If you thought 2021, aka the follow-up to When Satan met 2020, seemed like a mixed bag of forward momentum and frustrating setbacks in the move to reform PBMs, you’re in good company. As we look over the year that was 2021, we’re encouraged by many of the high points (Louisiana Independent Pharmacies Association v. Express Scripts; Comer Forum on Drug Pricing) and positively puzzled over the rest (UnitedHealth Acquiring Change Healthcare?). You be the judge as we recall this year’s highlights:
January was a time of hope and relief as the first COVID vaccines became available to high-risk members of the public. Not surprisingly, Walgreens and CVS locked up contracts with the federal government to vaccinate residents in nursing homes and long-term care facilities, only to fumble nearly every step of the way. West Virginia made national news when its independent pharmacies quickly and efficiently vaccinated its most vulnerable populations; proving once again who the true healthcare heroes are. The fledgling Arizona Independent Pharmacy Coalition (founded and supported by PUTT members) introduced their first anti-PBM transaction fees legislation, while Florida Small Business Pharmacies Aligned for Reform (SPAR) introduced aggressive Medicaid managed care reform legislation. Overall, 43 states introduced 111 pieces of legislation intended to rein in PBM abuses and overreach.
Spirits were high in February following NCPA’s landmark announcement of a lawsuit to end DIR fees. The celebration was somewhat subdued, however, upon learning that NCPA’s lawsuit wasn’t so much about ending DIR fees as moving said fees to the point of sale. Following an in-depth conversation with NCPA CEO Doug Hoey, PUTT President Scott Newman and Executive Director Monique Whitney sought additional legal counsel to examine options for suing to end DIR fees. Meanwhile, Louisiana Independent Pharmacies Association (LIPA) took Express Scripts to court over state law requiring payment of a 10-cent provider fee that funds Louisiana Medicaid. Express Scripts claimed Medicare preempted the fee requirement and moved to dismiss the case; U.S. District Court Judge James Cain saw no reason to dismiss and ruled to hear the case.
Fickle March swept in with the end of IndyHealth, an independent pharmacy and pharmacy-organization owned Medicare D health plan with a strong concept but an unfortunately-timed roll out (thank you, global pandemic). We all cheered when Wisconsin passed their PBM reform bill, SB 3, after a year-long battle, and Michigan took a strong stand against PBMs with their proposed legislation HB 4348 (affectionately known as "the kitchen sink bill").
Following a controversial 60 Minutes segment in which it was alleged well-to-do friends of Governor DeSantis may have received early access to the COVID vaccine over poorer communities, PUTT Vice President Dawn Butterfield helped organize a vaccine clinic in Belle Glade, Florida, vaccinating more than 100 residents. PUTT organized media attention on the clinic, highlighting again the need to protect independent pharmacies that serve rural and economically challenged communities.
By April the public had full access to COVID vaccines, and pharmacies gave it their best shot(s) to help end the pandemic, though the emergence of new variants and mixed public receptiveness to the vaccines would ultimately delay long-term health and economic relief. PUTT founder Dave Marley shared his “Manifesto to Dismantle Traditional PBMs” on the PUTTcast and PUTT hosted a webinar update on the “PUNCH” lawsuit (which is still taking pharmacies as client defendants. Learn more here)
In May we took up arms against UnitedHealth Group’s intent to acquire Change Healthcare, a health IT company pharmacies know as “the switch” - the entity responsible for routing the claim to the correct insurance company, then routing the response back to the pharmacy (source: pharmcompliance.com). PUTT spoke out against the proposed acquisition, including sending a letter to the U.S. Department of Justice in opposition. A small but promising victory in Arizona meant no pharmacy will have to pay PBM transaction fees on commercial or ERISA plans effective October 1st, and Maryland quietly paved the way for removal of ERISA language from state law with their passage of HB 601.
