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Independent pharmacists in Arkansas are mad as hell at CVS Caremark, and they’re not going to take it anymore.
Starting Jan. 1, CVS Caremark, the pharmacy benefits manager for Arkansas Blue Cross and Blue Shield plans, which covers more than 90 percent of Arkansans, slashed its reimbursement rate for participating pharmacies. The cuts disproportionately affect independent pharmacies, according to Arkansas Pharmacists Association (APA) chief executive Scott Pace.
The group wants CVS Caremark, which is a subsidiary of CVS Health, and Arkansas Blue Cross and Blue Shield to immediately fix the reimbursement rates. The group also is calling for legislation that would provide greater state oversight of all PBMs operating in the state. If Arkansas winds up passing PBM oversight legislation, it could have ripple effects in other states and would affect not only CVS Caremark but also other PBMs like Express Scripts, AllianceRx Walgreens Prime, and UnitedHealth’s Optum Rx.
Iowa, Kentucky, New Mexico, New York, Texas, and West Virginia are currently grappling with similar reimbursement issues, Pace said.
“We think this is an industry-wide problem,” Pace told Bloomberg Law in a Feb. 27 phone call. “It’s a national problem that came to a stark head in Arkansas at the beginning of the year.”
“We need immediate relief and comprehensive oversight of the PBM middlemen,” he said. “It needs to happen yesterday.”
For independent pharmacies, the reimbursement levels are a matter of survival, Pace said. In approximately 20 percent of prescription fills, prescription reimbursement rates are lower than purchase costs, meaning that pharmacies must cover the difference or refuse to fill the prescription.
In Northeastern Arkansas earlier this year, Pace said, a PBM was going to reimburse an independent pharmacy $25 for an anti-nausea suppository prescription that cost the pharmacy $600. The pharmacy couldn’t afford to fill the prescription and had to send the patient elsewhere.
And CVS Caremark has been reimbursing its own retail pharmacy stores at a much higher rate than independent pharmacies, Pace said. Data on CVS’s own website showed CVS paid its own pharmacies substantially more per prescription than it paid independent pharmacies. CVS’s data on 272 claims showed CVS paid its own pharmacies $63.51 more per prescription than independent pharmacies.
“The data blew our minds,” Pace said. “This is an example of blatant self dealing,” he said.
A state law enacted in 2015 prohibits PBMs from paying affiliated pharmacies more than they pay other pharmacies to fill the same prescriptions.
After the APA raised the differing reimbursement rates with Arkansas Blue Cross and Blue Shield, CVS Caremark lowered the rate it paid CVS Health pharmacies, Pace said. But he said CVS Caremark still pays chain drugstores more than it does independent pharmacies for the same prescriptions.
Christine Cramer, senior director of corporate communications of CVS Health in Woonsocket, R.I., said the APA is painting a skewed picture of how CVS Caremark reimburses pharmacies.
“We believe that independent pharmacies in our network are reimbursed fairly and that we are in compliance with state law,” Cramer said in a Feb. 28 email to Bloomberg Law. She said the group “has repeatedly refused to share specific claims data with us to validate their allegations.”
Cramer said CVS would soon introduce a new reimbursement rate for generic prescriptions that would give Arkansas independent pharmacies “generic reimbursement predictability that will balance the need to fairly compensate independent pharmacies while providing a cost-effective benefit for our clients.” The new rate, she said, will reimburse independents in Arkansas at a higher rate than national chains.
Meanwhile, the APA is pushing for CVS and the Blue Cross carriers to come to the table to resolve the reimbursement issue. “We’re optimistic it’s going to happen,” Pace said.
Arkansas Attorney General Leslie Rutledge (R) said investigators and attorneys from the office have requested information from CVS Caremark on the reimbursement issue to see whether reimbursement rate changes trigger provisions of Arkansas’s Deceptive Trade Practices Act.
“The change in reimbursement rates by the pharmacy benefit managers has hurt Arkansans in every community across the state,” Rutledge said in a statement. “Due to these changes, pharmacists are facing tough decisions because the reimbursements do not cover the actual cost of the medications. When public health is threatened, all Arkansans suffer.”
Arkansas Gov. Asa Hutchinson (R) has promised to call a special legislative session to address the pharmacy reimbursement issue, including a legislative proposal that would require the Arkansas Insurance Department to license PBMs and make sure they have robust pharmacy networks, fairly reimburse pharmacies, and don’t favor certain pharmacies over others.
The bill (Senate Resolution 9), currently in draft form, is being sponsored by Rep. Michelle Gray (R) and Sen. Ron Caldwell (R).
While vowing to continue to work closely with state legislators and the state attorney general, CVS said SR 9 “goes well beyond the regulation of PBMs and would eliminate the tools that help lower the cost of prescription drug benefits.”
The Pharmaceutical Care Management Association, a Washington, D.C.-based trade association that represents PBMs, also said the bill would increase prescription drug costs without improving the quality of pharmacy benefits.
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