In the world of Big Healthcare mergers and acquisitions, it’s deja vu all over again.
The U.S. Department of Justice (DOJ) is investigating UnitedHealth Group’s proposed purchase of Change Healthcare, self-described in its Wikipedia entry as “a provider of revenue and payment cycle management and clinical information exchange solutions, connecting payers, providers, and patients in the U.S. healthcare system. The name also refers to a company founded in 2007 which subsequently became part of the current conglomerate.”
One would think that 2-sentence description alone would provide the DOJ just cause for stopping the acquisition, but perhaps the DOJ, like most of the country, doesn’t quite understand the implications if Change were to enfold itself into the UnitedHealth conglomerate. (See this article by NCPA CEO Doug Hoey for one possible explanation why giant corporate mergers are so difficult to stop in the U.S.).
There are many reasons we oppose this acquisition: continued integration means fewer competitors and less choice for end users of healthcare data services (not that we should be the ones to fight that fight, but still). Consolidation of healthcare service providers into large, single entities leads to less competition and ultimately no reason to compete on price.
But perhaps most disturbingly, Change Healthcare is an independent arbiter of healthcare claims, the outside entity that compares submitted claims against the terms of payer contracts. As such it has access to explosively sensitive data - not just patient data (for some reason not cause enough to stop the acquisition) - but also the “proprietary” and “trade” secret information PBMs and their insurer parents have fought to the death of nearly every type of reform to protect.
Now here comes UnitedHealth - or more accurately UnitedHealth’s Optum Insights (Change Healthcare’s competitor and also its largest customer) - to acquire Change, and with it every bit of competitive intelligence. What does that mean for consumers and payers? Who will be the independent entity accountable for accuracy of claims submitted for payments? And why haven’t CVS and Cigna/Express Scripts opposed the acquisition if their so-called “proprietary” and “trade secret” information will be seen by their competitor?
We could go on, but time is not on our side, and it isn’t on yours or your patients’ either. At the time of publication we are drafting our letter to the DOJ protesting this merger. We invite you and your patients; your state or independent pharmacy organization; business, chamber, municipality or other associations to sign our letter or to submit one of your own asking the DOJ to thoroughly investigate - and ultimately block - this acquisition. Enough is enough.
PUTT Executive Director
If April is to state legislation what March is to college basketball, then break out your brackets because it’s time for PUTT’s mid-session “State of PBM Reform Legislation” Review as we gather our list of Top States for PBM Reform in 2021.
Who We’re Watching:
Michigan. Easily the most fascinating bill of the 2021 session is HB 4348 introduced by Rep. Julie Calley. The signature bill of House Speaker Jason Wentworth, the “Pharmacy Benefit Manager Licensure and Regulation Act” encompasses what we affectionately call “the greatest hits of PBM Reform”* and addresses nearly every appalling anticompetitive PBM practice with a smart, workable solution. The bill readily passed the House and is now under review by the Senate Committee on Health Policy and Human Services.
*ok, we actually stole this term from Miguel Rodriguez, attorney for our good friends at the Texas Pharmacy Business Council
Oklahoma. As of this writing, the Sooner State has 4 bills on their way to the Governor’s desk, which is incredibly impressive and a testament to the hard work of the Oklahoma Pharmacists Association and their members toward protecting their professional rights. HB 2768, just signed by the Governor on April 19th, expands actions that constitute unfair claims settlement practices under the state’s Unfair Claims Settlement Practices Act. SB 821 amends the Patient’s Right to Choice Act, while HB 2123 created the Patient’s Right to Choice Commission, and HB 2124 closes loopholes in PBM licensure, regulation and levying of fees.
Texas. Because Texas meets only every other year, their legislative sessions feel especially urgent on matters related to curtailing abusive PBM practices. This year Texas legislators are fielding a large number of bills affecting pharmacy both positively and negatively but we’ve got our eye on Sen. Charles Schwerner’s SB 727, which would ban the practice of patient steering; and Rep. Eddie Lucio III’s HB 1093, which would eliminate reducing claims reimbursements via aggregated effective rates; quality assurance programs or DIR fees. Sen. Lois Kolkhorst’s SB 679 is HB 1093’s companion bill. By the way, for ideas on how to organize an excellent advocacy manual, we highly recommend reviewing the Texas Pharmacy Business Council’s 2021 Legislative Session Preview.
Illinois. Although SB 2008 has undergone 3 subject matter hearings, we’re optimistic the bill will be voted and signed into law before the end of session. Sen. David Koehler’s bill and Rep. Greg Harris companion HB 3630 are organized around patient access and correcting the imbalance of power currently tipped in favor of PBMs. Its 4 key provisions: assuring patient choice by requiring PBMs to accept claims from any licensed pharmacy; allowing any willing provider to join PBM networks; restricting abusive audits; and restricting PBM fees, denials and copayments that exceed the cost of the drug.
