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.

This pick could change community pharmacy as we know it | NCPA Executive Update | March 22, 2019

by NCPA | Mar 22, 2019

Dear Colleague,

Doug Hoey

March Madness is underway. Millions have filled out their brackets to see how their predictions play out. Duke University, with their NBA lottery pick freshmen, Zion Williamson and R.J. Barrett, are the odds-on favorites. But every year the tournament has major upsets. So, even though most bracketologists are picking Duke as the winner, the eventual champion has to prove it on the court before getting out scissors to cut down the nets.

Last month, HHS released a proposed rule that would remove the safe harbor exemption that allows rebates between PBMs and pharmaceutical manufacturers. As further translation, retroactive pharma rebates to PBMs would go away. Instead, manufacturer price concessions would be given to the patient in the form of lower prescription drug costs at the pharmacy counter. Like so many brackets having Duke as the eventual winner of the NCAA tournament, the conventional wisdom is that this proposed rule will become a final rule. But as in the tournament, we won't know the outcome until the final buzzer.

NCPA advocates changing the pharmacy payment model because the current system is no good for anyone unless you spell your name P-B-M. For everyone else – particularly consumers, taxpayers, plan sponsors, and community pharmacies – the current payment model is complex, cumbersome, confusing, and most of all, covert. Rebates games are a major symptom of the broken payment model, which enables the kind of shell games that encourage higher-priced drugs.

Every group affected – meaning everyone in the pharmacy supply chain – is sorting out how the proposed rule would impact them if it became final. NCPA supports the proposed rebate rule provided the implementation is done properly. For example, if the patient is receiving the benefit of the rebate when they pick up their prescription, how and when does the pharmacy get paid back? It would not be acceptable for the pharmacy to have to wait to receive payment on the discount that the patient received at point of sale. Frankly, cash flow based on the current payment model would not support any additional payment delays.

The comment period on the rebate rule ends on April 8, giving pharmacy owners attending the 2019 NCPA Congressional Pharmacy Fly-In, April 10-11, one more topic to discuss with their legislators. Sometime after that, HHS will decide if the rule will become final. As proposed, it would take effect Jan. 1, 2020 – not coincidentally a presidential election year – an incredibly aggressive timeline for a new policy so disruptive to the current prescription drug pricing model.

NCPA's talented staff of industry veterans, pharmacists, and lawyers has been working hard to game-play how this proposed rebate rule would likely work out if it becomes a final rule. We have actively sought input from industry experts who are your business partners, such as wholesalers, buying groups, PSAOs and more. We are engaging outside experts and also comparing notes with other trade groups who are also trying to sort out what the proposed rule means to their corporate memberships. NCPA's full attention is the impact on our one and only constituent – pharmacy owners.

NCPA is on this and working hard to get to an outcome that improves the current payment model and, at a minimum, helps patients without harming pharmacies.

Best,

Doug Hoey