Legislation seeks ‘level playing field’ for independent pharmacies

Mississippi Business Journal

A bill that says it is designed to level the playing field for independent pharmacies overwhelmingly passed the Mississippi House of Representatives and has been sent to the state Senate.
House Bill 708, which would be known as the Pharmacy Benefits Prompt Pay Act, was approved by the House 115-3.
It would cut the time allowed for Pharmacy Benefit Managers (PBMs) to reimburse pharmacies to seven days, down from the current 15.

“PBMs are paid by their clients as soon as the pharmacy fills the subscription,” the Mississippi Independent Pharmacy Association stated in a “talking points” release, and PBMs “hold” all these reimbursements “until they are forced to pay the pharmacies.”

The PBMs are making money off the pharmacies’ money by holding the reimbursement in an interest-bearing account, association argues. “If the Mississippi Division of Medicaid can reimburse the pharmacies in 7 days, why can’t a major multibillion-dollar corporation pay in 7 days?”

Legislation that went into effect on July 1, 2006 reduced the turnaround to 15 days. Many reimbursements had taken 30 to 60 days, according to Robert Dozier, executive director of the association.
HB 708 also seeks to bring clarity on how Pharmacy Benefit Managers (PBMs) establish maximum level reimbursement to pharmacies, Dozier said.

Pharmacies pay drug wholesalers for what they charge for prescription medicine.

But in some cases, PBMs reimburse less than the pharmacies paid, putting them at a deficit, according to Dozier.
“There is no state or federal law that tells how to set a reimbursement,” Dozier said of PBMs in an interview.
“If the reimbursement if below the pharmacy’s acquisition cost, we want to know how they arrived at the reimbursement,” Dozier said.

“All we want is a little transparency,” he said.

But the scenario is not little guy versus big guy, or the chains, he said. “The chains are in the same boat.”

However, according to at least one calculation, the number of independent pharmacies is sinking.

The number of independents in Mississippi has fallen to about 385, according to the Mississippi Board of Pharmacy. Between 2009 and 2019, 189 independents and 158 chain pharmacies closed in Mississippi, the board says.
Nationally, there were 21,909 indies as of 2017, down from 23,106 in 2011, according to the National Community Pharmacists Association.

Chris Paddington of A.T. Kearney, a global management firm, stated in an interview with another publication: “Many independent operators are older and looking for an exit, while younger pharmacists are less attracted to the risk and return of ownership.”

However, Greg Lopes,  assistant vice president for strategic communications for the Pharmaceutical Care Management Association, provided a study by that organization that was released this month that indicates an actual increase in the number of independents between 2010 and 2019 of more than 2,600 stores (12.9 percent), whereas chains lost around 80 stores (0.2percent) on average.

Lopes said in an email to the Mississippi Business Journal:
“Pharmacy benefit managers, PBMs, are advocating on behalf of Mississippians to reduce prescription drug costs and improve health outcomes. The legislation [HB 708] risks the health and safety of Mississippi’s patients, especially for those with chronic conditions taking specialty medications. In addition, HB 708 does nothing to lower drug costs, in fact, it will result in higher costs for patients.”

The Pharmaceutical Care Management Association website states that PBMs were established by health plans more than two decades ago and now “administer prescription drug plans for more than 266 million Americans who have health insurance from a variety of sponsors. PBMs will save health plan sponsors and consumers more than $1 trillion on prescription drugs this decade.”

In another email, Lopes stated: “We firmly believe there’s a patient safety issue with the legislation . . . . It’s not at all uncommon for independent pharmacies to seek higher reimbursement levels, which almost always would come at the expense of higher drug costs to patients.”

Further, Lopes said: “The majority of independent drugstores hire Pharmacy Service Administrative Organizations to collectively bargain with PBMs and other payers on reimbursement rates, payment terms and pharmacy audits. These are very large organizations, with huge market scale; many of these PSAOs also serve as wholesalers to pharmacies and sell them the medications they dispense.”
​
Nevertheless, the Mississippi Independent Pharmacists Association maintains that a standard and “transparent” maximum allowable cost list is necessary to assure pharmacies they are getting “a fair reimbursement from the PBMs.”