Louisiana. Always a state to watch, Louisiana continues to lead the charge in forward-thinking legislation. The 2021 session has only just started, but Sen. Fred Mills’ SB 218 and Rep. Christoper Turner’s HB 244 seek to prohibit PBMs and PSAOs from allowing any direct or indirect reductions in payments to pharmacies including “effective rates”, DIR fees, or any other attempts at reduction of payment. Though not exactly alike, the intention of both bills is to create greater accountability and fiduciary relationships between PSAOs and pharmacies. Additionally, Sen. Mills introduced SB 180, requiring the Health Department and Office of Group Benefits to procure PBM services via reverse auction.
Who (Happily) Took Us By Surprise:
Indiana. Fun fact: Indiana has successfully passed PBM reform legislation every year since 2013 and we had no idea until a hearing on SB 143, which seeks to allow public employers and self-funded health plans to use a reverse auction when procuring PBM services, and also requires PBMs to perform their contractual duties in good faith and observance of reasonable commercial standards. The bill was passed in the Senate, referred to the House and was passed by the House Ways and Means Committee.
Arizona. Home to CVS Caremark and 4 of the largest PBM mail order pharmacy fulfillment centers, the Grand Canyon State surprised just about everyone when its anti-PBM transaction fee bill went from introduced to enacted in 12 weeks. Even with PUTT’s Executive Director in Phoenix, Arizona has operated largely under the radar. But with fewer than 200 independent pharmacies left in the 6th largest state, Arizona pharmacies are back in action and making plans for 2022.
New Mexico. This sleeper state has been quietly enacting PBM reform legislation since 2016 when it first banned PBM transaction fees. Since then, the Land of Enchantment has methodically ramped up PBM management and oversight, stretching in 2021 to require annual transparency reporting and requiring PBMs to operate as “pass throughs” (unfortunately that last one didn’t fly). However, New Mexico passed SB 124, the “Prompt Pay” bill requiring PBMs pay pharmacy claims within 14 days of receipt and has a fierce champion in Rep. Kelly Fajardo.
Who We’re Rooting For in 2022:
New York. The legislature’s decision to delay the state’s Medicaid carve out until 2023 was a tough blow for pharmacists and it wouldn’t be an exaggeration to say more than a few hearts were broken. The decision, the fallout of a devastating year of COVID that continues still, is intended to preserve access to federal matching funds for another 2 years.
Florida. With hopes pinned on the state-funded Milliman PBM report that was released late last fall, PBM reform coalitions (there are 2) had hoped to make the case for a Medicaid pharmacy carve out. But the ask, possibly too much too soon for a state dealing with its own version of COVID-response-and-vaccine-roll-out and a steep budget deficit, was ultimately tabled. A bill requiring health plans that contract with PBMs to submit the contract to the Office of Insurance Regulation for review is still alive and in progress.
Minnesota. The “Pharmacy Fair Competition Act” looked promising from the start, with provisions for greater MAC transparency, appeals, banning reimbursement on ingredient cost below NADAC and prohibiting spread pricing. Still, SF 917/HF1279 was pulled when the Commerce Committee Chair and co-author of the bill inexplicably opted to file an amendment that would limit the bill’s applicability to pharmacies with 12 or fewer stores. Other complications only further sidelined this year’s attempts at PBM reform, but we know Minnesota, and they will undoubtedly be back stronger next year.
We’ll continue to keep you informed on PBM reform around the country and encourage everyone to stay involved and up-to-date on what’s happening with PBM legislation in your state. Our board members and staff are advocating in our respective states too, and are happy to share advice and resources. Contact us here for more information or assistance with advocating for PBM reform in your state.
4 AM, Saturday morning. The pharmacist packs her car with vaccine supplies and documentation, then hits the road. It’s well before sunrise, but 5 hours and counting until the community clinic starts. Before the day ends, she’ll have administered more than 100 vaccines, with a 6-hour road trip bookending her day.
American healthcare is a disparate collection of incongruencies. Built on the fundamentals of capitalism yet segregated from the free market, the U.S. healthcare system has left a nation of disenfranchised providers attempting to care for bewildered patients who no longer know who to trust: their doctors and pharmacists? Or the health plans promising patient access and coverage of care while seemingly doing everything in their power to deny both?
If we’ve learned anything from the COVID pandemic, it’s this: community care providers get the job done. Quickly, efficiently, effectively. West Virginia, New York and Louisiana are among the states whose governors wisely sought to include neighborhood pharmacists in the vaccine rollout. West Virginia became a case study.
But the perception that “bigger is better” still rules the day, and so giant, vertically-integrated corporations with their brick-and-mortar pharmacies-with-a-clinic snapped up government contracts to vaccinate vulnerable populations - and promptly stumbled in the process, sending mayday calls to local community providers because the truth is size does not equal capability.
Americans once again lost out on actual health care because of - and in spite of - the free market. And 3 months later Americans are still losing.
