Video: Rx for Failure Part 2 – Sen. Manar ‘Open Up’ state contracts

DECATUR, Ill. (WAND) – Pharmacy owner Owen Sullivan worries about his business. “Twenty-six years I’ve built that pharmacy and they want to come in and steal it and they want to use state tax dollars to do it.”

Sullivan, who owns Sullivan Drugs in Carlinville, made his comments during an Illinois House hearing on a bill which would require the state to increase payments to pharmacies under the states new managed care program which started on April 1. Sullivan is not the only pharmacist with concerns related to the states managed care program and the growing influence of Pharmacy Benefit Managers, PBMs.

“I honestly, even with a paid off business, because I’m going to be paid off in four-or-five months, I don’t think I can keep my doors open because I am going to be in the negative so much I can’t keep up with how much I am losing,” Sullivan told I-TEAM reporter Doug Wolfe.

PBMs set the price pharmacies are being paid to fill prescriptions including taxpayer funded Medicaid prescriptions. They are considered the middleman between insurance companies and the pharmacy. Numerous pharmacists we have talked with, and others who post on the internet, say PBMs are forcing them to sell prescriptions below the cost of dispensing them or at an unsustainable level. By contract, pharmacists are frequently forced to sell prescriptions at a loss.


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By Doug Wolfe

Clawbacks: Recent Litigation Targeting Insurers and Pharmacy Benefit Managers

While the term “co-pay” might suggest a sharing of costs between patients and their health plans, a recent study by the University of Southern California Schaeffer Center found that almost a quarter of patients are paying more than the full price for their prescription drugs under their insurance plans due to “clawbacks.” A prescription drug clawback occurs when patients purchasing drugs from pharmacies make co-payments required under their insurance plans that exceed the price of the prescriptions and then the insurers and/or pharmacy benefit managers (“PBMs”) clawback from the pharmacies the excess amounts paid.

There have been frequent media reports on the practice of prescription drug clawbacks and federal lawsuits have been filed against insurance companies and PBMs, such as UnitedHealth, Cigna, Humana, and Optum Rx. The theories of liability being asserted include breach of fiduciary duty under the Employee Retirement Income Security Act (“ERISA”), violations of the Racketeer Influenced and Corrupt Organizations Act, as well as under various state laws. These actions are all in their early stages, with none having been decided on the merits.

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Proskauer – Employee Benefits & Executive Compensation Blog

FDA chief hints at changes to drug rebates ahead of Trump speech

The leader of the Food and Drug Administration suggested the legal status of rebates paid by drug companies to insurers and pharmacy benefit managers could get another look to help rein in the costs of prescription drugs.

In a speech on Thursday, Scott Gottlieb said if the federal anti-kickback law that protects such rebates were changed, it could help increase competition and make drugs more affordable.

“One of the dynamics I’ve talked about before that’s driving higher and higher list prices is the system of rebates between payers and manufacturers,” Gottlieb said. “And so what if we took on this system directly, by having the federal government reexamine the current safe harbor for drug rebates?”

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By Nathaniel Weixel

White House Report on Drug Prices Is a Detailed Road Map

The Trump administration, with its rhetoric and, more importantly, its actions, has been making an aggressive effort to lower the prices of prescription drugs. A very detailed report produced in February by the White House’s Council of Economic Advisers (CEA) lays out a menu of ideas, a few already implemented or in motion, for driving drug prices down further.1 Those ideas germinated from two main goals: 1) reduce overpricing by promoting competition and reforming public reimbursement policies, and 2) cut the cost and raise the rewards for innovation through domestic reforms and limiting underpricing of drugs, particularly through “free riding” abroad.

“My view is that they have come to the table with some very thoughtful ideas,” says Dan Mendelson, President of Avalere Health, a D.C.-based health care consulting firm. “The administration has some very good people who understand the pharmaceutical industry and that is a big advantage.” Mendelson singled out Scott Gottlieb, MD, Commissioner of the Food and Drug Administration, and Alex Azar, Secretary of the Department of Health and Human Services. Dr. Gottlieb worked at Avalere in a previous incarnation, and Azar was a client of Avalere’s when he was at Eli Lilly.