With many state legislative sessions coming to an end, June and July are when PUTT switches to “free market solution” mode. With an eye toward supporting the “Relocalizing Care” movement, PUTT participated in the Mitigate Partners conference in Florida, including a brief presentation on incorporating small business pharmacies in the “Main Street” healthcare solution. PUTT’s “Pharmacy and Pharmacy Patient Protection Act” - proposed model legislation banning PBM practices including patient steering - saw intense debate at the American Legislative Exchange Council (ALEC) annual meeting in Salt Lake City. PUTT Executive Director Monique Whitney and American Pharmacies general counsel Miguel Rodriguez presented the proposed legislation, winning support from ALEC’s HHS committee public sector members but mixed reaction from private sector members, many of whom represented insurance companies. The bill was ultimately held back from a vote to allow for further stakeholder discussion and negotiation.
Attorney Mark Cuker’s (PUNCH lawsuit) MAC pricing win in July, along with the good news that LIPA’s lawsuit would be heard in U.S. District Court, helped make the transition from July to August much happier and more productive than the dog days of summer tend to be. In August PUTT teamed with LIPA general counsel J.R. Whaley to catalog PBM-related lawsuits while the National Federation of Independent Business (NFIB) took a public stand for the rights of independent pharmacies to be protected from PBM abuse.
In September PUTT hosted its Annual Summit in Orlando, Florida with spotlight presentations by Michael Wright and Miguel Rodriguez of the Texas Pharmacy Business Council on the passage of their landmark PBM legislation bills HB 1763, which prohibits retroactive fees, and HB 1919, their anti-patient steering legislation. Greg Reybold of American Pharmacy Cooperative Inc., discussed the “now what” of the U.S. Supreme Court’s groundbreaking Rutledge v. PCMA decision that cleared the way for states to regulate certain PBM business practices. Trevor Daer, principal at Granite Peak Analytics, discussed a case study on fair reimbursements, and Carl Schuessler of Mitigate Partners gave an insider's view on the benefits of implementing relocalizing care programs into pharmacy business. Legislative panelists Sen. Nancy Barto (R-AZ), Sen. Fred Mills (R-LA), Sen. James Skoufis (D-NY), Rep. Jackie Toledo (R-FL), and Del. Nicholaus Kipke (R-MD) rounded out the event with encouraging insights into PBM reform in their states.
With the onset of October PUTT joined the grassroots campaign to include the Grassley-Wyden Medicaid managed care reform language in the Biden Administration’s reconciliation (“Build Back Better”) bill, then in November joined the rest of the country in applauding the outcome of the 8th Circuit Court of Appeals decision in PCMA v. Webhi.
November continued to be a powerful month for the conversation to end PBM abuse, with sparks flying at the “Comer Forum” on drug pricing, in which PUTT friends and people we generally fangirl/fanboy over testified before a panel of Republican Congressmen and Congresswomen on the factors escalating drug prices. Our favorite moment: when Rep. Diana Harshbarger (R-TN) said she’d waited 35 years to have the hearing. “I understand this problem,” she said. “You can’t solve a problem unless you understand it, and I understand this problem.” (emphasis added by us, but she was seriously badass)
And on the topic of badass, as we come to the end of this year we’re bursting with pride to see PUTT Vice President, Dawn Butterfield, ranked #14 in the list of The 50 Most Influential Leaders In Pharmacy. Our podcast, the PUTTcast, had more trailblazing guests this year than we can count, and with the unwavering assistance of the Pharmacy Podcast Network we have even more great shows in the works for the upcoming year. We’re looking ahead to 2022 with optimism and enthusiasm, but also with a fierce determination to see more wins than losses, more forward movement and fewer setbacks. Together we can do this.
We thank you for your enduring support of PUTT. We couldn’t do what we do without you, and we appreciate all you do for your patients, your communities, and your industry.
