NCPA Executive Update

NCPA Executive Update delivers insights on legislative, regulatory, policy, and industry developments from NCPA CEO B. Douglas Hoey, Pharmacist, MBA, to NCPA members and pharmacy leaders every Friday.

Rattled Cages | NCPA Executive Update | February 10, 2017

by NCPA | Feb 10, 2017

February 10, 2017

Rattled Cages

Dear Colleague,

Doug Hoey

This is what independent community pharmacy is up against: "an aggressive strategy to engage the new Administration and counter efforts to undermine PBMs' ability to reduce costs for payers and consumers."

That's the first sentence of a 2,700-word, six-point memo purportedly from the CEO of the PBM/mail order industry lobby, the Pharmaceutical Care Management Association. The memo was apparently leaked to the website BuzzFeed News where its story bore the cheeky headline, "A Lobbying Group Is Freaking Out Over What Trump May Do To Drug Prices."

The PBM industry appears rattled, and it has every reason to be. After decades of flying below the radar, unknown to most and understood by few, PBMs are in the crosshairs for their role in increasing and benefitting from ever-higher drug prices.

There's rich irony here. After years of a symbiotic relationship—rebates from the drug companies in exchange for PBM formulary placement—the manufacturers seem to have finally had enough of being made the scapegoat for rising prescription drug prices.

Just last week, Merck revealed that it had increased its list prices in 2016 by an average of 9.6%, but only kept an average net price increase of 5.5%. Merck also revealed that the average discount from list prices for its products rose to 40.9% in 2016 from 27.3% in 2010.

GlaxoSmithKline's CEO Andrew Witty cited an industry-sponsored report that out of every $100 of a drug's list price, only two-thirds ends up back with the drug maker. According to a Bloomberg story, Witty went on to say much of the rest goes to "non-innovators in a system which thinks it's paying high prices for innovation."

Other drug companies have released information that similarly begs the question, "Where are those discounts going?" The list of suspects is short and the PBMs' aggressive strategy suggests a guilty conscience.

The PBMs' biggest fear is likely that President Trump will keep his campaign promise to have Medicare (or maybe himself) negotiate with drug companies on prices. Government negotiations mean a much more limited role for PBMs, perhaps confined to claims management and processing.

The air of uncertainty that prevails in the capital was captured in the memo: "The sense that this President could make any decision, at any time, for any reason, on any issue is rattling industries in the health care sector and beyond."

As I read the details of the memo, whose authenticity has not been challenged by PCMA, this point jumped out at me:

"#4: Digital Grassroots Targeting of Key Congressional Leaders

"Since Q4, we have recruited nearly 50,000 new grassroots allies. Currently, our grassroots platform, the Affordable Pharmacy Action Network, (APAN) features more than 73,000 recruited allies who can be leveraged as needed to help drive our message in key districts around the country."

Pharmacy colleagues, we must rally our greatest strength—independent community pharmacy's true, deep grassroots support in communities in every state and across all 435 congressional districts. I don't know if PCMA's "new grassroots allies" are real or Astroturf. But I do know that you must get personally involved in advocacy action to combat them.

One way is to join hundreds of your colleagues at the NCPA Congressional Pharmacy Fly-In April 26-27 in Washington, D.C. Register now online or call 1-800-544-7447 and talk to your legislators about our solutions to lower drug where the middleman is a claims processor, like they were originally charged with where pharmacists are unchained to use their expertise to help lower overall health care costs.

Like our opponents, NCPA is on Capitol Hill every day contacting allies and cultivating new ones. But a face-to-face visitor from home gets a congressional office's attention like no other.

We have changed the format for this year's legislative meeting to make it more accessible to as many pharmacists as possible. The effectiveness of your visit and preserving your time and money are our top priorities.

Because of the new format of this year's event, the Hilton Alexandria will be the anchor hotel. Attendees, however, have the freedom to pick a hotel that fits with their cost and convenience comfort. We list some options on the NCPA website. We also have reduced the registration fee from $350 to $95 to further make it more accessible for more pharmacy owners

Preliminary Schedule:

Wednesday, April 26

2:30 p.m.: Capitol Hill visits begin (transportation provided to Capitol Hill from Hilton Alexandria)

6 - 7:30 p.m.: Capitol Hill Congressional Reception (transportation provided back to Hilton Alexandria)

Thursday, April 27

7 - 8:15 a.m.: NCPA Sal D'Angelo Breakfast, Hilton Alexandria (Guest speaker, USA TODAY reporter Jayne O'Donnell)

9:30 a.m.: Kick-off and member briefing on Capitol Hill, Capitol Visitors Center (transportation provided to Capitol Hill from Hilton Alexandria)

10:30 a.m.: Hill visits begin

*Schedule and timing is subject to change.

Change is in the air that could fall our way or go against us. Help us make sure it goes the right way.

Doug Hoey