In early March, Dr. Gottlieb criticized the drug distribution payment system dominated by hidden rebates when he told a meeting sponsored by America’s Health Insurance Plans, the trade group for health insurers, that “a rigged payment system” was partly responsible for high drug prices. In those comments, he was echoing a line in the CEA report which said: “The overall Part D benefit structure creates perverse incentives for plan sponsors and pharmacy benefit managers (PBMs) to generate formularies that favor high-price, high-rebate drugs that speed patients through the early phases of the benefit structure where plans are most liable for costs.”1

The Centers for Medicare and Medicaid Services (CMS) is currently considering whether to force Medicare Part D plans to pass rebates to plan members when they pay for prescriptions at the pharmacy counter. The PBM industry hotly opposes that idea. The health insurance industry is slowly warming to the concept, with UnitedHealthcare announcing in March it would provide pharmacy rebates for a percentage of its client base. Drug manufacturers are the leading advocates for rebates to consumers.

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Stephen Barlas

Rauner dismisses small pharmacies’ concerns amid Medicaid reboot

Gov. Bruce Rauner on Tuesday appeared to brush aside concerns from independent pharmacies whose owners say reduced reimbursements from the state’s expanded Medicaid managed-care program threaten to put them out of business.
“The reality is what we’re trying to do is drive more competition, and sometimes businesses can be competitive in costs, and some businesses can’t,” the Republican governor said at a Springfield event honoring Illinois small businesses.
Rauner was asked to respond to complaints about the managed-care reboot, HealthChoice Illinois, that have been made by owners of independent pharmacies, small-chain pharmacies and also small businesses selling outpatient medical equipment and supplies.

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By Dean Olsen

The State Journal-Register

The windfalls of secrecy

Express Scripts met with analysts at banking giant Barclays in March and mentioned how its “industry-leading EBITDA per claim” — a measure of profit they collect on each prescription — likely will be “sustainable over time,” according to Barclays’ note to Wall Street. Those comments come as each of the big three pharmacy benefit managers are being attached to health insurers.

The big picture: Some PBMs use a different “transparent” model to earn money, but they are in the minority. New documents obtained by Axios peel back the curtain on the traditional drug benefits business, though many details remain hidden from public view.

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Some new documents shed light on how PBMs make money, and also reveal how difficult it is to get the full picture:

  • Nashville uses Express Scripts to provide drug benefits to city employees, and its publicly available 2017 contract lays out actual financial terms — including rebates. Many of the contract’s definitions are also identical to the template Axios previously published — including the brand/generic algorithm.
  • The state of Delaware amended its contract with Express Scripts a few years ago to ensure that Express Scripts guaranteed more rebates, according to a copy of the contract.
  • Axios obtained an OptumRx pharmacy benefits proposal through New Jersey’s open records law. New Jersey awarded its pharmacy benefits deal to OptumRx last year. However, several sections that outline financial terms for the taxpayer-funded prescription drug deal are “exempt from public disclosure.” OptumRx did not respond to questions.

What we’re hearing: Many people that work in the industry are voicing disdain for the business models and lack of transparency associated with the main players.

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By Bob Herman

Health Plans Say CVS, Pharmacy Middlemen Hid Prices

CVS Pharmacy Inc. conspired with several of the nation’s largest pharmacy middlemen to hide the lowest prices they offered for generic drugs, two union health plans say.

The allegations against CVS, its pharmacy benefit manager subsidiary Caremark Rx, and other PBMs, including Express Scripts Inc. and UnitedHealth Group Inc.’s OptumRx Inc., adequately stated federal racketeering claims, Chief Judge William E. Smith of the U.S. District Court for the District of Rhode Island said. Smith allowed the plaintiffs to add the claims to their original fraud complaint against CVS.