As she drives, the pharmacist considers the issues she sees everyday: patients worried about prescription prices; endless cycles of prior authorizations and denied reimbursement claims; audits that feel predatory; PBMs helping themselves to her bank account in the name of CMS and other health plan payers. And now the opportunity to assist in vaccinating citizens of rural Belle Glade, Florida - nearly 3 months after the first vaccines debuted in the U.S. Because in Florida, community pharmacies were among the last to receive vaccine shipments as part of the state’s COVID immunization program, with rural communities like Belle Glade left to figure out vaccine access for themselves.
Independent pharmacies are healthcare heroes whose “frontline warrior” attitude and optimism doesn’t ebb. It’s optimism and a genuine desire to provide personalized care that motivates pharmacists to become independent pharmacy owners. And whether its kismet or kindred spirit, community pharmacies and their patients share a common belief: they understand that healthy communities prosper, and people who feel healthy are more likely to participate in the betterment of their communities.
Belle Glade is a small city in a rural part of West Palm Beach County that boasts a population of just under 20,000. Sometimes called “Muck City” because of the abundance of “muck” in which sugar cane grows, it is a community in which the median age is 33 and median household income just barely tops $25,500.
When Belle Glade appeared in a “60 Minutes” segment examining whether wealth and privilege had influenced vaccine distribution, an independent pharmacist jumped into action. Assuming the roles of healthcare provider, event coordinator, and patient advocate she called her fellow pharmacy owners, organized a pop up COVID vaccine clinic in 48-hours and brought positive press attention to a situation that just days before had been hailed as one of Governor Ron DeSantis’ biggest blunders.
Actions of this nature are not uncommon in independent pharmacy. Determination, drive, and swift flexibility allow community pharmacists to see the need and respond immediately. They are of the mindset that patients and communities are top priority -- qualities rarely, if ever, seen in corporate healthcare conglomerates.
It’s an example of practice and outlook that truly does put the care back in healthcare.
In a year vividly marked by unfathomable loss of life, business and livelihood, we find ourselves saying an unexpected goodbye to the fledgling Indy Health, an unpredictable casualty of, among other things, the pandemic and its unforeseen forces that have left our world reeling in tragedy and uncertainty.
For legal reasons, the founders, investors and executives of Indy Health cannot speak for themselves (read here for additional information), and this message is not an attempt by PUTT to speak for anyone at Indy Health.
Though the post-mortems have only just begun, we can be sure of one thing: Indy Health was a good idea, a strong idea, a not-improbable nor pie-in-the-sky shot at a better approach to pharmacy benefit management. It was an opportunity for pharmacists to take control of their destiny, if not to head off the well-documented anticompetitive tactics by PBMs that are driving out small pharmacies making a handsome profit for themselves and their shareholders at literally everyone else’s expense.
And while a number of factors contributed to Indy Health's early demise, (see pharmacist Benjamin Jolley's compelling analysis of one possible factor), the truth is there are certain realities that cannot be ignored. The PBM market is oligopolistic and extremely difficult for competitors to enter - entirely by design. Prescription medication is only getting more expensive while those who could do something about it choose to pursue false solutions like foreign drug importation or removing rebate caps. There are enemies in the camp - not just the usual suspects - and pharmacists are among the few left fighting a battle that shouldn’t have been theirs to begin with.
Indy Health’s founders and investors saw the challenges and willingly faced them head on. In the words of Theodore Roosevelt, they dared greatly. To those people, and to the many pharmacists who believed in Indy Health and helped enroll their patients in Indy’s plans, we at PUTT thank you for your conviction, your willingness to risk, and your determination to put a stake in the ground for the future of independent pharmacy.
This won’t be the last time independent pharmacy takes a stand. We can only hope it won’t be too terribly long before independent pharmacists try again.
With ardent respect and admiration,
Between the pandemic and the vaccine race, the last 12 months have felt like an endless episode of Nightmare on Sesame Street brought to us by the letters C-O-V-I and D. And while “COVID fatigue” may or may not be an entirely too-polite term for the exhaustion and disappointment many of us feel over bungled roll outs and vaccine mongering by certain very large pharmacy chains, there is some good news.
The war against PBM abuse continues, and PUTT is fixed on the front lines. We’ve seen promising forward movement in states that have either traditionally been PBM holdouts (Florida, where CVS’ now former CEO Larry Merlo resides) or strongholds like Arizona, home to the largest PBM mail order pharmacies and corporate home of CVS Caremark.
Still, we’re realistic. We feel the frustration of having to start over again with a new administration. While President Biden has stayed the Trump Rebate Rule, a win for PBMs and literally no one else, we’re undeterred and will continue pushing for rebate kickbacks to end.
DIR fees remain the #1 threat to independent pharmacies, and we’d be remiss if we didn’t take a moment to address the thrust of NCPA’s lawsuit, which seeks to move DIRs to the point of sale. While we appreciate the gesture, we strongly believe the push to increase transparency of DIR fees does little to alleviate the exorbitant financial burdens DIRs place on pharmacies. We’re exploring options, and will report back to members with our findings.
It’s often the small victories that matter most. States that included their community pharmacies in the vaccine rollout saw demonstrably better results than those who did not - and the gap was widely reported in the national news, raising the profile of independent pharmacies across the U.S.