We wish you the warmest and brightest of holidays,
The PUTT Board
It’s feeling a lot like PBM reform is getting really real as the largest pharmacy benefit managers, especially those that might own or exert enormous influence over large retail pharmacies, come under fire for issues related to real-world concerns for patient safety, drug pricing and limiting access to medications.
First up, and perhaps the most exciting development this month, the 8th Circuit Court of Appeals released its verdict in PCMA v. Webhi, with the outcome decisively upholding the U.S. Supreme Court’s Rutledge v. PCMA verdict that says certain practices by PBMs toward network pharmacies are not preempted by ERISA. What it means: states can confidently move forward in their attempts to regulate PBMs without PCMA playing the ERISA card every 5 minutes.
Until Arkansas Attorney General Leslie Rutledge took on PCMA last year, ERISA (the Employee Retirement Income Security Act) had been a favorite fallback of the PBM lobby. A federal law that sets minimum standards for private industry health and retirement plans, ERISA preemption had become a kind of de facto standard against which the most predatory of PBM practices were compared and found to be, for some reason, allowable. So when Arkansas passed a law protecting its pharmacies from being forced to accept PBM below-acquisition cost reimbursements on drugs dispensed, PCMA naturally claimed ERISA preemption on the grounds that the federal law superseded state law.
In a nutshell, SCOTUS said no, and kicked PCMA v. Webhi back down to the 8th Circuit for review (previously the 8th Circuit had ruled in favor of PCMA’s ERISA preemption argument). But what, exactly, was the 8th Circuit (re)considering?
Briefly, the 8th Circuit reviewed laws enacted by the State of North Dakota in 2018, which proposed to regulate a series of PBM practices that have proved problematic to patients and pharmacies to the point of impacting patient care. The practices in question include the right of pharmacies to mail and/or deliver medications to patients upon request; the right to disclose to the patient or plan sponsor details of pharmacy reimbursements; levying performance fees on pharmacies’ cost of goods sold as well as other fees post-claim adjudication; requiring pharmacy practice standards above those set by the state board of pharmacy including additional standards for inclusion in the PBM’s network; and restraining pharmacies from dispensing the full range of drugs allowed under state licensure. PCMA vigorously objected, claiming ERISA pre-emption on some of the laws, and Medicare D exemption over others.
Ultimately the 8th Circuit decided none of the laws North Dakota enacted were preempted by ERISA, but the ones related to fees were not preempted on Medicare D prescriptions. So a victory for patients and pharmacies in the areas of transparency, access to medication and the end of certain onerous network inclusion requirements, but a not-insignificant loss on the question of DIR fees, which have increased more than 91,000% in 10 years.
DIR fees were very much a topic during the November 17th Committee on Oversight and Reform Forum on the Role of Pharmacy Benefit Managers in Drug Pricing. The 7 member almost all-star panel that testified before Ranking Member James Comer (R-KY) included 46Brooklyn Research CEO Antonio Ciaccia; Dr. Madeline Feldman, President, Coalition of State Rheumatology Practices and Chair of the Alliance for Safe Biologic Medicines; Dr. Jonathan Grider, independent pharmacist and owner of Lake Cumberland Pharmacy; and Ted Okon, Executive Director of the Community Oncology Alliance. Pharmacist Kim Caldwell represented PCMA, and as such, professed his discomfort more than once.
The Committee hearing is well worth a watch (or rewatch), and serves as a strong, positive reminder that the work we and our fellow pharmacy organizations have been engaged in is yielding results. Watching our Congresspersons ask direct, educated questions about DIR fees, formulary management, spread pricing and seeing them hold that line of questioning without falling to double-speak and obfuscation is incredibly satisfying (Rep. Diana Harshbarger is especially riveting) -- and only possible because of the tremendous efforts of pharmacy owners and their staff for taking the time to educate their patients and their elected officials.
