NCPA Urges Congress to Preserve Patient Access, Level the Playing Field in Pharmacy Contract Negotiations



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Alexandria, Va. - March 29, 2012

The National Community Pharmacists Association (NCPA) submitted written comments today to the U.S. House Judiciary Committee Subcommittee on Intellectual Property, Competition, and the Internet hearing on H.R. 1946, the Preserving Our Hometown Independent Pharmacies Act, in support of the bill.

In addition, NCPA commends two of its members—Renardo Gray, owner of Westside Pharmacy of Detroit, and Mike James, owner of Person Street Pharmacy in Raleigh, N.C.—who testified in support of H.R. 1946. They provided their personal, first-hand perspectives on why the bill is needed and why the status quo is untenable.

H.R. 1946, which was introduced by Rep. Tom Marino (R-Pa.), allows independent community pharmacy owners to collectively negotiate the terms and conditions of contracts with pharmacy benefit managers (PBMs). It now has more than 30 bipartisan co-sponsors. The current system precludes collective negotiations, oftentimes forcing independent community pharmacies to either accept onerous contract terms or be excluded from the pharmacy insurance networks patients use. The bill seeks to level the playing field.

In its statement, NCPA describes the problem and why a solution is needed by saying, "While PBMs make record profits, independent pharmacies are being driven out of business, and patients and communities suffer. Ultimately, the cost of the imbalance of negotiating power is borne by us all—by patients, by employers, by health plans—both public and private—and by taxpayers. This legislation would be a response, among others, to this significant market imbalance and its enactment will benefit both consumers and competition."

NCPA continues: "The purpose of our antitrust laws is to help consumers by encouraging competition in the marketplace. Ironically, however, in the pharmacy segment of the economy, the antitrust laws are having the opposite effect by enabling PBMs to exert unchecked market power. At present, independent pharmacies are barred from joining together to negotiate binding contracts with PBMs in the way large chains can. H.R. 1946 would help address this inequity by allowing independent pharmacies... that represent no more than 25% of all retail pharmacies in a Medicare Part D prescription drug plan to aggregate to negotiate their third-party contracts."

Other reasons given for supporting passage of H.R. 1946 are:

  • The lack of transparency in the contracts PBMs offer, such as the mysterious maximum allowable costs (MAC) lists.
  • PBMs' pursuit of revenue through overly-aggressively and egregious audits of pharmacies based on minor technicalities.
  • The current avenues for independent community pharmacies to consolidate negotiating leverage are limited to entities known as pharmacy services administrative organizations (PSAOs), which are geared more to managing the flow of information between their small business clients and PBMs.
  • The growing consolidation of the PBM market as exemplified by the proposed merger of Express Scripts and Medco Health Solutions, which will only increase their leverage over independent community pharmacies.

The National Community Pharmacists Association (NCPA®) represents the interests of America's community pharmacists, including the owners of more than 23,000 independent community pharmacies. Together they represent a $93 billion health care marketplace, dispense nearly 40% of all retail prescriptions, and employ more than 315,000 people, including 62,400 pharmacists. Independent community pharmacists are readily accessible medication experts who can help lower health care spending. They are committed to maximizing the appropriate use of lower-cost generic drugs and reducing the estimated $290 billion that is wasted annually by improper medication use. To learn more go to www.ncpanet.org or read NCPA's blog, The Dose, at http://ncpanet.wordpress.com.

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