Texas, New Mexico, Minnesota, Michigan, Wisconsin and now Arizona are taking their next steps toward meaningful PBM regulation, seeking to create or tighten laws that protect patients, payers and pharmacies. New Mexico, in particular, passed a comprehensive law in 2020 that greatly limits PBM overreach. Earlier this month, PUTT testified at the state’s House HHS committee on measures to help further strengthen the new law.
More states are passing laws to limit non-DIR transaction fees. PUTT is assisting independent pharmacy organizations to pass bills modeled after Texas’ successful 2015 transaction fee bill. Arizona’s bill recently passed the Senate and moves to the House next. We’re building a cache of evidence-based rebuttals against the opposition’s frequently -made points. Please contact us for more information about our evidence files.
Keeping our members informed and empowered is a priority. Please join us for the upcoming webinar “Big Insurance’s Money Machine: The Secret and Not so Secret Ways PBMs Make Money”, hosted by PUTT board member and webinar series organizer Nathan Mair. Space is limited, so be sure to register soon!
Also be sure to check out PUTT board member Dr. Jeremy Counts’ op-ed “Where’s the Vaccine?” inspired by our newest editorial cartoon.
Thank you for your support of PUTT. As always, we welcome your input. YOU are the source of our goals and best ideas!
Stay safe and well,
2021. So far for pharmacies, it's been a wild ride. The much anticipated advent of the COVID vaccine(s) has spawned additional issues with rollout and availability capabilities - many of which can be tied back to misinformation, corporate territorialism and lack of proper planning.
Does anyone else hear a common PBM theme here?
States that are excelling in the vaccination effort are those including their local independent pharmacies in all phases of distribution. In an MSNBC interview this month, West Virginia Governor Jim Justice noted that, “instead of letting vaccines sit on shelves we saw that our elderly wanted to go to their local pharmacies and clinics… We incorporated everybody together… and said we’re not going to let vaccines sit on shelves.” And, in a January interview on Face the Nation, Arkansas Governor Asa Hutchinson remarked, “Our independent pharmacies are doing a better job of getting it (the vaccine) out. They’re acting with more urgency than the chain pharmacies.”
The facts are that the CVS/Walgreens partnership was allocated more than 4.7 million doses of the Pfizer and Moderna vaccines, but as of mid-January -- a month after rollout began in many states -- had only administered a quarter of those vaccines. In states like Mississippi, that translated to only 5% of the state’s initially allocated shots administered to their most vulnerable populations. Statistics that abysmal can only be construed as either the chains are saving doses for second round inoculations, or incapable of doing the job they were contracted to accomplish. And while one would hope that it’s the former not the latter, even saving doses isn't necessary. Both Pfizer and Moderna have made clear that new shipments will cover those second rounds .. so why is there a shortage?
It has long been reported by even their own employees that major chains like CVS and Walgreens are understaffed to the point of patient danger, and large numbers of what they themselves call “retail locations” (as opposed to ‘pharmacies’) obviously do not translate into the amount of trained medical personnel necessary to effectively administer vaccines to the single portion of the population they were contracted to vaccinate. Whether or not this factors into their ongoing vaccination rollout issues, we may never know.
The truth is that if CVS/Walgreens were not either "holding back" doses for second round inoculation or caught in a web of their own ineptitude with regards to their LTC government contract, far more shots could have gone into arms -- and far more shots would be available to our swiftly dying population. Look at the independent pharmacy rollouts in West Virginia, North Dakota, and Louisiana. They're not holding back doses, or lacking the ability to get doses administered. They're getting them into the arms of the population that needs them most - and receiving the doses for second rounds. The statistics prove it. West Virginia alone has achieved a 50% drop in hospitalizations and a 45% drop in deaths since the inception of their vaccine rollout - a substantial difference over states who choose to rely solely on giant corporation driven control.
Patients trust their local independent pharmacies, and have for generations. When it comes to easily accessible advice on medication-related questions and issues, their local pharmacy is a patient’s preferred go-to. Not a chain ‘retail’ store that places more importance on superstore mentality than individualized patient care -- which may explain CVS and Walgreens’ claims that lack of consent is a large part of the reason they’ve been unsuccessful.
The PBM-owned pharmacies at the helm of America’s vaccine effort are, in essence, proving the necessity of PBM reform. Independent pharmacies nationwide are licensed, willing, Trusted partners in the ‘arms race’ on one of the most important vaccines in history. Giant corporations playing territorial hardball are not the answer. As The Washington Post recently wrote, “The strong performance by local pharmacies in distributing lifesaving vaccines makes that clear.”
Jeremy Counts, PharmD
Main Street Pharmacy
Carl Savoie’s mother died alone in a nursing home.
“She didn’t die from illness. She died of loneliness,” the Opelousas, Louisiana-based pharmacist and owner of Carl’s Thrifty Way Pharmacy told local newspaper the Daily World. “She never got to touch her grandkids anymore. The residents at the nursing home had become shut-ins.”
