In The News | Statewide View: Middlemen costing pharmacies money, Minnesotans their pharmacies

Duluth News Tribune

OPINION: by PUTT President, Deborah Keaveny

On March 21, pharmacist Philip Hommerding was busy dispensing medications at his store in Rochester, Minnesota, when he received a patient’s prescription for an EpiPen, the well-known product used to prevent allergic emergencies (anaphylaxis).

Following standard procedure, he identified the correct generically available version he had in stock and submitted the insurance claim for electronic processing. The claim was rejected, though, and Philip was told that only a single generic product from a different manufacturer would be covered. He resubmitted for the new product, and, seconds later, the claim was accepted and processed.

Just one problem: the price his pharmacy had to pay a wholesale distributor to acquire the single generic product was $285.60, which, according to data routinely collected by the federal government, is in line with the price most pharmacies are charged. However, the insurance claim, processed by a middleman company called a pharmacy benefit manager, or PBM, showed his pharmacy would be paid $48.94 for the prescription. So, for filling his patient’s prescription, his pharmacy would be paid nothing for the service of dispensing and would lose $236.66 in the transaction.

Philip was left with a very difficult but ever-more-frequent choice: turn away the patient, a Medicaid recipient with no ability to pay for a prescription without using insurance, or lose the equivalent of several hours of his staffs’ wages simply for doing his job.

Why is this scenario even possible?

Medical Assistance (what Minnesota calls its Medicaid program) uses numerous Managed Care Organizations, or MCOs to cover approximately 85% of its enrolled Medicaid patients (currently just under 1 million Minnesotans). MCOs are paid a “capitated” rate per enrolled patient and have wide freedom over how to interact with and pay health care providers.

MCOs are allowed to subcontract with for-profit PBMs. PBMs have total control over how much pharmacies are paid to fill prescriptions for their enrolled Medical Assistance patients. PBMs use consolidated market power to force take-them or leave-them contract terms on pharmacies to be “in-network” for their patients.

That includes the use of a maximum allowable cost, a secret price for each generic drug that can change at any time, has no minimum and requires no justification or explanation.

That is how it came to be that Blue Cross Blue Shield of Minnesota, via its pharmacy benefit manager, Prime Therapeutics, decided to pay Hunt Drug in Rochester $48.94 for a drug product that costs $285.60, to provide necessary medication to a Medical Assistance patient enrolled in its Blue Advantage MCO.

But there’s one more twist.

When Philip inquired with Prime Therapeutics, he learned his reimbursement amounts are actually determined by a completely different company, an even larger PBM, Express Scripts. Prime Therapeutics has a price-fixing arrangement with Express Scripts that is currently the subject of antitrust litigation.

When Philip then contacted Express Scripts with questions about his problematic reimbursement rate, he heard crickets. Express Scripts is so powerful it has no incentive to care about independent pharmacies like Philip’s. Pharmacies must either refuse to fill prescriptions or eat financial losses.

As more and more pharmacies face the dilemma of filling prescriptions at a loss, they are closing at an alarming rate. In Minnesota, 40 pharmacies have closed in the last two years.

Regions under economic stress are hit hardest when pharmacies close. Eight smaller Minnesota cities (Avon, Clarkfield, Clearbrook, Menahga, Motley, New London, Nisswa, and Winthrop) have lost their only pharmacies, leaving residents in “pharmacy deserts.” In North Minneapolis, more than 30,000 people only have local access to a single Cub Pharmacy... CONTINUE READING

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