On that note, last and by no means least, on the list of powerful events this month, is the #PizzaIsNotWorking campaign. Started by Oklahoma City-based Dr. Bled Tanoe to call attention to a systemic problem that no amount of comfort food could possibly fix (even if major retail pharmacy staff had time to eat, which by most accounts it seems they don’t), the #Pizza hashtag is trending mightily as pharmacists and patients demand better from the Fortune 10 companies whose production metrics are at the heart of the problem. Even in retail pharmacy, PBM practices rule the day.
At PUTT, we support our fellow pharmacists in their demand for better working conditions because when it comes to patient safety, there can be no compromises. And we stand by our call for PBM reform, because as everyone can see, #PizzaIsNotWorking.
Like many community pharmacies, Newman Family Pharmacy is the kind of pharmacy patients choose for its incomparable commitment to service and care. A smaller pharmacy located in the heart of Chesapeake -- Virginia’s working class and military family neighborhoods -- Newman Family Pharmacy was set up to serve the very community in which its proprietor, pharmacist Michael Scott Newman, grew up. The high school from which he graduated is almost literally down the street from his pharmacy.
A long-time successful pharmacist with Rite Aid, Scott said he knew going into business for himself would be challenging. “Really my goal was simply to pay the mortgage and maintain the standard of living we’d obtained on my salary at Rite Aid,” he says with a laugh. But he was confident; he knew the skills he’d honed and used to consistently build Rite Aid’s pharmacy business would serve him in his new store. And so, in March of 2013, Scott Newman opened Newman Family Pharmacy.
The first four years were good; in the fourth year Newman Family Pharmacy began to turn a modest profit (“when I could stop checking my bank account every day because it was no longer running in the red” Scott says). In September of 2017, the pharmacy took a downturn - you may remember the 3rd and 4th quarters of 2017 were when CVS began drastically cutting reimbursements then sending follow up “wouldn’t you like to sell?” letters. So, like many community pharmacies, Newman Family Pharmacy was growing, but the more patients Scott took on, the more money the pharmacy lost … and the cycle never stopped.
You may know the end of this story. On Wednesday, October 13, 2021, Newman Family Pharmacy closed its doors for the last time.
Here at PUTT, when a pharmacy closes it feels like losing a good friend. In the case of Newman Family Pharmacy, which belonged to PUTT President Scott Newman, it’s like the death of a family member. The closure of Scott’s pharmacy marks the 3rd such “death in the family” in less than a year. Two other PUTT Board members were forced to make similar decisions. There simply aren’t words to describe the gut punch that comes with the death of a business over circumstances and practices the business owner, by contract, cannot control.
There is no shame in the closure of a pharmacy. But, there is enormous shame in trying to pretend pharmacy closures aren’t happening -- that the independent pharmacy industry is well and thriving, not to mention expanding! -- which is why the latest installment of PCMA’s gaslighting campaign to prove pharmacies aren’t closing is so infuriating.
Titled some version of “Gosh, we’re really just trying to understand why NCPA and NCPDP’s data don’t line up”, PCMA’s latest white paper is 10 pages of explanation about data, methodology, and a Penn State professor/author’s commentary on why anyone who questioned his first report is basically wrong. It’s followed by an unambiguous message that NCPDP is the gold standard for data and NCPA data is somehow flawed and shouldn’t be used.
NCPA will surely defend the data it publishes in its annual digest. But it’s important to remember that pharmacy closures are one very big symptom of a much larger problem, one that underlies the tenets of a capitalist economy and free market system, and touches every single person living in the U.S. whether or not they take medicine, pay taxes or buy insurance. And until we drag that problem -- the opacity and greed of a few extremely large insurance and PBM middlemen -- into the light and compel transparency, the sickening cycle of pharmacy openings and closures will continue.
For now, we know NCPDP data is definitely not the gold standard. But we would appreciate hearing from you about your experiences with NCPDP. If your NCPDP pharmacy data is still not correct, please contact us. We can’t undo the release of PCMA’s latest “research” but we can provide real evidence that at least calls the validity of their so-called “research” into question.