Savoie is among the nation’s thousands of independent pharmacists and pharmacy owners who are mobilized and vaccinating as many Americans as possible against COVID-19.
After learning he would receive a substantially larger number of vaccine doses than the standard 100 doses community pharmacies were being given by the State of Louisiana, Savoie immediately jumped into action recruiting volunteers and setting up a drive-through clinic at a local church.Over the course of 2 days, Savoie and team vaccinated 975 Louisiana senior citizens.
“Because of (my mother), this was just something that I wanted to do for the parish, giving back to the people here. It wasn’t about my customers or my store. It wasn’t for fame or notoriety. It’s just to me, there never has been anything as important as this,” Savoie said that day.
Savoie is not alone — not in his home state where the Louisiana Independent Pharmacies Association (LIPA) currently employs a COVID vaccine coordinator to assist its 300+ member pharmacies — and not in the rest of the country where community pharmacies in other states including West Virginia, Maine, Arkansas, and New York have risen to the challenge of vaccinating hundreds of patients a day when vaccine is available.
“Community pharmacies are successful with the vaccine rollout precisely because they are tapped into their communities,” says Randal Johnson, LIPA President and CEO. “This isn’t about metrics and or being the center of attention. Independent pharmacies care for the people in their communities because the people in their communities are neighbors, family and friends.”
Johnson says their pharmacies were able to receive vaccines directly from Pfizer in special thermal shipping containers packed with dry ice to maintain vaccine temperature integry while getting doses into arms within a week, thus alleviating any concerns about the ability of small pharmacies to manage direct shipments of vaccine.
Retired Louisiana State Medicaid Director Ruth Kennedy, now LIPA’s COVID vaccine coordinator, says “Our independent pharmacies in Louisiana have more than amply demonstrated that they are the key to getting vaccines from vials to arms. All they need is the opportunity — and in our case, opportunity means vaccine!”
Although independent pharmacies were largely left out of the federal government’s Pharmacy Partnership for Long Term Care program, an agreement that mostly relies on CVS and Walgreens to administer vaccinations at long-term care facilities across the country, it hasn’t stopped small business pharmacies from stepping up to the challenge of finding ways to quickly, safely and efficiently administer COVID vaccinations in their communities.
Unfortunately for the retail pharmacy giants, several frustrated state governors have begun speaking out about CVS and Walgreens’ disappointing results, saying distributing through CVS and Walgreens “isn’t working” and, in the case of New Jersey Governor Phil Murphy, accusing the giants of “punching under their weight.”
“It’s like no one did basic research before agreeing to give the project reins over,” says PUTT President Scott Newman, whose own pharmacy is one of 5 independents in the greater Chesapeake, Virginia area to assist with vaccinating eligible Virginia residents. “CVS and Walgreens have been cutting staff. CVS’ inability to keep up with just filling prescriptions is well documented. Why CVS and Walgreens would be entrusted with the job of vaccinating millions of vulnerable Americans when they can barely keep up with their core business is a question people should be asking.”
Under scrutiny and pushing back against complaints of their very public failure to meet basic vaccine rollout goals, Walgreens has pointed a finger at health care workers for declining to be vaccinated while CVS’s chief medical officer, Dr. Troy Brennan, told CNN’s Kate Bolduan the dismal rate of vaccination distribution was “all part of the program that was well understood by everyone who was involved from the state departments to the federal government” — presumably implying state governors shouldn’t be surprised by the chaos or failure to meet benchmarks.
And yet there were no complaints from West Virginia, and no reports of chaos.
In the first week of rollout, the Mountain State had administered nearly all of its available vaccine thanks in large part to the work of independent pharmacies and the absence of giant retailers CVS and Walgreens. Because many of their long term care facilities have existing relationships with community pharmacies, vaccinating the target populations went, well, according to plan.
To comply with its own plan, Maine began shifting COVID vaccine doses away from CVS and Walgreens, citing “principles of velocity and equity” as reasons to go with independent pharmacies. CVS and Walgreens tap-danced around the shift, saying it wasn’t an issue of pace so much as already having “more doses than planned.”
In Louisiana, Carl Savoie and his fellow independent pharmacies are administering vaccinations as soon as doses become available, especially picking up slack in parishes where there’s limited or even no CVS or Walgreens presence. And because they are so dialed in, Louisiana pharmacies are also bringing vaccine — and hope — to smaller congregate living settings who feel as if they’ve been overlooked.
“Some of our local elderly and assisted living facilities were falling through the cracks. They were told their residents would be vaccinated by pharmacists sent from the national chains, but they were never contacted and their calls were never returned.” says Baton Rouge, Louisiana-based pharmacist and pharmacy owner, TJ Woodard. Last week, Woodard and his team administered more than 100 vaccine doses to residents at a local assisted living facility in a space of a few hours, one of many such clinics he and his staff have conducted since learning they would be included in the state’s vaccine rollout. “We’ve now done this enough that we know we can vaccinate several hundred people a day. We’re here, we’re ready. As usual, when others overpromise and underdeliver, at the expense of the health and welfare of our friends and neighbors, independent pharmacies are happy to step in and help carry the load.”
