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On July 9, the Federal Trade Commission (FTC) released a preliminary report of its highly anticipated 6(b) study into pharmacy benefit manager (PBM) practices. The report officially recognizes several facts: that the three largest PBMs control 80% of all scripts in the US; PBMs steer patients to the pharmacies they own; and PBMs offer network pharmacies take-it-or-leave-it contracts.
American Pharmacies General Counsel Miguel Rodriguez has closely followed the FTC study and notes several significant findings in the 71-page interim report:
- Between 2013 and 2022, about 10% of independent retail pharmacies in rural America closed.
- Between 2016 and 2023, net income grew by 159% for UnitedHealthcare, CVS, Cigna and Humana.
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The vertically integrated PBMs are paying themselves more and more money: the revenue earned through their mail-order and specialty-pharmacy affiliates rose as much as 500% over a three-year period.
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In a case study of two generic cancer drugs over three years, pharmacies owned by the three largest PBMs collected an extra $1.6 billion by charging their clients as much as 40 times NADAC for these two drugs. In one case, a patient could purchase the drug for $97 at Costco but the PBM-owned mail-order pharmacy charged the plan $19,200 for the same drug. The FTC projected that similar price increases likely applied to many other drugs managed by PBMs.
- PBMs have gained significant power over prescription drug access and pricing through increased ncreased concentration and vertical integration. The FTC says this trend may enable PBMs to reduce competition, disadvantage rivals and drive up drug costs.
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PBMs dominate specialty drug dispensing: the Big 3 PBMs -- CVS Caremark, Express Scripts and Prime Therapeutics -- pocket about two-thirds of all specialty-drug dispensing revenue, and the report presented evidence of specialty-drug steering to PBM-affiliated pharmacies.
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Self-serving reimbursement on specialty drugs: The report states that pharmacies affiliated with the Big 3 PBMs are often reimbursed 20-40 times the NADAC price on specialty drugs.
- Pharmacy reimbursement practices are "opaque and unpredictable," and PBMs may use their market power to set reimbursement rates at "untenably low levels for independent pharmacies."
The FTC commissioned the study in June 2022 but has had difficulty obtaining all needed documents from the PBMs. This had led to the delay in issuing the final report, for which the FTC has provided no timetable.
In its conclusion to the interim report, the FTC states: "PBMs and their affiliated entities may have the incentive and ability to engage in steering a growing share of prescription revenues to their own pharmacies through specialty drug classification, self-preferential pricing, and pharmacy contracting procedures to target and control the business operations of pharmacies."
American Pharmacies closely follows FTC activities and urges the FTC to promptly commence enforcement action against PBMs as soon as it uncovers wrongdoing, even before the completion of its final report.
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NOW is the Critical Time to Contact Congress!
The Federal Trade Commission's Tuesday (July 9) release of its preliminary report on PBM practices has intensified overall federal scrutiny of the ongoing PBM abuses and self-dealing that harm patients, drive up drug prices and keep independent pharmacies struggling to stay open.
It may seem like Congress is at a standstill on PBM reform, but key allies like U.S. Rep. Buddy Carter of Georgia (our APEX honoree and speaker last month) are working tirelessly to build support for passing reforms this year. Indicative of Congress' growing focus on PBMs is the announcement this week that CVS Caremark, Express Scripts and OptumRx have agreed to testify before the House Oversight Committee on Tuesday, July 23.
Now is the time to add your voice to the chorus speaking out against them. Your input is vital to your elected leaders in this time of punitive reimbursements and contract offers, so please go to our Advocacy Engagement Center and use our resources to craft a letter to your congressional delegation.
Click the link below to log in and send your message:
https://www.votervoice.net/APRX/Campaigns/73244/Respond
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Conclusions
- Since June 1, each time a participating Member called a patient with a goal of addressing refill adherence, they captured:
- 1.5 fills
- $120 revenue
- $14 gross profit
Note: This accounts for all calls placed; some unanswered, some answered but unsuccessful, and some answered and successful.
- 86% of answered calls were successful
- 24% of captured fills were PDC drugs (i.e., Star Ratings performance measures)
- Guided Growth-directed adherence outreach ensures simultaneous pursuit of:
- Rx volume
- Star Ratings
- Adherence program enrollment (i.e., med sync or auto-refill)
- Profitability
Did you know…
- Like the RxCompass analytics platform, Guided Growth is offered to American Pharmacies Members at no cost?
- American Pharmacies tracks aggregated performance data for Guided Growth participants AND provides performance updates at no cost?
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Update on Trust LLC
Class-Action Suit
Tue., July 23 | 3 p.m. EDT | 2 p.m. CDT
Hosted by NCPA & American Pharmacies
Presenters:
Miguel Rodriguez, APRX VP & General Counsel
Matt Seiler, NCPA EVP & General Counsel
John Roberti, Attorney/Partner at Cohen & Gresser
Registration is required to attend this event.
► Register Online Here
Please join NCPA and American Pharmacies to get the latest updates about TRUST LLC’s lawsuit against the PBMs to recoup DIR fees for independent pharmacies.
NCPA created the TRUST LLC to focus on protecting access to retail pharmacy. This is a nationwide endeavor, and NCPA has engaged three law firms to go after the PBMs in an effort to recoup abusive DIR fees. To learn more, please check out https://www.fightpbms.com. If you like what you read and you still have questions before signing up, please attend this Town Hall meeting.
Copy or Share Meeting Registration Link: https://events.teams.microsoft.com/event/1cfff0d1-746b-4742-945c-f35c0260126d@b77cba5b-4b54-454a-b17c-067a46f21ebb
Lawsuit Participation is Free for NCPA Members
Non-members pay $1,000 per pharmacy location. To learn about joining NCPA at a discounted American Pharmacies rate ($90 off regular annual dues), click here.
