“In Champaign County...and the four contiguous counties in this year alone, 11 independent pharmacies have closed, shutting their doors, leaving just five left and they are hanging on a thread,” said Dennis Blank, a pharmacist currently practicing part-time for the Medicine Shoppe of Urbana.
The U.S. lost about one independent pharmacy every day in 2023 and is on track to see the same number of closures in 2024, according to the National Council for Prescription Drug Programs.
The council and pharmacists lay the blame on PBMs, while PBMs say their practices reduce drug prices.
“Customers are panicking, especially those that need the special services we provide,” Blank said.
Most states lost independent pharmacies from 2021-2022, as profit margins on prescription drugs continued to decrease due to retroactive fees and third-party payer and government contracts that lack transparency, the National Council for Prescription Drug Programs said.
The Community Pharmacy Protection Act includes proposed benefits for pharmacies, such as requiring insurers to pay pharmacies the actual acquisition cost plus a minimum dispensing fee for drug claims.
This would help prevent pharmacies from paying more for the drug than the cost they get for dispensing the drug, one pharmacist said.
“PBMs ruthlessly drive reimbursements down to the point where reimbursement for the products pharmacies dispense to Ohioans is often less than what they pharmacy paid to acquire the product,” Joe Muha, general counsel and director of pharmacy compliance for Discount Drug Mart Inc., said in his written testimony.
Discount Drug Mart has 79 locations in Ohio and multiple locations in the Dayton region. It employs about 5,700 people, Muha said, including 225 pharmacists.
“We’ve been in business for over 50 years, and I’m here to today because this is probably the most difficult time we’ve had as a company keeping our doors open, being able to serve your constituents and our patients,” Muha said during the committee meeting.
The reason for that difficulty is PBMs, he said.
The three largest PBMs, CVS Health’s Caremark, Cigna’s Express Scripts, and UnitedHealth Group’s Optum Rx, manage nearly 80% of all prescriptions filled in the U.S., according to the Federal Trade Commission.
“PBMs have squeezed community pharmacies and will continue to do so because they have disproportionate bargaining power,” Muha said. “As pharmacies are squeezed, you’re going to see more pharmacies close.”
The PBMs can require patients to purchase their prescriptions from approved pharmacy chains, which can impact which pharmacies earn more for dispensing the same drugs, according to the FTC and an analysis by the American Pharmacy Cooperative, which represents independent pharmacies.
In one analysis, chain pharmacies were paid $46.87 on average for dispensing a 90-day supply of atorvastatin, a drug for treating high cholesterol and triglyceride levels, while an independent pharmacy was paid $1.90, according to the American Pharmacy Cooperative.
Mandating dispensing fees could increase costs for consumers, the Ohio Chamber of Commerce says.
“With many Ohioans filling multiple prescriptions per month, this fee would quickly add up to a multi-billion-dollar prescription drug cost hike,” said Rick Carfagna, senior vice president of government affairs for the Ohio Chamber of Commerce.
H.B. 505 would include increased transparency around drug prices. The bill would mandate PBMs to submit a monthly report listing the drug claims they processed and would include the acquisition cost of each drug.
Opposition testimony from a previous Insurance Committee meeting argues that the “actual acquisition cost” in the bill would not include discounts from drug manufacturers, so the actual cost of the drug could be higher than the stated acquisition cost, according to Sean Stephenson, director of state affairs for the Pharmaceutifcal Care Management Association.
“A monthly cadence creates a lot of operational burden,” Stephenson said. “...Off-invoice discounts and rebates pharmacists receive from wholesalers are not required to be reported in the bill.”
The FTC says drug manufacturers have their own rebates going to PBMs.
PBMs may prevent consumers from accessing cheaper drugs by mandating the use of a specific and more expensive drug on their drug formularies, which are lists of drugs covered by an insurance provider, according to the FTC.
PBMs and brand pharmaceutical manufacturers sometimes enter agreements to exclude generic drugs from certain formularies in exchange for higher rebates from the manufacturer, the FTC says. These exclusionary rebates may cut off patient access to lower-cost medicines.
Those opposing H.B. 505 say PBMs need flexibility when determining a health plan’s drug formulary.
“PBMs exist to help plan sponsors―again, businesses large or small, unions, or government entities―develop the individual prescription drug benefit plans that work best for the plan sponsor and their employees,” Carfagna said.
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