Updated Apr 2, 2018 - Health

The pharmacy squeeze

An illustration of prescription pills.

Illustration: Sarah Grillo / Axios

Pharmacists have been among the most vocal opponents of the drug pricing tactics that pharmacy benefit managers use. PBMs pay pharmacies for each filled prescription, but pharmacists, especially those running independent stores, say the big players are squeezing them by paying out wildly differing rates.

Key quote: "It is an absolute bloodbath for pharmacies right now," said Antonio Ciaccia, a top lobbyist with the Ohio Pharmacists Association. "When things are subjective and they're unclear, that is when the PBM sees opportunity."

The details: PBMs use "maximum allowable cost lists" (better known as "MAC lists") to determine what to charge employers for drugs and how to pay pharmacies. Those lists, which aren't publicly available, allow companies like CVS, Express Scripts and OptumRx to charge employers higher rates, pay pharmacies lower rates, and then pocket the difference.

  • Several independent pharmacists who were interviewed for this story said their contracts with PBMs are pretty much take-it-or-leave-it offers, and they often have little to no visibility into what MAC lists are being used.
  • "Realistically, we can't not sign the contract because we'd lose our patient base," said one independent pharmacist. "If you try to line out stuff you don't agree with, they say, 'We only accept clean contracts.'"
  • The pharmacist asked not to be named because the pharmacy's contract with CVS prohibits anyone from making "damaging, derogatory, or unfavorable public statements regarding a Caremark Party." CVS said that language was "standard."
  • The pharmacist shared a spreadsheet of 88 common generic drugs that the store fills, like lisinopril and omeprazole. For all but eight of those generics, the independent pharmacy was paid less than a chain pharmacy. For some drugs, the independent's reimbursement was more than 80% lower.
  • "We can't sustain taking these kinds of losses," said a different pharmacist in Florida.
  • Pharmacists in multiple states said CVS in particular had lowered their rates heavily in 2017. Some also said they got letters from CVS asking if they wanted to sell their store.

The other side: CVS spokeswoman Christine Cramer said in an email that "on an aggregate basis, we reimburse independent pharmacies at a higher rate than larger regional and national chains." She also said some pharmacist lobbying groups are painting a "skewed picture of the reimbursement they receive from CVS Caremark by cherry-picking some claims."

From the Express Scripts template:

"Average Wholesale Price" or "AWP" means the average wholesale price of a prescription drug as identified by drug pricing services such as Medi-Span or other source recognized in the retail prescription drug industry selected by ESI (the "Pricing Source").
"MAC List" means a list of off-patent prescription drugs or supplies subject to maximum reimbursement payment schedules developed or selected by ESI.

Other parts of the series:

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