Regardless of who administers the COVID vaccine, the process is an undeniable logistical nightmare fraught with time consuming scheduling, paperwork and reporting requirements. Pharmacies are inundated with thousands of calls from patients and members of the general public seeking assistance for themselves or loved ones while reports of extra doses, missing doses, reallocated doses, calls from state governors for higher shipments of doses and much more continue to bombard and confuse Americans.
But perhaps it’s Arkansas Governor Asa Hutchinson, whose state made history when SCOTUS ruled in favor of Arkansas’ Act 900 in Rutledge v. PCMA, who sums up this unprecedented “arms” race best. When asked on Face the Nation about the difficulties with CVS and Walgreens, Hutchinson said, “The independent pharmacies are doing a better job … they’re acting with more urgency.”
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Canadian Drug Maker Medicure Inc. Acquires a U.S.-Based Independent Pharmacy to Market its Cholesterol Drug. What This Could Mean for the Future of PBMs.
The polio vaccine was never patented. The insulin patent was sold for $1. The average price for epinephrine is around $109 while the 2-pack EpiPen sells for somewhere between $650-$700. How does the conversation for the moral value of medication — not just market value — keep getting shoved under the rug?
That’s the question Canadian drug maker Medicure Inc. and Winston-Salem, NC-based Marley Drug were contending with when, in a moment of brilliance, they decided to align their operations for the sake of U.S. patients seeking access to affordable medication.
Loosely translated, “aligning” meant Medicure would acquire Marley Drug, a transaction that was finalized in mid-December 2020.
So why would a pharmaceutical company acquire a pharmacy? And is that even legal?
The answer may surprise you.
“It was an obvious opportunity for us and our patients. Medicure shares our moral mission to cut drug costs for consumers,” says David Marley, founder of Marley Drug along with his wife, Elizbeth. “You have a small pharmaceutical manufacturer who is willing to buck the system with us.”
“Bucking the system” could well be Marley’s motto. In the relatively small world of independent pharmacy, he’s well-known for being a “loud and proud” voice of pharmacy benefit manager (PBM) reform. Among his other advocacy efforts, Marley is the founder of Pharmacists United for Truth and Transparency (PUTT), a non-profit he formed with other pharmacy owners in 2011 to spread awareness of the types of systemic PBM abuse that now dominate the news: spread pricing; contract “gag clauses” that prevent pharmacists from telling patients about therapeutically equivalent — but less expensive — alternatives; extorting rebate kickbacks from manufacturers; reimbursing pharmacies below drug acquisition price while charging patients and their health plans drug cost plus a sizeable mark-up … the list goes on.
Winnipeg-based Medicure has its own view of working with PBMs. The small, publicly-traded company specializes in the development of medications for the U.S. cardiovascular market. Medicure came to prominence after taking its hospital-based drug Aggrastat® from 2% to 65% market share, offering a high-quality therapeutic alternative to a higher-cost brand at an affordable price.
Attempts to make its cholesterol drug Zypitamag® — a new generation statin with a low risk of adverse interaction with a patient’s other medications — commercially available to patients in the U.S. were not so successful. The reason: the contract demands of PBMs, self-appointed administrators of the U.S. prescription drug market who serve as the gatekeepers and price-setters of insurance-covered medications.
“When we launched, our approach, which I think is pretty standard, was to set a high WAC (Wholesale Acquisition Cost) price, but then to offer a steep rebate with the hope of getting coverage from PBMs,” says Medicure president Neil Owens, Ph.D. “Our assumption was that we would gain coverage, and then a provider would decide if it was right for their patient. Unfortunately, we didn’t gain very much coverage and the high WAC ended up being the cash price for anyone without insurance or who cannot use our discount card by law, such as someone on Medicare Part D.”
At first, U.S. PBMs were willing to carry Zypitamag to a limited extent … for $697 per 90-day supply. Yet Medicure can sell Zypitamag for $90 for a 90-day supply and still be profitable.
“As our company moved from a hospital-based product to a consumer prescription product, my expectation was that Zypitamag would be assessed based on its clinical benefit for patients, however, the only factor that seemed to be considered was the rebate provided. I’ve never asked (our PBM contacts) what would happen to our coverage situation if we lowered our price to $90 per 90 days, but I am guessing they would not be interested in providing coverage, and would likely drop our existing coverage,” Owens continues, “and only have (competitor) Livalo as an option.” (note: Livalo continues to raise its WAC price each year and is now $1,117 for 90 days). “Our understanding is that the PBM inflates our WAC price to the insurance company by about 10%, then offers them a rebate of 35–40%, which results in the patient bearing a significant portion of the cost.”
Even with an agreed-upon price of nearly $700 per 3 months’ supply, PBMs would not make Zypitamag available to patients until they had tried — and failed with — at least two other medications...
