Plan Subsidies

Independent Pharmacies Subsidize the Cost of Filling Prescriptions 

Every day small business pharmacies fill one or more patient prescriptions at or below cost. At a time when consumers are concerned about the rising costs of already-pricey prescription drugs, community pharmacies are losing money dispensing medications.

The largest Pharmacy Benefits Manager (PBM) companies – who intentionally obscure their methods for negotiating, pricing and reimbursing prescriptions – require pharmacies to collect patient co-pays at the point of sale. Weeks or months later, PBMs “claw back” the copays plus additional fees from the pharmacies. Often what’s left after the clawback – the “reimbursement” – is less than the wholesale cost of the prescription. This results in a loss for the pharmacy.

PBMs say independent pharmacies complain about the “reimbursements” they receive from PBMs. In fact, when pharmacies lose money filling a prescription and then suffer a clawback, this is not a reimbursement. The pharmacist is subsidizing the patient’s benefit plan at a loss to his or her own business.

Very few businesses can afford to sustain losses at the register and remain open, which is why literally hundreds of independent pharmacies close every year.

Pharmacists Can’t Tell You What’s Really Going On

Sometimes the patient’s copay is higher than the “list” price (retail or “cash” price) of the medication. So why don’t pharmacists tell the patient?

Good question.

Pharmacists are prohibited from informing patients and plan sponsors of the availability of money-saving options. This is because PBMs include “gag clauses” in their network contracts to prevent disclosure of true costs, causing a frustrating dilemma for pharmacists. If they break contract and tell the patient, they risk getting kicked out of the network and losing their business. If they remain silent, the patient pays more than retail price for the prescription.

Another dilemma involves the patient’s right to choose where to fill their prescription. Many insurance plans require patients to use large PBM-owned retail pharmacies or mail-order to receive lower co-pays. Patients who choose smaller, independent community pharmacies are often penalized with substantially higher co-pays for the same medications.

So while the service and the product are arguably the same, PBMs profit when patients use a PBM pharmacy.  But the patient’s right to choose where to take their business is limited in the absence of prescription plan transparency.

Your PBM/Broker/Consultant is NOT Going to Disclose This Information

For PBMs, taking money from the plan sponsor, patient and pharmacy in the name of “negotiating lower prices” is considered an industry norm. It falls under their definition of a “trade secret”. 

The truth is, collecting premiums, copays and fees is standard practice for non-transparent PBMs and a contributing factor to the high cost of prescription drugs. This is why more and more independent pharmacies are advocating for prescription plan transparency offered through transparent PBMs.

Prescription Plan Transparency is a Better Way

More and more independent pharmacies are driving the concept of prescription plan transparency through transparent PBMs.

Transparent PBMs:

  • administer prescription drug claims for a flat administrative fee
  • provide “pass through” pricing on prescriptions to plan sponsors, patients and pharmacies
  • return manufacturer rebates to their rightful owner – the plan sponsors – instead of pocketing the difference for themselves.

Independent pharmacies are integral to patient care and part of the backbone of the U.S. economy. Patients choose small business pharmacies because they expect and trust their pharmacists to be honest when helping them make the best choices for their health and well-being.  

Decision makers and plan sponsors also have the right to know who is making money on their plan, and who is subsidizing it.

PUTT Endorses Transparent PBMs for Prescription Insurance Plans

While we don’t endorse a specific transparent PBM, we are delighted to pass along word when we discover a PBM that meets our checklist of requirements to be considered transparent.

PUTT keeps a list of transparent PBMs. For more information, please contact us here.