When CVS went into the pharmacy benefits management (PBM) business it seemed to me to be a conflict of interest–they’re running a business that negotiates and determines how much gets paid to pharmacies.\u00a0 \u00a0Wouldn’t that be like your cable company also owning the TV stations it controls and deciding how much to charge different cable companies for their content??<\/p>\n
The author of the article below agrees and even cites examples where they have been paying less to independent pharmacies, causing them to lose money and eventually sell their files to CVS.\u00a0 \u00a0There has been talk about the government getting involved in regulating the PBM’s to put a stop to this, so it will be interesting to see if that happens.<\/p>\n
Source:\u00a0 The American Prospect<\/a><\/p>\n When the CVS drug chain announced its proposed merger with Aetna, some health experts offered a sliver of optimism. Combining elements of the medical supply chain could increase efficiency for patients, they reasoned, and eliminate some of the middlemen that make health care so expensive.<\/em><\/p>\n But recent allegations about CVS trying to put independent pharmacists out of business should put an end to this happy talk. CVS\u2019s existing combination of a pharmacy (which dispenses drugs) and a pharmacy benefits manager (which reimburses other pharmacists for dispensing drugs) is a disaster for competition and access, particularly in underserved communities. Adding a health insurer like Aetna would further concentrate market power and narrow the networks people depend upon for medical care.<\/em><\/p>\n As first reported by the subscription-based outlet\u00a0The Capitol Forum, near the end of October, right around when CVS\/Aetna negotiations were\u00a0first disclosed<\/a>, independent pharmacists began to notice significant cuts to reimbursement rates for prescription drugs on plans managed by CVS Caremark, the nation\u2019s second-largest pharmacy benefit manager (PBM).<\/em><\/p>\n A PBM negotiates with drug companies over prices on behalf of health plans, and then pays back pharmacies when patients use their drug benefit to purchase the medications. PBMs set reimbursement prices at their discretion, through maximum allowable cost (or MAC) lists that vary from pharmacy to pharmacy. A pharmacist often doesn\u2019t know what reimbursement they\u2019ll receive on a particular prescription until the moment they ring up a sale. So CVS Caremark, manager of tens of millions of individual drug benefits and also a pharmacy, sets their competitors\u2019 profit margins, while gaining access to all their sales records. In plain English, this is a conflict of interest. And since late October, the squeeze has been on.<\/em><\/p>\n The CVS reimbursement cuts were concentrated in Medicaid managed-care plans, according to Doug Hoey, president of the National Community Pharmacists Association. \u201cPBMs are constantly squeezing on reimbursement, but these were at a magnitude not seen before,\u201d Hoey explained. An example in the\u00a0Capitol Forumstory stated, \u201cone pharmacy went from earning $41.63 for selling Metronidazole\u2014an antibiotic used to treat bacterial infections\u2014to losing $72.27 per sale of the treatment.\u201d<\/em><\/p>\n Some of the most severe cuts, Hoey noted, were to generic Narcan, an emergency treatment for opioid overdoses, and generic Tamiflu, a critical treatment during one of the\u00a0worst flu seasons<\/a>\u00a0in recent memory. \u201cPayments for generic Tamiflu are $50 to $60 below the cost of acquisition by some accounts,\u201d Hoey maintained.<\/em><\/p>\n At the same time CVS Caremark was slashing reimbursement rates, its acquisitions department sent letters to the independent pharmacists, inquiring about buying their stores. \u201cI know what independents are experiencing right now: declining reimbursements, increasing costs, a more complex regulatory environment,\u201d read one letter. \u201cMounting challenges like these make selling your store to CVS Pharmacy an attractive and practical option.\u201d<\/em><\/p>\n Other pharmacy chains like Walgreens and Rite Aid periodically send letters asking independents if they want to sell out. But left unsaid in CVS\u2019s letter is their role in the declining reimbursements. In a statement to\u00a0The Capitol Forum, CVS insisted that their pharmacy acquisition program and PBM business are \u201ccompletely unrelated\u201d with \u201cstringent firewall protections.\u201d But the solicitations, on the heels of actions by the parent company that threaten independent pharmacists\u2019 livelihoods, are beyond suspicious. Firewall or no, CVS is a source of the squeeze.<\/em><\/p>\n It\u2019s unclear why CVS\u2019s reimbursement cuts mostly hit Medicaid managed-care. But a disproportionate share of independent pharmacist income comes from such plans. Over 90 percent of independents\u2019 revenue comes from prescription drug sales, unlike full-service chains that feature more consumer products for sale. And over half of all of those prescriptions are from Medicare Part D and Medicaid.