NBC News - KARK Arkansas
Attorney General Leslie Rutledge says, ‘the stranglehold PBMs have on drug prices is driving many local pharmacies out of business’
Arkansas Attorney General Leslie Rutledge has filed a brief with the United States Supreme Court in Arkansas’s pharmacy benefit manager (PBM) case.
The Supreme Court will hear oral arguments in that case on April 27, 2020.
In this case, Rutledge seeks to protect rural Arkansas’s small businesses and save community pharmacies from abusive PBM payment practices.
“For many Arkansans, we interact most frequently with our local pharmacists, but the stranglehold PBMs have on drug prices is driving many local pharmacies out of business,” said Attorney General Rutledge. “It’s time we hold PBMs accountable for skyrocketing prescription drug prices and directly hurting Arkansan’s pocketbooks.”
In 2015, the Arkansas General Assembly enacted Act 900 to regulate PBMs who play the role of intermediary, reimbursing pharmacists for prescription drugs dispensed to insurance beneficiaries. Before Act 900’s enactment, PBMs were found to reimburse pharmacies at less than a pharmacy’s cost to acquire a drug, causing more than 16 percent of rural pharmacies to close in recent years.
In 2015, PCMA filed a lawsuit to block enforcement of Act 900. U.S. District Judge Brian Miller ruled Act 900 was preempted by the federal Employee Retirement Income Security Act, and in 2018 the Eighth Circuit Court of Appeals affirmed Judge Miller’s ruling Rutledge petitioned the U.S. Supreme Court in November 2018. Rutledge’s petition was supported by the U.S. Solicitor General and a bipartisan, 32-state coalition led by California.
The case is Rutledge v. Pharmaceutical Care Management Association, No.18-540.
NCPA.org News Release
Case seeks to clarify if states can regulate runaway corporate middlemen
The National Community Pharmacists Association (NCPA) and the Arkansas Pharmacists Association (APA), along with the American Pharmacists Association (APhA) and the National Alliance of State Pharmacy Associations (NASPA), announced today they will file an amicus curiae brief with the Supreme Court of the United States in support of a case that pits pharmacy benefit managers (PBM) against neighborhood healthcare providers.
"The PBMs have been hiding behind a vaguely worded section of a federal law that was never supposed to apply to them," said B. Douglas Hoey, CEO of NCPA, which represents 21,000 locally owned pharmacies nationwide. "They operate without meaningful regulation, and because of that they're able to stack the deck in their favor, and at the expense of community pharmacies and their patients."
The case, Rutledge v. the Pharmaceutical Care Management Association, will be heard on April 27, 2020, the Court announced today. It originates from Arkansas, which passed a law in 2015 barring PBMs from reimbursing local pharmacies at a lower rate than what the pharmacies pay to fill the prescriptions. The PBM lobby, PCMA, challenged the law in court, which is when the APA and NCPA joined the effort to ensure the 2015 precedent stands.
"For countless years, PBMs have tightened the noose on pharmacists and their ability to serve their communities and provide access to life-saving medications and essential counseling," said APA CEO and Executive Vice President John Vinson, Pharm.D. "Instead, PBMs have prioritized profits and stockholders by using anti-competitive practices, self-dealing, and monopoly-like business practices to create an environment where patients, pharmacists, and employers suffer the consequences — patients lose their choice, pharmacists lose their jobs, and employers lose their money."
That case made its way to the federal 8th Circuit Court of Appeals, where the judge ruled in favor of the PBMs. When Arkansas appealed the ruling, the Supreme Court asked the US Solicitor General to recommend whether to take the case. Not only did he urge the Court to take the case, but he argued strongly that the 8th Circuit erred in its decision.