The claims against CVS and the PBMs are emblematic of an increasing wave of criticism aimed at retail pharmacies and PBMs over allegedly unfair drug pricing practices. In February, independent pharmacists in Arkansas complained about CVS Caremark’s reimbursement rates. The group is calling for legislation that would provide greater state oversight of all PBMs operating in the state. Iowa, Kentucky, New Mexico, New York, Texas, and West Virginia are among the states currently grappling with similar PBM reimbursement issues.

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By Dana A. Elfin

From Health Care on Bloomberg Law

What CVS is doing to mom-and-pop pharmacies in the US will make your blood boil

The short version of what happened to CVS in 2018 is this: The company got too greedy, and then it got caught.

In its greed, the company squeezed independent mom-and-pop pharmacies. The squeezing wasn’t being done by the part of CVS you buy dental floss from or visit to pick up a prescription, though it’s not unrelated. It’s a behind-the-scenes business known as a pharmacy benefit manager, which manages payments between insurers and pharmacies and drug companies.

The mom-and-pop pharmacies say CVS’ in-house pharmacy benefit manager, CVS Caremark, slashed reimbursements for medications sold to their patients on Medicaid. At the same time, they say, it was reimbursing CVS pharmacies at much better rates. With some of them on the verge of going out of business, these pharmacies have rallied lawmakers — both Democrats and Republicans — to put an end to this.

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By Linette Lopez

Local pharmacy, lawmaker applaud passage of bill regulating pharmacy benefit managers

Gov. Asa Hutchinson signed a bill into law recently to have the state insurance commissioner license and regulate pharmacy benefit managers (PBMs), which small pharmacy owners have said are driving them out of business.

The Arkansas Pharmacy Benefits Manager Licensure Act, thought to be the first one of its kind in the country, had wide support in both parties in the House and Senate. PBMs have been criticized as “middlemen” between insurance companies and pharmacies, and handle pharmacy claims and reimbursements to pharmacies for medications distributed.

The legislature had attempted to regulate the industry in 2009 and 2015 will little effect, supporters of the new bill said.

“Hopefully this will protect the little pharmacists – the small business pharmacists out there – from the corporate PBMs that are questionable at best,” District 5 Sen. Bryan King said.

On Jan. 1, Arkansas Blue Cross and Blue Shield contracted with CVS Caremark as its PBM. Caremark already served as PBM for Ambetter in the state. Pharmacists around the state soon began getting smaller reimbursements for filling prescriptions, according to other media sources.

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By Rod Harrington

Editorial: Stop soaking taxpayers for Medicaid drugs

Did you know that for every 60-mg caplet of duloxetine dispensed in Ohio through a Medicaid-contracted managed-care company, taxpayers pay a middleman $1.54, but the middleman passes only about 18 cents of that to the pharmacy that supplies the drug and pockets the $1.36 difference?

Sen. Bill Coley, R-West Chester, didn’t know, and he’s on the Senate Medicaid Oversight Committee. “We thought there was some nominal fee to PBMs but had no idea (the fees were so large),” Coley said. “It’s ridiculous.”

He’s talking about pharmacy benefit managers — private companies that contract with managed-care companies to handle prescriptions — deciding which drugs to cover and how much to reimburse pharmacies for them. Most of Ohio’s Medicaid members are served by one of five managed-care companies that contract with the state. For four of those companies, CVS is the subcontracted pharmacy benefit manager, or PBM.

What’s equally ridiculous is that state officials have tolerated contracts under which CVS and other PBMs get to decide how much they’ll charge taxpayers for a drug and how much they’ll pay the pharmacy for it without having to disclose any of that information.

Lawmakers say they’re taking steps to bring transparency to such contracts, and that’s important. But while they’re at it, they should set some reasonable guidelines for how much of a pharmacy transaction the PBMs are allowed to pocket.

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