Today an uneven playing field shortchanges local pharmacists and denies patients and health plans the benefits of true pharmacy competition. Small business community pharmacies receive one-sided, take-it-or-leave-it contracts from major corporations like PBMs. The independent pharmacist may be forced to either dispense drugs at a financial loss or lose access to many longtime patients. Current antitrust laws prevent independent pharmacies from collectively negotiating contracts, as opposed to large pharmacy chains with greater leverage.
"Right now, if I say 'I'd like to negotiate,' the PBM will tell me the customers under their plan can go to the Walgreens down the street," Holly Whitcomb Henry, RPh, owner of Rxtra Care pharmacy in Seattle and past president of NCPA told CNNMoney.com. Brian Caswell, of Wolkar Drug in Baxter Springs, Kan. added, "The contracts have become egregious, with 15 to 20 pages of legal documents and red tape that we can't understand. As the PBM industry has shrunk to a handful of companies, they take more and more and give us less and less."
Some common, controversial PBM contract provisions include:
Experts believe that this practice is very widespread and represents several percentage points in undisclosed PBM revenues, costing payers tens of millions of dollars annually.
As Linda Cahn of Pharmacy Benefit Consultants writes in Managed Care, "...when it is in PBMs' interests to classify more drugs as generics, they magically recharacterize the drugs as generics. For example, PBMs wanting to make their generic substitution rate appear greater reclassify drugs that they invoiced as brands as generics when calculating the number of generic drugs dispensed. Similarly, if a contract calls for a PBM to pay a specified rebate 'per brand drug claim,' it can reclassify drugs that were invoiced as brands as generics for the purpose of calculating rebates..."
According to a 2011 survey of 1,850 community pharmacists, excessive PBM audits are decreasing the time pharmacists can devote to patients. Illustrating the compliance burden, 62 percent of respondents considered the audit requirements to be completely inconsistent from one health plan to another; 48 percent of pharmacists report auditors asking them to justify claims that are two years old or older; and, of the pharmacists who report having appealed a PBM audit, 81 percent describe that process as burdensome and unsatisfactory.
PBMs can retain a significant or all "recoveries" from PBM-conducted retail pharmacy audits. The revenue and profit stream from pharmacy audits is not always shared. For more, read "Community Pharmacists Describe PBM Audit and Reimbursement Practices That Undermine Patient Care, Local Jobs."
For example, during implementation of the Medicare Part D prescription drug benefit in 2005-2006, independent community pharmacists spent countless, uncompensated hours helping millions of seniors resolve problems utilizing their new prescription drug benefit. Even as pharmacists were helping these seniors, they reported having to wait many weeks for reimbursement for their prescription drug and dispensing costs from the sponsors of the Medicare Part D plans, mainly the major pharmacy benefit managers or PBMs. As a result, during this period hundreds of community pharmacies closed.
Recognizing this, Congress enacted a bipartisan provision in 2008 to require timely, 14-day reimbursement by Part D plans to keep locally owned pharmacies whole. However, many pharmacists allege that the practice continues today in other health plans.
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