Continue Reading the Full News Release HERE
Milwaukee Community Journal
WI ASSEMBLY VOTES 96-0 PASSING LEGISLATION TO HOLD PBMs ACCOUNTABLE FOR RISING DRUG COSTS AND PROTECT PATIENTS AND PHARMACISTS STATEWIDE
The Wisconsin Pharmacy Patient Protection Coalition (WPPPC), which represents patients, health groups, pharmacists and others negatively impacted by Pharmacy Benefit Managers (PBMs), today thanked representatives in the Wisconsin State Assembly for passing AB114 by a roll call vote of 96-0 in favor of the legislation. The bill holds PBMs accountable for secretive practices that currently increase prescription prices; delay patient access to medications; and have contractually gagged pharmacists from talking about what is happening with customers.
“We thank the State Assembly for sending a strong bipartisan message that Wisconsin is now very aware of what has been going on and that something needs to be done to help protect patients and pharmacists statewide from the PBM middlemen,” said Rob Gundermann, chair of the WPPPC and president and CEO of the Coalition of Wisconsin Aging & Health Groups. “PBM policies are part of the problem with rising prescription prices in Wisconsin and elsewhere. That’s why 40 states have already passed similar legislation to reform PBM activity. It is time to fix Wisconsin’s PBM problem!”
The Assembly vote now moves the measure to the Senate, where companion bill SB100 received overwhelmingly positive testimony last week during a committee hearing with patients and pharmacists. A full Senate vote could come by mid-March, according to the WPPPC.
A total of 104 cosponsors have signed onto the bipartisan legislation supporting regulation of the PBMs. Primary sponsors of the bills include Representative Michael Schraa (R-Oshkosh), Representative Debra Kolste (D-Janesville), Senator Jon Erpenbach (D-Middleton) and Senator Roger Roth (R-Appleton). To view both bills and their support go to SB100 and AB114.
Those interested in supporting the Wisconsin Pharmacy Patient Protection Coalition can follow the group on Twitter and Facebook, and can also view this video that further explains the PBM process. Everyone is encouraged to send an email and/or call your local legislators by going to www.WI4Patients.com or https://maps.legis.wisconsin.gov. Urge them to learn more and help protect Wisconsin consumers from greedy PBMs by supporting the PBM legislation (SB100/AB114) in the Senate or thanking Assembly representatives for voting for the bill.
Members of the Wisconsin Pharmacy Patient Protection Coalition include: American Cancer Society Cancer Action Network; American Diabetes Association; AIDS Resource Center of Wisconsin; Coalition of Wisconsin Aging and Health Groups; Epilepsy Foundation; Great Lakes Hemophilia Foundation, Hometown Pharmacy; Lupus Foundation of America, Wisconsin Chapter; National Infusion Center; National Multiple Sclerosis Society; Pharmacy Society of Wisconsin; Wisconsin Alliance for Women’s Health; Wisconsin Medical Society, Wisconsin Rheumatology Association and the Wisconsin Association of Osteopathic Physicians & Surgeons.
News Service of Florida / NPR
Amid a legislative tussle with millions of dollars on the line, people who operate pharmacies in Florida contend they are getting short-changed by the state.
A report released Thursday maintains that pharmacists participating in Florida’s Medicaid managed-care program are being woefully underpaid.
State Medicaid officials estimate the cost of doing business in the Medicaid program is $10.24 per filled prescription. But on average, Medicaid managed-care plans paid pharmacists $2.72 per claim in 2018.
The 202-page analysis was commissioned by the Florida Pharmacy Association and American Pharmacy Cooperative Inc. and was conducted by 3 Axis Advisors. It was based on a review of more than 350 million Medicaid managed-care claims between 2012 and 2019 and claims data from more than 100 small community pharmacies across Florida to help validate the state data.
The claims showed researchers what each managed-care company reported paying for each drug to each pharmacy and how some pharmacies are paid more than others. The study comes as the Legislature considers bills that would address the role of pharmacy benefit managers.
But the report’s findings were quickly questioned by the managed-care industry.
The analysis showed that pharmacies affiliated or owned by pharmacy benefit managers can be paid more than other pharmacies. Five pharmacy groups that in the aggregate filled less than 1 percent of the managed-care claims in 2018 made $13 million in profit, 28 percent of the total profit made by pharmacists that year.
