News Releases

NCPA: Fla. Report a Searing Indictment of PBM Greed in Medicaid

by NCPA | Jan 30, 2020

Neighborhood pharmacies urge accountability, action to rein in PBMs

ALEXANDRIA, Va. ((Jan. 30, 2019) - A report released today by the Florida Pharmacy Association and American Pharmacy Cooperative, Inc. paints a vivid picture of how pharmacy benefit managers and Medicaid managed care organizations are pushing prescriptions and taxpayer dollars to pharmacies they own or control. The ultimate results, says the National Community Pharmacists Association, are higher costs, fewer choices for patients, and a growing number of neighborhood pharmacies that are struggling to survive.

"The abuses and manipulations uncovered in this report are staggering. PBMs are steering patients to their affiliated pharmacies and, once there, are paying themselves much more than they are paying non-affiliated pharmacies," says NCPA CEO B. Douglas Hoey, pharmacist, MBA. "If PBMs are doing this in Florida – and getting away with it so far – you can bet they are doing similar things in other states too.

"This report reinforces the need for Congress to reform Medicaid managed care. It's also a bright red flag for policymakers in every state to scrutinize their respective Medicaid programs for this kind of anti-competitive, anti-patient behavior," Hoey continued. "To community pharmacists, it's as clear as day that PBMs serve their own interests, not the interests of patients or taxpayers. This report underscores that PBMs — responsible for managing the prescription drug benefit for the Medicaid population — are the judge, jury, and executioner by steering patients into self-owned or affiliated pharmacies and away from competitors."

According to the report, which utilizes data analyzed by the 3 Axis Advisors health care research firm, patients are being coaxed to pharmacies owned by or affiliated with the PBMs. Conveniently, those pharmacies are authorized to dispense so-called specialty drugs, which are among the most expensive. In fact, the report shows that payments to these affiliated pharmacies "far exceed" the cost to dispense the drugs and that pricing policies are set differently, often to the advantage of affiliated pharmacies. The report exposes "many examples" of "how MCOs and PBMs appear to be using their control in managed care to incrementally shift dollars to their affiliated companies." For example:

  • Prescriptions allowed by PBMs to be dispensed by non-affiliated retail pharmacies are being reimbursed between only $2-4 per medication. Meanwhile, "specialty" medications being routed by PBMs to their affiliated or specialty pharmacies are being reimbursed up to $200 per medication.

  • Five specialty pharmacies, all affiliated with an MCO or PBM, collected 28 percent of the available "profit" paid to all providers, despite only dispensing 0.4 percent of all managed care claims.

  • Pharmacy reimbursements for dispensing medications went down to $2.72 in 2018 from $7.70 in 2014, despite the state determining that it costs pharmacies $10.24 to dispense a prescription.

  • Average reimbursement for high margin generic drugs was $93.84 per claim versus $1.58 per claim on all other generics, disadvantaging those pharmacies not given access to the high margin drugs by the PBMs.

"The market is being rigged by the PBMs against community pharmacies and their patients," Hoey said. "Despite that, surveys of pharmacies repeatedly demonstrate that independently owned pharmacies lead the pack in pleasing consumers. We hope that Florida will soon join the ranks of states acting to regulate the PBMs or even carve them out of health care programs altogether. We're eager to continue assisting with and fighting to advance pro-patient, pro-taxpayer, and pro-pharmacy efforts in Florida and throughout the country."

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Founded in 1898, the National Community Pharmacists Association is the voice for the community pharmacist, representing 22,000 pharmacies that employ 250,000 individuals nationwide. Community pharmacies are rooted in the communities where they are located and are among America's most accessible health care providers. To learn more, visit www.ncpanet.org.