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.

Perseverance, persistence, and the boiling pot

by NCPA | Nov 30, 2018

Dear Colleague,

Doug Hoey

If you've spent any time in a kitchen, you know what it's like to wait for water to boil. You're all set to cook pasta or boil eggs, and it just seems like you wait forever to see the tiny bubbles form around the edges of the pot.

"A watched pot never boils," they say. But that's not true. Apply slow, steady heat and that simmer will turn to a hearty boil. It might not happen as quickly as you'd like, but patience will pay off in the end.

NCPA's perseverance and persistent lobbying paid dividends this week when the Centers for Medicare and Medicaid Services released its proposed drug pricing rule, a significant part of which calls for accounting for pharmacy price concessions in Part D, also known as pharmacy DIR fees, at the point of sale rather than clawing back thousands of dollars from pharmacies weeks or months after the prescription has been filled. (Here's a brief NCPA analysis of the proposed rule, and here's our news release about it.)

NCPA's repeated message to CMS about take-it-or-leave-it contracts was reflected in CMS' proposed rule, which stated:

    "The one-sided nature of the pharmacy payment arrangements that currently exist also creates competition concerns by discouraging independent pharmacies from participating in a plan's network and thereby increasing market share for the sponsors' or PBMs' own pharmacies."

Clearly, they've heard us.

NCPA members have repeatedly cited that the unpredictability of pharmacy DIR fees makes operating a small business difficult. Last year in NCPA's Member Priorities Survey, 96.7 percent of members said that "eliminating retroactive pharmacy DIR fees" was one of their top three priorities. This proposed rule provides that relief. NCPA will continue to fight for elimination of all pharmacy DIR fees in the Part D program, although that battle will largely be waged on the contracting side when pharmacy owners consider the contracts they or their representatives sign with PBMs.

This rule is a big win for community pharmacy, but it's still only a proposed rule, and therefore subject to amendment based on public input during the comment period. We're not just sitting back. We'll keep this pot boiling. We'll be meeting with policymakers, relying on our Congressional champions, using social media, convening and coordinating with other community pharmacy supporters, and more. Importantly, we'll be asking for your help, too. Stay tuned; we'll share shortly what you can do to support the proposed rule.

Also, this week, CVS-Aetna announced completion of its merger deal. Unfortunately, based on the last several decades, that was the outcome experts predicted. In the past 40 years, the federal government has rarely found a vertical merger it didn't approve. Still, reports just this morning say U.S. District Judge Richard Leon, who must give final approval of the deal, this week excoriated Justice Department lawyers for keeping him in the dark and demanded that they slow down while he considers antitrust concerns about the deal. Whether his comments are a hiccup or a real threat to the deal remains to be seen.

From the moment the proposed merger was announced last year, NCPA expressed grave concerns about the negative impacts a combined CVS-Aetna would have on competition, pharmacy patients, payers, and locally owned pharmacies. Through much of this year, we pursued an aggressive strategy of behind-the-scenes advocacy to urge key policymakers to oppose the deal. It was a more productive strategy, in our estimation, than simply stamping our foot, shouting, and tweeting.

We discussed our concerns in dozens of conversations with federal and state regulators, making the case for why we believe the merger is not in the best interests of patients, providers, or plan sponsors – including the government. 

Despite requiring some divestitures related to Part D plans, what seems to be the government's current conventional wisdom that vertical integration is procompetitive prevailed. Still, the conversations opened dialogue and significant interest about the one-sided current pharmacy payment model and why it needs to be reformed, particularly with respect to the role that PBMs play in the market. For example, late last week, 32 states and the District of Columbia signed on to an amicus brief in support of the state of Arkansas' appeal to the Supreme Court of a lower court decision striking down its common sense PBM transparency legislation.

Additionally, a number of states investigated the merger and a few chose not to allow the deal to proceed unimpeded. State regulators in California, Georgia, and New York extracted concessions – some of them highly favorable for community pharmacies – from CVS in return for merger approval. State pharmacy associations in those states were instrumental in producing the pharmacy- and patient-friendly results.

All in all, persistence won the week. CMS heard us, and eliminating retroactive pharmacy DIR fees became a real possibility. Plus, a health care merger that was a lock from the beginning had to stop and make some key concessions – concessions that will become a helpful precedent for other states attempting to regulate PBMs and pass legislation.

The pot is boiling. You can bet we'll keep applying heat.

Doug Hoey