having to sign a 20-point gag order to make sure I didn’t further damage their reputation, just to provide care to my patients
Given these stories, one would expect the FTC to step in and investigate PBM. Responding to criticism that the FTC chose not to, FTC Commissioner Noah J. Phillips said the proposed investigation was not clearly defined and that he would support a clearer and “rigorous” look at PBM practices. This “rigorous” survey is the most popular and hopefully it will take place sometime this year.
Solution: Start asking tough questions
While we await government action, perhaps now is the time for program sponsors and their members to act. Most Americans receive health care as an employee benefit through their employer. Employers who are plan sponsors and employees who are plan members provide funds to pay prescriptions. PBMs don’t pay for prescriptions, but they have created a complex system in which they can obscure the flow of funds and hinder payers’ ability to track and understand how PBM practices often fail to provide fair compensation to independent pharmacists. Asking PBMs some tough questions may help illuminate and drive much-needed change.
For example, plan sponsors may want to consider sitting down with their brokers and advisors and asking what they can do to ensure the survival of independent pharmacies. Make it clear that you want to control costs, but do that without driving independent pharmacies out of the local communities where employees work. Instruct your RFP advisor to: (1) invite not only the Big 3 PBMs, but PBMs committed to providing transparency and fair pricing for independent pharmacies; (2) update the standard RFP to ask a series of questions that require PBMs to disclose their pricing practices. Ask PBM directly if it values independent pharmacies and ask PBM to detail the steps it takes to ensure that the price it pays the pharmacy with your money is a fair price that does result in underwater payments after any spread pricing or rebates. For those PBMs who own a pharmacy, ask if they pay the independent pharmacy the same price they pay their pharmacy, and what steps the independent pharmacy must complete to fill your plan members (assuming they are even allowed to do so).
On the other hand, plan members can visit their local independent pharmacy and consider transferring their prescriptions to that pharmacy. By shopping locally, program members gain access to trusted and talented healthcare providers while helping to maintain the uniqueness of their local community.
Source: Illustration, Getty Images