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Two new members of the American Pharmacies Board of Directors took office July 1. Sabrina Griggs, owner of the Apothecary Shop in Kerrville, TX, and Russell Pelzel, owner of Hometown Pharmacies in Whitesboro and Pilot Point, TX, received the most votes in the May 2024 Board election. Both have begun three-year terms that will end on June 30, 2027. | |
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American Pharmacies welcomes Griggs and Pelzel to the Board and thanks outgoing Board members Bruce Rogers and Mike Muecke for their outstanding service to the Board. Rogers was the last of the original American Pharmacies board members, serving from the Board's creation in 2002 through June 2024. Muecke served 18 years on the Board.
Griggs and Pelzel will attend their first Board meeting in September.
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Congressional Fly-in Set for Sept. 17-18
American Pharmacies will hold its second annual Congressional Fly-in in September with about 20 APRx members and staff descending on congressional offices to continue pushing for Congress to enact vital PBM reforms.
Last year's fly-in, led by APRx VP of Government Affairs Michael Wright, generated visits to 22 congressional offices and a private luncheon with U.S. Rep. Buddy Carter of Georgia.
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Don't Miss PUTT's Vital PBM Reform Summit on July 24 | |
COST: PUTT Members - $35 | Non-Members: $85
APRx Members: Use code PBM Reform 2024 to register at lower member price
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Pharmacists United for Truth & Transparency, a key strategic ally of American Pharmacies, is sponsoring an important four-hour online summit on July 24. Speakers include APRx EVP and General Counsel Miguel Rodriguez, who will deliver a review of the FTC interim PBM report and a key update on pending litigation against PBMs and what those lawsuits mean for independent pharmacy in the near future. Other sessions include:
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The strategy that led to passing Louisiana’s SB 444, which requires PBMs to reimburse pharmacies at drug acquisition cost in commercial plans;
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How you can use the latest 3 Axis Advisors drug pricing analysis commissioned by the Washington State Pharmacy Association to educate employers in your area; and
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a panel of state legislator champions who have fought for bills to protect patients and pharmacies from PBM abuses.
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New Louisiana Medicaid Formulary Takes Effect
The State of Louisiana implemented a new Medicaid Formulary on July 1 that shifts generic versions of several expensive brand drugs to preferred status, ending PBMs' establishing of high-price branded drugs as preferred because of the high rebates they generate.
The formulary applies to both managed-care plans and Fee for Service in the Louisiana Medicaid program. The preferred generic drugs added to the formulary include cheaper versions of such high-price brands as Revlimid, Revatio, Copaxone, Sprivia, Symbicort and Ventolin.
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Walgreens, Rite Aid Woes
Open New Opportunities
for Independents' Growth
The accelerating pace of chain pharmacy closings underscores the stark financial challenges for retail pharmacy in general, but it also creates opportunities for independents to gain market share in affected areas.
Earlier this month, Walgreens announced that it would close a "significant number" of its stores due to challenges with profitability and margins. Rite Aid, meanwhile, announced the closing of 27 stores in Michigan and Ohio as it continues to shutter underperforming locations while it reorganizes under Chapter 11 bankruptcy. And CVS, which has already closed 600 of its stores since 2002, has confirmed it will shutter 300 more by the end of 2024.
For independents like APRx member John Gross of Clare, MI, the chains' struggles have created an opportunity to expand his customer base. Gross, who opens several pharmacies in central Michigan, is opening a new location in nearby Beaverton, MI, to meet the needs of patients who are losing their Rite Aid Pharmacy there. He also has purchased patient files from other closing Rite-Aid stores and is hiring additional staff, improving workflows and expanding front-end merchandise to accommodate displaced chain customers.
For opportunistic independents looking to capitalize on the chain closings, there are several things you can do to reach potential new patients looking for a pharmacy:
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Advertise your willingness to accept patient transfers with the community newspaper or radio station where the chain pharmacy is closing.
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Contact key prescribers in the affected community to tell them about your pharmacy, its services and your willingness to take care of their patients. Leave a flyer or handout about your pharmacy.
- Consider dropping those same flyers by major employers to let them know you can help their employees who are looking for a new pharmacy.
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Consider offering some type of incentive to affected patients transferring scripts to your pharmacy: an in-store credit toward front-end merchandise, a free bottle of kids' vitamins, etc. (this can be a great opportunity to give away your excess front-end merchandise and OTC products.
Preparing for New Patients
- Contact Cencora/ABC to discuss possible improvement of your credit terms and expansion of your CSRA limits based on projected purchasing growth.
- Adjust your staffing levels and workflows as needed to accommodate the increased business.
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Consider beefing up your front-end to appeal to chain-store shoppers, who are accustomed to larger selections of merchandise.
- If the size of the community justifies it, consider opening a new pharmacy in the affected city or town. If opening a full retail pharmacy is not feasible, consider opening a remote telepharmacy location if the laws in your state allow it.
Resources
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Contact your GNP advertising manager to discuss your marketing and advertising strategy for reaching potential new customers. Your GNP ad manager can assist with optimizing your pharmacy's Google search profile and with geo-targeting specific areas for advertising outreach. You can get a useful overview of the available resources and advice with GNP's Capturing New Patients Marketing Execution Guide.
- If you are considering expanding the size of your pharmacy or opening a second location, please contact GNP's Pharmacy Ownership Services team. A pharmacy acquisitions advisor can help you plan for expansion or a second location, or advise on recapitalizing your operation.
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