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.

Pharmacy payment reform seeds are planted. Let's watch them bloom. | NCPA Executive Update | June 1, 2018

by NCPA | Jun 01, 2018

Dear Colleague,

Doug Hoey

If you are a regular reader of NCPA's communications, this week's blistering Wall Street Journal editorial ("Why CVS Loves Obamacare") about PBM exploits was old news. However, for many of the WSJ's 2.5 million subscribers, learning how PBMs are contributing to higher prescription drug costs in states was a newsflash.

Here are a few of the juiciest tidbits from the editorial:

  • "Yet CVS appears to be billing the state for far more than what it is paying pharmacies, driving up taxpayer costs."

  • "CVS's actual drug payments aren't transparent to the state or MCOs."

  • "CVS is also attempting to drive independent pharmacists out of business and expand its retail market share."

  • "Data from fully-insured commercial health plans showed that CVS paid itself over $60 on average more per prescription than independent pharmacists."

The state of Ohio had already taken some positive steps to gain better insight into how their taxpayer dollars were being spent. Effective April 1, 2018, Ohio Medicaid amended contracts with its managed care plans to require PBMs to disclose the amount they pay pharmacies in addition to the amount the plans pay them. Ohio Medicaid will now have the ability to review all financial terms and agreements for payment between managed care plans and PBMs.

The WSJ editorial came the same week we learned of an endorsement from AARP's California chapter in support of PBM legislation in California (Assembly Bill 315) that would require PBMs to register with the state. It also includes language requiring PBMs to periodically disclose to a purchaser, at the purchaser's request, certain information such as drug acquisition cost, rebates received from pharmaceutical manufacturers, and rates negotiated with pharmacies.

Add to that President Trump's and HHS Secretary Alex Azar's release of the Trump administration's "American Patients First" blueprint for lower prices a few weeks ago, which echoed comments NCPA has been making for years. Then, add the "60 Minutes" segment about the runaway prescription drug budget in the city of Rockford, Ill., coupled with Express Script's statement that it had "no contractual obligation" to control costs. Put them together, and in May 2018, the seeds for taxpayer and plan sponsor transparency are planted and ready for watering.

A prescription model where plan sponsors (employers, taxpayers, and individuals buying health insurance) know where their dollars are going is a necessary step to maximize value from the trillions of dollars spent on health care. That doesn't necessarily translate into pharmacies being paid more or even fairly, but it's a step in that direction.

Not surprisingly, being paid fairly for the value we provide is what NCPA and its owner members will be talking about at the NCPA 2018 Annual Convention, Oct. 6-9, in Boston. (Consider this a nudge from me for you to go register now at the early-bird rate.)

Working together to improve quality of care, purchase products as efficiently as possible, and contract negotiations based on the value community pharmacies offer (e.g. CPESN® USA) are what will make those seeds eventually blossom.

Doug Hoey