While 2020 may have seemed like the worst year in modern human history, it was a busy one for PUTT and our members. With just a few days before the holidays and plenty of reasons to celebrate (Rutledge v. PCMA victory; COVID vaccines) we thought we’d take a moment to reflect on some of the many accomplishments of PUTT and PUTT members over the last 12 months:
In January and February, we launched The PUTTcast, and began regularly guest-hosting on the PBM Reform podcast series for Pharmacy Podcast Network in an effort to further PBM reform by sharing information and resources. We connected members who’d been affected by OptumRx practices to attorney Mark Cuker, whose firm launched a lawsuit against the #3 PBM in multiple states.
The beginning of March brought the full onslaught of COVID. During the first weeks of the crisis PUTT developed and sent a Local Pharmacy Engagement 4-Point Plan to Boards of Pharmacy, Departments of Insurance, and the Governors’ Coronavirus Task Forces in all 50 states. We compiled the responses and published them to the media and our website.
In April and May we conducted Medicaid managed care surveys of independent pharmacies in Florida and Illinois. In response to Florida’s survey and 3 Axis Advisors independent report findings, we worked with pharmacy owners to cast light on pharmacy exploitation by CVS Caremark -- assisting them in holding their own press conferences to highlight the findings. PUTT members and friends contributed evidence that resulted in an article in the Capitol Forum, a private inside-the-Beltway publication read nationwide. The article, published on April 6th, outlines the anticompetitive PBM practices we’ve all come to know, but witnessed shamelessly taking place during the COVID-19 pandemic.
In May and June our board members filed FTC complaints against PBMs and complaints with CMS when network access requirements were not being met. In an effort to mitigate acronym confusion, we created a downloadable Managed Care “Glossary of Terms” for lay persons that can be used to help anyone decipher contract jargon and translate how it’s used as a mechanism for PBM exploitation of pharmacies.
In response to member evidence and complaints we developed the Invoice Project -- an effort to educate payors about the true discrepancies in how PBMs are using their pharmacy dollars -- and an Evidence Locker of member-supplied documentation of PBM abusive practices; as well as a PBM patient poaching survey for data on patient steering tactics.
In June and July, we continued to spearhead “PBM Reform-adjacent” campaigns that affect the viability of independent pharmacies. We conducted an anti-drug importation campaign and asked Facebook users to sign state petitions asking Governors to issue orders that would allow pharmacies to administer the full range of FDA approved vaccines as a proactive response for future COVID vaccine availability. As a COVID precaution, our Annual Summit went virtual and was a huge success. PUTT members and friends had a unique opportunity to speak directly (via Zoom) with a panel of legislators involved in PBM reform from across the country, and even pre-submit questions to be answered.
In August and September PUTT co-authored a 27-page summary proposal of recommendations requested by the White House on healthcare reform with FDA Senior Advisor, Dr. David Gortler, and the input of multiple other pharmacy groups including PSSNY, LIPA, NCPA, and IPMD -- the culmination of multiple meetings with high-ranking White House staff on the need for national PBM reform measures.
In October we welcomed new "official" and unofficial state chapters of PUTT in Michigan and Minnesota spearheaded by members of our board; and enjoyed moments of nail-biting camaraderie when we hosted our live SCOTUS "watch party" of the Rutledge v PCMA proceedings. The final months of 2020 brought a wave of PCMA-funded false patient coalition websites for "Affordable Rx". In response to their bogus claims of "independent pharmacy lobbies", we began a community education campaign putting a "face" to independent pharmacy through social media #UNselfie graphics using pictures submitted by PUTT members and friends. We plan to continue this campaign into 2021.
In November PUTT wrote and defended policy language at the American Legislative Exchange Conference (ALEC) HHS committee which was attended by members from both the political and private sectors, including PCMA. And, a year after we first began coordinating evidence and interview subjects, NBC released its investigative report on mail-order abuse of patients -- a huge win in the battle to educate legislators and the public on the dangers of forced pharmacy mail-order.
PUTT is nothing without the efforts of our members, so this year’s 4th Quarter Membership Campaign has focused on creating solidarity with all healthcare organizations using the title RxRevolution -- we encourage all who are abused by PBM business practices to join the fight!
While 2020 has definitely been "one for the record books," it has also been a year of intense scrutiny on PBM business practices. This is due in large part to our board of directors and members who’ve continued to work hard to educate lawmakers, patients and plan payers -- all while serving as front-line essential workers in the worst global pandemic in a century.
As this year comes to an end, we thank you all for your hard work, your sacrifices and for going the extra mile for your patients and staff. We thank you for your support of PUTT and look forward to working alongside you in 2021 for PBM reform.
Happy Holidays from all of us at PUTT!
The schoolyard bully doesn’t like it when the other kids finally stand up for themselves.
Such was the case this week when CVS Health posted a 4-paragraph response to losing the $400 million State of Louisiana employee and retiree pharmacy benefits contract.