<\/em><\/p>\n Independent pharmacies are typically located in rural and underserved communities, which have higher Medicare and Medicaid populations. So these particular reimbursement trims really threaten independent pharmacists\u2019 ability to survive. One pharmacist reported to the independent pharmacists\u2019 association that his gross revenue increased 22 percent last year but he still lost money, primarily because of the reimbursement cuts.<\/em><\/p>\n The Medicaid managed care plans are typically negotiated with states on a capitated rate, meaning that CVS agrees to manage a patient\u2019s health needs for a set amount per month. If drug costs stay low\u2014like through cutting reimbursement rates to pharmacies\u2014CVS\u2019s profit increases. And because state costs cannot rise above the per capita, they pay less attention to managed care plan maneuvering.<\/em><\/p>\n The squeeze and buy scheme also fits with CVS\u2019s plan to deploy \u201cMinute Clinics\u201d at their pharmacies across the country. These walk-in clinics treat minor illnesses and injuries, administer vaccinations and injections, and give physicals. Matching CVS with a major insurer like Aetna can make its Minute Clinics dominant, especially if they bankrupt or take over competing pharmacies in smaller communities. Once established, CVS\/Aetna can steer patients with its insurance and drug benefits to its own clinics and pharmacies. The risk is that profits for the conglomerate will take precedence over the best interest of the patient. \u201cIt locks in the patient even more,\u201d said Doug Hoey.<\/em><\/p>\n This vertical integration has become epidemic across the health-care sector.\u00a0<\/span>Four of the largest nonprofit hospitals are\u00a0launching a generic drug company<\/a>. Insurer UnitedHealth, which also owns a large PBM, just bought a bunch of\u00a0primary and urgent care clinics<\/a>from DaVita. We\u2019re moving to a system where your insurer will dictate your providers, your drugs, and your treatment. And with the new tax law giving health care firms\u00a0ready cash for mergers and acquisitions<\/a>, that reality could accelerate.<\/em><\/p>\n This has consequences for choice and access. One pharmacist from Brooklyn cited by Hoey reported Medicaid patients lining up outside his store every morning. The pharmacist presumed that CVS competitors like Walgreens and Rite Aid stopped filling prescriptions on CVS\u2019s managed-care plans, because of the low reimbursement rates. Normally a line out the door is a welcome sight for a small businessman, but when each individual in line represents a net loss, it\u2019s a nightmare. \u201cAt some point he has to tell them it\u2019s cash, or I can\u2019t help you because I can\u2019t lose $50 a prescription,\u201d Hoey said.<\/em><\/p>\n Independent pharmacists in several states have complained to state regulators about the squeeze and buy tactics. The\u00a0Maryland Department of Insurance\u00a0<\/a>confirmed to me that the complaints are under investigation. This could complicate the CVS\/Aetna merger in states where insurance commissioners have the jurisdiction to review the deal.<\/em><\/p>\n That would be completely appropriate. The squeeze and buy scheme strongly suggests anti-competitive conduct. Adding an insurer to CVS\u2019s pharmacy\/PBM roll-up would give them more ability to leverage captive patients at the expense of rivals. \u201cPeople probably have no idea how much power resides within these companies,\u201d Hoey said. \u201cMore needs to happen to rein in these guys.\u201d<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" When CVS went into the pharmacy benefits management (PBM) business it seemed to me to be a conflict of interest–they’re running a business that negotiates and determines how much gets paid to pharmacies.\u00a0 \u00a0Wouldn’t that be like your cable company also owning the TV stations it controls and deciding how much to charge different cable Read More…<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2396","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/re-tales.net\/index.php?rest_route=\/wp\/v2\/posts\/2396","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/re-tales.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/re-tales.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/re-tales.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/re-tales.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2396"}],"version-history":[{"count":2,"href":"https:\/\/re-tales.net\/index.php?rest_route=\/wp\/v2\/posts\/2396\/revisions"}],"predecessor-version":[{"id":2398,"href":"https:\/\/re-tales.net\/index.php?rest_route=\/wp\/v2\/posts\/2396\/revisions\/2398"}],"wp:attachment":[{"href":"https:\/\/re-tales.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2396"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/re-tales.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2396"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/re-tales.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2396"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}