When those five companies were excluded from the data, the report shows that payments made to pharmacies participating in the Medicaid managed care program dipped from an average of $2.72 per claim to an average of $1.97 per claim.
Researchers noted that CVS Health filled 45 percent of all managed-care prescriptions in 2018 and provided pharmacy-benefit manager services for at least 46 percent of managed-care prescriptions, which makes the company a dominant force in Florida.
But pharmacists argue that dominance comes at a cost. As an example, in 2018 the managed-care company Centene paid CVS in Palm Coast $11.18 for a specific drug, yet paid Publix and an independent pharmacist 24 cents and 53 cents, respectively, for the same drug. All three pharmacies were located within blocks of each other, according to the report.
CVS issued a statement Thursday accusing “big pharma” and independent pharmacists of spreading “falsehoods.”
Florida has one of the largest Medicaid programs in the nation, providing benefits to nearly 3.8 million people as of last month, according to the latest available data.
The majority of those people, or 2.93 million, are enrolled in Medicaid managed-care plans, as required by state law. The state makes monthly payments to managed-care plans to cover all the costs of services patients may need. That “capitated” amount, which is required to be actuarially sound, includes the costs of pharmaceuticals.
Florida also has 843,673 people who receive Medicaid services outside of managed-care plans. Pharmacists who treat those patients, according to the analysis, are being reimbursed at a level that covers their costs of doing business.
The federal Centers for Medicare & Medicaid Services requires all states to conduct an analysis showing pharmacists’ costs of doing business and to reimburse them that amount for each Medicaid claim on top of the cost of acquiring the drug.
Florida has determined the cost of doing business incurred by pharmacies in the state is $10.24 per claim.
But the federal agency does not place similar requirements on Medicaid managed-care plans, and there are no requirements outlining how pharmacists should be paid.
Managed care companies sign contracts with pharmacy benefit managers to manage drug costs. The so-called PBMs can collect money from administrative fees they charge health plans and network pharmacies and retain drug rebates paid by pharmaceutical manufacturers.
Noting that the new report was funded by two organizations that represent pharmacists, Florida Association of Health Plans President and CEO Audrey Brown was critical of the findings.
It “is nothing more than a bought and paid for targeted attack on PBMs. In no way should this report be viewed as credible or unbiased, it was developed with a clear agenda and compiled with unverified data that fits the special interests’ narrative,” she said in a statement to The News Service of Florida.
But Michael Jackson, executive vice president and CEO of the Florida Pharmacy Association, defended the analysis and pointed to data from the state Agency for Health Care Administration.
“Don’t take our word for it,” Jackson said. “The data is the agency’s. Have the agency come in and validate what is in there. And if the PBM industry questions the result of the study, then my invitation to them is open up your books and tell us we’re wrong.”
Bills have been filed for this year’s legislative session that relate to pharmacy benefit managers. For example, a bill (HB 961) would preclude PBMs from directing patients to pharmacies they own in whole or part. But that bill and a Senate version (SB 1444) have not been heard in committees.
Both chambers are considering more-conservative proposals. A bill (SB 1338), filed by Sen. Tom Wright, R-New Smyrna Beach, would give the state insurance commissioner authority to conduct market conduct examinations of PBMs and would allow the insurance office to review contracts between managed-care organizations and pharmacies.
Another bill (HB 7045), meanwhile, has the support of the managed-care industry. The bill would require pharmaceutical companies to report price increases to the state Department of Business and Professional Regulation.
Brown, of the Florida Association of Health Plans, called the bill a “holistic approach to understanding the drug chain and reining in the high price of prescription drugs.”
Cocoa pharmacist Dawn Butterfield said the Legislature needs to address the issues or she will join the ranks of independent pharmacists who are shuttering their businesses. Florida has had a 15 percent decrease in the number of independent pharmacies during the past three years, according to the Florida Pharmacy Association.
