Independent Pharmacies Say Drug Middlemen Are Making Them Sick

Independent pharmacy groups in several states are sick of the low insurance reimbursement rates that middlemen, known as pharmacy benefit managers, or PBMs, pay them after drugs are dispensed and they’re pushing for greater oversight of the drug middlemen.

PBMs include companies like Express Scripts Holding Co., CVS Health Corp.’s Caremark, and UnitedHealth Group Inc.’s OptumRx, and independent pharmacies say those companies’ practices may threaten the survival of nonchain pharmacies.

The PBM reimbursement rates and post-sale fees they charge pharmacies are challenging the survival of independent pharmacies, according to the Alexandria, Va.-based National Community Pharmacists Association, a trade association for independent pharmacies, more than 80 percent of which are located in small population centers.

Moves are afoot in state legislatures, including Arkansas and Kentucky, to increase government regulation of PBMs.

In Kentucky, for example, a state Senate committee approved a bill Feb. 14 that would end state Medicaid payments to pharmacy benefit managers for managing the state program and let the state use the money to administer its own pharmacy benefits program.

"[PBMs] currently set all the rules with little to no government oversight,” Kentucky state Sen. Max Wise (R) said in a statement. “As a state senator, taxpayer, I don't think that's right.”

In Arkansas, Gov. Asa Hutchinson has promised to call a special legislative session on pharmacy reimbursement issues. Draft legislation circulating there would require PBMs to be licensed to operate in the state and give the state insurance commissioner rulemaking and licensing authority over PBMs.

But PBMs and others say these moves come with their own negative consequences. For example, state officials in Kentucky have said it would be significantly more costly for the state to administer the state Medicaid program itself than to have PBMs manage it. Similarly, increasing the minimum dispensing fee for pharmacies would cost the state at least $6 million.

The Pharmaceutical Care Management Association (PCMA), a Washington-based trade association that represents PBMs, said in a statement that the Arkansas PBM licensing proposal would increase prescription drug costs without improving the quality of pharmacy benefits. “The state should be encouraging market-based solutions to reduce drug costs, not giving special protections to the drugstore lobby,” PCMA President Mark Merritt said in a Feb. 27 statement.

Read my full story on pharmacy reimbursement issues here.

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