Keep fighting, and as always, thank you for your support of PUTT!
CURBING PATIENT STEERING, RELOCALIZING HEALTHCARE: THE FOCUS OF PUTT’S POLITICAL SUMMIT THIS YEAR IN FLORIDA
PUTT’s annual Political Summit took place this year in Orlando, Florida and featured our most aggressive PBM Reform agenda to date. Everything about this year’s Summit - from its location at an independent hotel and conference center in the heart of one the world’s most competitive markets for multi-billion dollar corporations to our Saturday “free market solution” agenda - was designed to restore the balance of power between small business pharmacies and the predatory multi-billion dollar PBMs who hold our collective fate in their greedy hands.
Highlights from the Summit included a surprise welcome from Harris Rosen, founder and owner of the beautiful Rosen Centre Hotel and Conference Center where the Summit was held. A local business icon, Mr. Rosen’s corporation is featured in Relocalizing Health, a seminal book that makes the case for health care as a “Main Street vs. Wall Street” problem - with Wall Street ever so slightly beginning to lose ground as community businesses begin restructuring their employee benefits healthcare programs to include local small business healthcare providers.
“What if there was ‘Governments United for Truth and Transparency?’,” Mr. Harris noted in his greeting, then went on to expand on the terrible impact COVID-19 had had on the tourism industry and how organizing a local-first approach to Rosen employee healthcare had resulted in lowered healthcare costs and higher employee retention.
Following Mr. Rosen’s welcome, Miguel Rodriguez and Michael Wright of American Pharmacies and the Texas Pharmacy Business Council provided a case study of Texas’ HB 1919 and HB 1763, new legislation with far-reaching effects that make PBM patient steering illegal (HB 1919) and prohibit a punch list of anticompetitive PBM business practices including charging retroactive fees; reimbursing PBM-affiliated pharmacies at a higher rate than non PBM-affiliated pharmacies; preventing pharmacies from delivering prescriptions to patients and charging for that service; and forcing accreditation standards on pharmacies that exceed those of the state’s board of pharmacy requirements in order to be included in the PBM’s pharmacy network.
This year’s legislative panel featured the strongest line up of pharmacy champions yet: Senator James Skoufis (NY) - a third-time panelist for his tireless efforts to protect patient access to their local pharmacies - joined new panelists Senator Nancy Barto (AZ), Senator Fred Mills (LA), Delegate Nicklaus Kipke (MD) and Rep. Jackie Toledo (FL) - an unshakeable voice for PBM reform in Florida following her own troublesome experiences with PBMs.
Summit presenters Trevor Daer of Granite Peak Analytics and Greg Reybold of American Pharmacy Cooperative Inc. spoke on community focused solutions for fair reimbursement and state legislation in a post-Rutledge v. PCMA respectively. Other sessions included strategies for holding effective stakeholder meetings and how the most effective pharmacy organizations create member engagement with very special guests Daniel Martinez of the California Pharmacists Association, Deborah Billingsley of the Oklahoma Pharmacists Association and Randal Johnson of the Louisiana Independent Pharmacies Association.
Unfortunately political strategy isn’t enough, and so Saturday’s agenda focused on the “Relocalizing Care” movement, with keynote speaker Carl Schuessler of Mitigate Partners, a risk management / cost containment / employee benefits consulting firm at the forefront of helping local businesses invest their healthcare dollars in local healthcare providers and, as a result, the local economy.
Saturday’s agenda featured panelists Cindi Reed, Dawn Butterfield, Daniel Martinez and Chuck Gamsu providing insight on how to work with local municipalities and employees to help reduce their prescription drug spend. In particular, Daniel Martinez shared how the California Pharmacists Association has helped their members to work in partnership with local healthcare clinics to develop collaborative practice agreements that allow pharmacies to be paid for providing services related to medication therapy and other clinical practices.