At times, Butterfield said she cries when filling Medicaid managed-care prescriptions, knowing that the HMO will pay her less than what it costs her to buy the drug. She recalled last July filling 58 prescriptions for members of one Medicaid managed-care plan and losing money on 52 of those prescriptions.
“I made a negative $342 on that. That’s not sustainable,” she said.
But Butterfield said she cannot drop Medicaid. If she does, the pharmacy benefit manager she contracts with will not allow her to serve the commercial or Medicare clients it provides services for.
“I hate to use this word, but it’s rape,” she said. “It’s financial exploitation. That’s what it is.”
Bloomberg Law Review
The U.S. Supreme Court will hear a case that could decide the validity of at least 38 states’ laws regulating how companies like Express Scripts and CVS Health make money off prescription drugs.
The justices agreed Jan. 10 to take a case asking whether an Arkansas law regulating pharmacy benefit managers is preempted by the federal Employee Retirement Income Security Act. The Pharmaceutical Care Management Association, a trade group representing PBMs, successfully challenged the law on ERISA preemption grounds in the Eighth Circuit.
The court’s decision to hear the case came at the urging of U.S. Solicitor General Noel J. Francisco, who argued that the Arkansas law doesn’t reference ERISA plans or have an impermissible connection with them.
At least 38 states have passed laws regulating how pharmacy benefit managers make money off prescription drugs. The states say the laws in question seek to tamp down on ever-increasing prescription drug costs by making the relationships between pharmacies, pharmacy benefit managers, and consumers more transparent.
The PCMA has challenged several of these laws by arguing that they interfere with ERISA or Medicare statutes. The Eighth Circuit has twice agreed with the PCMA, striking down state laws in both Arkansas and Iowa, with a challenge to North Dakota‘s law pending. Outside the Eighth Circuit, the PCMA is challenging an Oklahoma regulation in federal district court.
California, New York, and 30 other states also urged the Supreme Court to take this case.
McDermott Will & Emery LLP represents the PCMA.
The case is Rutledge v. Pharm. Care Mgmt. Assoc., U.S., No. 18-540, certiorari granted 1/10/20.
The federal government accused pharmacy giant CVS Health and its Omnicare business of fraudulently billing federal health programs for hundreds of thousands of drugs dispensed without prescriptions.
In a civil healthcare fraud lawsuit filed Tuesday, the Manhattan U.S. attorney claimed that Omnicare, a provider of pharmacy services to long-term care facilities, violated the False Claims Act by allowing its pharmacies to dispense prescription drugs to elderly and disabled residents even though prescriptions had expired or were out of refills.
Omnicare then billed Medicare, Medicaid and Tricare for the illegally dispensed drugs, which included antipsychotics, anticonvulsants and cardiovascular drugs and other medications, the complaint alleged. The U.S. intervened in two whistleblower lawsuits against Omnicare. It is seeking treble damages and civil penalties.
"A pharmacy's fundamental obligation is to ensure that drugs are dispensed only under the supervision of treating doctors who monitor patients' drug therapies. Omnicare blatantly ignored this obligation in favor of pushing drugs out the door as quickly as possible to make more money," Manhattan U.S. Attorney Geoffrey Berman said in a statement.
From 2010 to 2018, instead of obtaining new prescriptions from patients' doctors, Omnicare pharmacies simply "rolled over" the prescriptions by automatically assigning a new prescription number, refills and prescription date, according to the complaint.
Continuing to dispense invalid prescriptions allowed Omnicare to fill more prescriptions and collect more revenue, while putting individuals living in residential facilities at risk by dispensing medications with dangerous side effects and that must be monitored by a doctor, according to the lawsuit. Omnicare allegedly allowed prescriptions to roll over in at least 1,766 residential living facilities.
A CVS Health spokesman said the claims had no merit. "We are confident that Omnicare's dispensing practices will be found to be consistent with state requirements and industry-accepted practices," he said in an emailed statement.
Omnicare, which was acquired by CVS in 2015 for $12.7 billion, has come under fire for its pharmacy practices before. In 2012, the company paid $50 million to settle U.S. Justice Department claims that its pharmacies had dispensed controlled substances to long-term care facility residents without valid prescriptions.
