In the competitive pharmaceutical industry where drug manufacturers vie for huge market shares, middlemen work billion dollar deals, and pharmacy goliaths dominate the prescription landscape, it’s hard to be small, and, in many cases, unfair.
That’s the take by Jesse Brashear, of Brashear’s Pharmacy in Lecanto and Inverness, and who is hoping proposed legislation that requires more transparency about drug prices.
Brashear’s focus during a local press conference Wednesday was predominately on pharmacy benefit managers and House Bill 961.
Brashear said pharmacy benefit manager middlemen who work out drug prices between pharmacies and insurance payers often favor large chain pharmacies or pharmacies they own, leaving small, local pharmacies to wither pacing far lower reimbursement rates.
“Local pharmacies are being preyed upon by the predatory practices of PBMs,” Brashear said.
“Independent pharmacies like ours aren’t asking to be paid more than another pharmacy under Florida’s Medicaid Managed care system, but we don’t deserve to be paid less,” he said.
Brashear warns the way pharmacy drug prices are set by pharmacy benefit managers, the small mom and pop pharmacies can’t stay in business. Under the current pricing schemes, Brashear said pharmacies like his often have to sell drugs less than his contracted prices.
PBMs act as middlemen and contract with pharmacies. They negotiate prices, discounts and rebates between pharmacies and those who reimburse the pharmacies such as health insurance payers, health plans, self-insured employer plans, Medicare Part D plans.
The problem is PBMs have become so powerful that they dictate drug prices for everyone and smaller pharmacies get the short stick in these price deals, Brashear said. As a result, larger chain pharmacies often get much better price deals.
Before the press conference, Brashear cited an example regarding the reimbursement for Cyclosporine, a drug that stops a patient’s body from rejecting a transplanted organ. In the example, Brashear said a national PBM worked a deal whereby insurers reimburse small pharmacies just under $20 for the drug when they sell it to a patient. In contrast, the same PBM’s contracts with much larger pharmacies, such as Walmart and CVS, allows them to get reimbursements exceeding $30.
Brashear also claims in some cases, national pharmacy chains also own their own PBMs. That’s bad, because as a result, those PBMs get better reimbursements for their own pharmacies than they do for independent pharmacies.
The PBMs also steer patients to their own pharmacies when buying medicines, Brashear said.
“PBMs have, over time, transformed themselves into billion-dollar companies extracting money from pharmaceutical manufactures,” he said.
The proposed House Bill 961 prohibits steering patients to PBM-owned pharmacies. It would also require PBMs to report administrative fees PBMs receive from the insurer and report rebates from drug manufactures, and additional overages that PBMs receive that exceed the cost of the drug to them.
Nationally, a PBM bill is also working its way through Congress that allows the government to collect data to determine whether PBMs are causing higher drug prices by favoring high-list price drugs with large rebates.
PBM critics say that PBMs pocket the rebates as profits instead of passing them to patients. The PBMs argue they use rebates to lower the cost of patient premiums.
Eric V. Schlecht is president of the consulting firm OnPoint Strategies and is a former economist for the Senate Republican Policy Committee.
In a January opinion piece in The Hill, Schlecht wrote that making PBMs the fall buy ignores the complexity of drug pricing.
“The cost involved with research and development, medical trials and obtaining Food and Drug Administration approval to bring a drug to market typically exceeds $1 billion, and drugs that go through the same gauntlet but prove to be either unsafe or ineffective invariably cost a similar amount,” he wrote.
“However, as is the case in most attacks on the middlemen of any market, this perception deeply misconstrues the market as well as the role of PBMs, which provide valuable services that can improve health outcomes and save consumers billions of dollars in prescription drug costs,” he said.
“For starters, their purchasing power gives them leverage over both pharmaceutical companies and retail pharmacies, allowing them to extract lower prices,” he said.
“What’s more, the wealth of information at their disposal allows them to come up with ways to save their clients’ money, either by shifting coverage to less expensive but more efficacious drugs,” he wrote.
But Brashear told the Chronicle that all pharmacies should be reimbursed the same amount and rebates should make their way to patients.
The problem gets worse because small pharmacies can’t go elsewhere for better deals.
“We’re offered a take-it-or-leave-it contracts from billion dollar (middlemen),” he said.
Also at the press conference was Citrus County Commissioner Jimmie T. Smith.
He said that PBM contracts are anti completion and “results in a higher cost overall.”
Equal reimbursements are also good for local businesses, he said.
Local pharmacies support local organizations, hire local employees, and spend profits locally, Smith said.
Josh Wooten is president and CEO of the Citrus County Chamber of Commerce.
He said the unfair reimbursements not only effect Brashear’s pharmacy, but healthcare prices overall.
Raj Patel, owner of three county pharmacies, said PBM are price manipulators. He said it will take legislative action and community support to change the reimbursement landscape.
“If there’s something wrong happening, we need to stand up (for change),” he told the small press conference audience. “We need help from the community for sure.”