Perhaps thanks to COVID, or maybe because we’re finally joining the technical revolution, this marked the first year PUTT’s Political Summit was held both online and in person. PUTT members can review segments of the 2021 Summit in the Members’ Library of the website, and the session “Secrets of Effective Pharmacy Associations” will be the next episode of the PUTTcast, coming soon.
Our thanks to everyone who attended in person and online, and as always, thank you for your support of PUTT!
PUTT’S Model Legislation Update: Proposed Pharmacy and Pharmacy Patient Protection Act Garners Public Sector Support at ALEC
Last month PUTT presented our proposed model legislation, the Pharmacy and Pharmacy Patient Protection Act (PPA), at the 48th annual meeting of the American Legislative Exchange Council (ALEC) in Salt Lake City, UT. The presentation before ALEC’s Health and Human Services Committee marks the second time our proposed policy has been heard and debated by the committee, which comprises more than 200 members from the public and private sector. We owe a debt of gratitude to Sen. Nancy Barto (R-AZ) who sponsored our bill and went to bat for its necessity both before and after our presentation and to Miguel Rodriguez of the Texas Pharmacy Business Council, who co-authored and helped present the bill.
ALEC, for those not familiar, favors limited government, free markets, and federalism - but if the reaction during the Q & A section of our presentation is any indication, even the most staunch “limited government” ALEC members see the need to rein in the largest PBMs from their massive overreach in the marketplace.
There’s much to say about the PPA, and why PUTT opted to go “all in” on attempted passage and adoption of this model policy language at ALEC. I’ll do my best to break it down in this post, but as always, please feel welcome to contact me directly with questions and comments.
Cutting directly to the chase, the PPA was tabled a second time, but was well-received and roundly supported by many of the public sector members present. A number of state legislators spoke with us afterward, voicing their support and asking questions about next steps on the bill. More than one legislator expressed concern that the PPA didn’t go far enough, and should do more to protect pharmacies and patients (to which we say, “Yes! We agree!”)
The inspiration for the Pharmacy and Pharmacy Patient Protection Act came from Georgia’s HB 233 and HB 918 -- both sponsored by pharmacy champion Representative David Knight -- landmark legislation seeking to end patient steering by PBMs to PBM-owned pharmacies. The PPA similarly seeks to end patient steering and certain other “bad” behaviors that serve no one but PBMs and their seemingly conscience-less or perhaps simply uninformed shareholders.
While the PPA is model legislation, acceptance from ALEC would mean endorsement from an organization whose influence is especially favorable among “red” states. Many of these states rely on their rural community pharmacies as healthcare hubs for residents, and as such cannot afford to have them squeezed out of business because a handful of very large pharmacy benefits managers can make more money mandating mail order pharmacy.
But why this model for model legislation?
Well, back in the day when I first started working with PUTT (4 years ago), we thought licensure and oversight would be enough to curb the enthusiastic abuses PBMs were perpetrating on small business pharmacies at the expense of patients, plan payers and taxpayers. We soon learned licensure was a bit esoteric - good in theory, but impractical against oligopolists who’d mastered the art of making billions by exploiting every possible loophole in the name of “proprietary” and “trade secret” business practices.
As I explained to Kansas Rep. Will Carpenter minutes before our presentation, we once thought we could fight for transparency and it would be enough to catalyze systemic reform. We now see the pharmacy industry must fight for the basic rights most other industries take for granted: the right to sell (dispense) a product and at the very least recoup the acquisition cost of the product; the right to develop and keep a customer base; and the right to participate in a provider network without being charged exorbitant fees; the right to do the work required by our profession without being charged. (What other industry has to pay the payer in order to be paid?)
The PPA has opposition, primarily from PCMA. But we are confident moving into ALEC’s policy meeting in December that we will continue to gain support among the public and private sector, and will continue to keep you updated on our progress in the subcommittee meetings leading up to the next presentation.
Until next month,
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,