News Wire

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