With zero irony, the largest health company in the U.S. complained on their LinkedIn page:
“By inserting themselves in the state’s process of selecting a firm to manage prescription drug coverage … special interest groups representing Louisiana’s independent pharmacists attempted to line their own pockets at the expense of the state’s taxpayers, employees, and retirees …
“This situation has set a dangerous precedent, endangering the healthcare coverage of state employees, threatening the fiscal solvency of the state employee and retiree benefit plan, and emboldening special interest groups whose sole concern is lining their own pockets. This bullying behavior, at a time when the state is facing unparalleled economic uncertainty from a global pandemic and countless natural disasters, is nothing short of shameful. Moreover, it represents an alarming trend that all states should be concerned about.”
Translation: the tables have turned and they don’t like it. Not one little bit.
The problem wasn’t that “special interest groups” inserted themselves into the process. Procurement was complete by the time Louisiana’s Office of Group Benefits submitted the CVS Health contract to the State Joint Legislative Committee on the Budget (JLCB) for approval, citing an “emergency.”
The problem was there wasn’t an emergency.
And so the JLCB had questions. How did this happen? Why was the state rushing to sign a contract with such poorly defined terms? (e.g. definition of a generic drug: “any drug that isn’t a brand”) Why CVS Health, with its documented track record of screwing over patients and undercutting small pharmacies? What about those state Medicaid studies implicating CVS for overcharging Medicaid nearly a half-billion dollars?
Without satisfactory answers, the JLCB voted unanimously to reject the CVS contract and now CVS blames the state’s small business independent pharmacists, who showed up en masse to protest the contract on behalf of their patients and the state.
But put CVS’ sore loser attitude aside for a moment. Review their statement, especially the subtly abusive and blame-shifting language.
“This situation has set a dangerous precedent, endangering the healthcare coverage of state employees … the fiscal solvency of the state employee and retiree benefit plan …”
Anyone who’s ever attempted to leave a toxic relationship knows what it’s like to be taunted with sentiments like these. CVS is effectively saying “Louisiana, this is a dangerous precedent you’re setting … if you leave you’ll endanger the family … you’ll ruin yourself financially …”
And it only gets worse as the statement goes on. “You’re being fiscally irresponsible! You’re letting your friends influence you when you should be listening only to us! There’s a pandemic out there! You’re already helpless from countless natural disasters! To leave now is shameful, you should be ashamed of yourself!”
And finally, “YOU are bullying ME!”
This is classic projection, a common practice among tormentors toward their tormentees, except here we’re talking about the actions of the 5th largest company in the U.S. toward a state caught between a rock and hard place.
Stay classy, CVS.
Publicly whining about the loss of a sale is not a good look, but it’s downright distasteful if the whiner is the corporation currently holding 2/3rds of Louisiana’s Medicaid pharmacy benefits contracts (CVS). Bear in mind, CVS generated revenues of $256 billion in 2019.
And then there’s the matter of calling small business pharmacy owners “greedy”. How they can possibly say that with a straight face when CVS CEO Larry Merlo’s 2019 compensation jumped 66% to over $36 million and is now 790 times that of his average employee’s compensation is the very definition of hypocrisy.
This is the same Larry Merlo who earlier this week bragged about how well the COVID-19 pandemic has played into CVS’ business model, making no apologies for moving into the physician space and heralding the sinister-sounding “omnichannel” as a new approach to healthcare in the retail space.
It’s worth noting that nowhere in CVS’ complaint did they mention Louisiana’s independent pharmacists turning down a $2-per-prescription dispensing fee — paid by the Office of Group Benefits (i.e. taxpayers), not CVS — in exchange for a “yes” to the contract. Nowhere do they mention dragging the state and local pharmacists into a week of contract negotiations focused solely on whether or not CVS would agree to follow Louisiana state laws.
Yes, you read that right. Because CVS had entered “if applicable” in the areas of the contract that dealt with following the law, it became necessary to negotiate following the state’s pharmacy and tax laws.
That’s the kind of business CVS is. Arrogant enough to think the laws may or may not apply to them; trigger happy and ready to spend $9000 or so on a full-page print ad in the state’s main newspaper addressed to the “People of Louisiana” to inform them they now face financial doom because their state declined a contract. Nothing like a little misleading public shame and fear mongering to shape the tide of public perception.
That, by the way, is an abuser playbook tactic called “triangulation” — adding a third party to a discussion in which they are not directly involved. Abusers, in their distorted thinking, can find ways to make any private discussion “relevant” to a public audience.
But that’s CVS, a classic bully and tormentor of anyone who doesn’t fall in line with their view of the world.
Why should they have to conform to the practices of professionalism and good business; show some character, good sportsmanship, or a little humility at the loss of a sale? Why should they consider what lessons could be learned or applied when they can unleash the full firepower of the finest legal, lobbying, and PR army money can buy? And then, turn that army on the small business pharmacies, taxpayers and employees of the State of Louisiana?
Why would they, when no one — not even the federal government — can truly hold them accountable? And so here we are, back where we started.
But the good news is, this is what it looks like when the other kids on the playground finally stand up to the schoolyard bully.
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