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Medicare D Reform for Independent Retail Pharmacies

Medicare D Reform for Independent Retail Pharmacies

Medicare D Reform for Independent Retail Pharmacies:

Pharmacy Benefit Manager (PBM) companies have become a major concern for the independent Pharmacy businesses and owners that we have as clients. We at HCC fully support independent retail Pharmacies and everyone can agree that they are a vital part of every community. However, some recent policies and rules generated by several PBMs are seen as a threat to the operation and survival of independent community Pharmacies throughout the country.

The PBM essentially acts as a third-party administrator (TPA) regarding prescription drug programs. These plans include Medicare Part D, as well as many commercial corporate health plans, self insured plans, and for many government employee plans (on both the State and Federal levels). According to APhA’s (The American Pharmacists Association) description: “PBMs are primarily responsible for developing and maintaining the formulary, contracting with pharmacies, negotiating discounts and rebates with drug manufacturers, and processing and paying prescription drug claims. For the most part, they work with self-insured companies and government programs striving to maintain or reduce the pharmacy expenditures of the plan while concurrently trying to improve health care outcomes.” It is estimated that nearly 300 million people in the United States are currently affected by a PBM managing their pharmacy benefits. It must also be noted that there are currently about two dozen existing “major” PBMs (although a total as high as 60 has been referenced several times), but that the 3 “Super PBMs” account for roughly 80% of the entire market  and have almost 200 million patients enrolled.
The 3 “Super PBMs” are:

1. Express Scripts
2. CVS Health (formerly CVS Caremark)
3. United Health (also referred to as OptumRx & Catamaran)

The intent of this post is not to build a case against PBMs, but to point out that perhaps some reform is necessary for independent community Pharmacies to be able to make a profit and continue to thrive in our communities. The intent of PBMs is to maximize the purchasing power for large groups of patients, resulting in a reduction in their prescription drug prices. This is accomplished through volume buying, pharmaceutical manufacturer rebates and pricing discounts at participating retail pharmacies and drug stores. So far no independent study has shown this to be happening. A study often cited by PBMs in 2015 by CVS claimed a reduction of 6.8% for its members, but so far this has not been independently substantiated. The fact that in 2015 there were seven lawsuits filed against PBMs (for antitrust violations, fraud and criminal negligence) has not helped the situation. Additionally, at a 2014 ERISA hearing (Employee Retirement Income Security Act) it was clearly pointed out that PBMs in many instances pose “conflicts of interest” regarding providing consumers reductions in their prescription drug spending.

Now a Pharmacist is taking some action by initiating a Medicare D Reform Petition. Jae K. Shin, the managing pharmacist of Jays Drug and director of Jays Diabetes Education Center in the greater Los Angeles is asking all Pharmacists to officially go on record and support his petition. Although his email in it’s entirety is too long to include, here are the foundation points that Mr. Shin provided:
*Please see where his entire email is posted.

1. PBM companies reimburse rate are extremely low, be reflected fair pharmacist dispensing fee.
2. Pharmacy dispensing fee should calculate by AWP, not Direct Price(partial items are not returnable and there are many medication need special care with cost)
3. Pharmacy does not need unreasonable accreditation or attestation.
4. PBM should not take any amount of fund from pharmacy account, such as Dir or other weird rank order.
5. PBM company should not treat differently with independent pharmacy, such as preferred plan which is no copay if they go their own chain pharmacy.
6. Pharmacy are no need accreditation for special drugs.
7. Pharmacy wants eliminate abusive pharmacy audit from PBM companies
8. Pharmacy want to return the high cost of old generic drugs which raise the price recent years.(one of old generic drug Colchicine 0.6mg was $5.00 for 100 tablet, not name changed same medication are $200.00 for 30 tablet.)
9. Pharmacy want to reform Medicare D plan more simple and better understanding module. The coverage should apply equally to individual recipient.
10. How pharmacy chain can have PBM company. (If chain pharmacy doesn’t own PBM company, then chain pharmacy fight for low reimbursement and also this PBM company no need to treat differently for their patient to go their own chain pharmacy.)
If you support this petition, Mr. Shin asks that you fill out the following information and send it to him via e-mail ( or fax it to him at (805) 388-5889. He also provided his phone number for contacting him: (323) 810-3360.

Name of Pharmacist:
Name of Pharmacy:
Telephone No:
Fax No:
E-mail address, if available:

As always, please contact us here at HCC if you have any questions regarding this. With over 27 years in the Pharmacy Consulting business, HCC can assist with expert advice in any area of your pharmacy business or practice. We urge you to contact us today to see how our Pharmacy Consulting services can help. With a full-time staff of in-house Pharmacy Consultant specialists, HCC can answer any questions that you may have in all Pharmacy settings. Contact us online or call us today at 800-642-1652 for a free consultation.

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