In 2016, Omnicare paid $28.1 million to settle allegations it requested and accepted kickbacks from Abbott Laboratories to promote the drugmaker's epilepsy drug to nursing home residents.
WSHU Public Radio
Independent pharmacies say they’re being squeezed to the brink of closing by the sharp rise in prescription drug prices. We’ll discuss how pharmacy benefit managers affect the flow of customers to big and small drugstores, with guests:
The Indiana Gazette
Pharmacy benefit managers were created to control prescription drug prices. Since they arrived on the scene in 1987, however, prescription drug benefit costs have risen by 1,129 percent and patients’ actual out-of-pocket costs have increased by almost 200 percent.
Here in Pennsylvania, a 2018 report from Auditor General Eugene DePasquale found that as prescription drug costs in the commonwealth went from $1.41 billion in 2013 to $2.86 billion in 2017 (an increase of more than 100 percent!), the average price of a prescription at a community pharmacy actually went down slightly and prescription volume was flat.
Where did all that money go? To pharmacy benefit managers; the multibillion-dollar quasi-monopolies that set the prices patients pay for prescription drugs and create pharmacy networks, often pushing people to pharmacies that they own.
In fact, the top three PBMs control as much as 89 percent of the U.S. marketplace.
Despite their claims to the contrary, PBMs actually benefit from higher prices due to perverse incentives. Drug manufacturers offer discounts in the form of rebates, which are meant to be savings to be passed along to patients.
Importantly, rebates are usually provided for the most expensive drugs; so, the higher the price of the drug, the higher the rebate.
The rebate process lacks transparency, so there is no way to determine how much PBMs increase their profits by pocketing some if not all of these rebates, which should be intended for patients. As Auditor General DePasquale found, “the rebate process is not working to lower costs for patients,” leaving the sickest people, who rely most on drugs, paying more than ever to keep premiums level.
In other words, elderly patients are subsidizing everybody else.
PBMs leverage the power of their formularies to bully not only patients but all players in the health care space.
They can essentially choose winners and losers, giving them enormous leverage over each party and leaving little room for small-business pharmacies to operate and serve their local communities.
A recent National Community Pharmacists Association survey of independent community pharmacists revealed that almost 60 percent may close their doors in the next two years, with nearly two-thirds saying that the biggest problem are the back-door fees the PBMs claw back from pharmacies weeks or months after transactions.
PBM abuses hurt more than just patients and small-business pharmacies; they cost taxpayers enormous sums of money.
Fortunately, there is a way for Pennsylvania to ensure their PBMs are controlling drug costs: increasing PBM transparency. Increased transparency has worked in other states.
For example, West Virginia has saved $54 million a year by removing opaque PBM practices from its Medicaid program. Ohio moved to more transparency PBM contracts after determining the move would save $16 million a year.
There’s plenty wrong with our health care system. We’re not blaming PBMs for all of the problems, but their fingerprints are all over one of the biggest issues, which is runaway prescription drug prices.
We applaud the local and federal policymakers who are focusing on lowering drug prices, reining in PBMs, and enacting real solutions for independent pharmacies, their patients and taxpayers.
Stephanie Smith Cooney, Pharm.D., is president of Gatti Pharmacy in downtown Indiana.
The Columbus Dispatch
A national drug-pricing consultant says despite implementing a new pricing system and other efforts to rein in pharmacy middlemen, Ohio’s Medicaid program continues “hemorrhaging” tax dollars.
“You are hemorrhaging money right now,” Linda Cahn, a critic of pharmacy benefit managers, told the Joint Medicaid Oversight Commission on Thursday.
Pharmacy benefit managers hired to oversee the $3 billion a year drug program have contracts that allow them to increase profits rather than keeping costs down, she said. The profits are largely hidden and come from rebates from drug manufacturers, manipulating drug costs, self-dealing with affiliated pharmacies and other loopholes, she said.
“There are so many problems here, you have to write a contract that addresses all of them, and you have to bring in people who know enough about this to help the Medicaid division do that ...it’s a very complex industry,” Cahn said.
“If you address all of the problems, you will dramatically, dramatically reduce your cost and end up with far better coverage.”
Cahn said to solve the problem, the state needs to negotiate an “air-tight contract” or handle pharmacy benefits in house. “All you can do is put controls on every one of these loopholes.”
She said Medicaid officials are not to blame.
“There is not a state in the country that has a good contract. I’ve never seen a good contract with an insurance company.”
Committee chairman Rep. Mark Romanchuk, R-Mansfield, said he asked Cahn to help lay out a road map for much-needed reforms, starting with improved contracts.
“Everybody knows what needs to be done. The question now is will that policy be executed properly,” he said.
At the legislature’s urging, Medicaid officials are in the process of contracting directly with a single pharmacy benefit manager to administer drug benefits.
The $28 billion Medicaid program provides health insurance to nearly 3 million poor and disabled Ohioans. Currently, the state contracts with five private managed care plans to oversee the program and they employ three PBMs — CVS Caremark, RxAdvance and OptumRx — to manage pharmacy benefits.
A recent study found that CVS Caremark and OptumRx billed the state $244 million more than they paid pharmacists in a single year, allowing them to profit three to six times the industry standard. Using a spread-pricing model, the PBMs billed the state far more than they paid pharmacists to fill prescriptions and kept the difference.
Ohio this year switched to a pass-through pricing model, which requires PBMs to pay pharmacists the exact amount they bill the state and pays them a fee for their services. But Cahn said even with the new system there are still hidden loopholes allowing PBMs to profit. For instance, PBMs can set artificially high drug prices and profit through an affiliated pharmacy.
The national trade association representing PBMs criticized Cahn’s credibility before she testified.
“Ms. Cahn is widely known as a vocal PBM critic, who initially gained prominence from a series of lawsuits she led against PBMs beginning in 1997. Based on any cursory review of Ms. Cahn’s past public comments, it is not possible to believe her testimony can reflect an impartial, objective perspective of PBMs’ role in Ohio’s Medicaid program,” Matt Borges, a Columbus lobbyist and former state GOP chairman representing the Pharmaceutical Care Management Association, wrote in a letter Tuesday to committee members.
To “gain a more complete picture,” Borges suggested the panel hear from others, including the association. “PBMs are the only entities in the drug supply chain focused on reducing cost,” he said.
Medicaid officials did not immediately respond to a request for comment. It was not immediately apparent whether any were at the meeting of the legislative panel established to oversee Medicaid.
WAND NBC17 November 13, 2019
NOKOMIS, Ill. (WAND) – Independent pharmacists tell WAND News they are seeing patients request prescription drug refills only to find the prescription has been transferred to a mail order facility without their knowledge.
David Falk of the Sav-Mor pharmacy in Nokomis and Lauren Young of Dale’s Southlake Pharmacy in Decatur tell similar stories: customers requesting a prescription drug refill and then the pharmacist having the refill rejected. It’s then determined the request is being filled through mail order. When the customer is contacted, the customer says they did not request the prescription be transferred from their local pharmacy.
Falk cites a case over the summer where a customer wanted her prescription refilled at his pharmacy. She is signed up to a plan through Medicare Part-D. She received a letter from a Pharmacy Benefit Manager, PBM, and was told her the order was on hold and she needed to call the PBM to confirm the order. PBMs are the middleman between the pharmacist and insurance companies.
Falk tells WAND News the patient did not ask her doctor to transfer the prescription to the PBM. Her order was eventually cancelled and the prescription has been reestablished with Sav-Mor.
The PBM, CVS/Caremark, tells WAND it received the prescription from the healthcare provider and attempted to contact the customer by phone. When Caremark could not reach the customer it sent out a letter requesting verification. The order, according to Caremark, was cancelled at her request.
To watch the broadcast of this investigative story, click HERE