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Independent Pharmacists Fight Discriminatory Health Plans

| Written by Stacy Mitchell | No Comments | Updated on Nov 1, 2003 The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/independent-pharmacists-fight-discriminatory-health-plans/

Pennsylvania pharmacists are up in arms over a new health plan for state workers that bars them from filling prescriptions at locally owned drugstores, requiring instead that they use Rite Aid or a mail order service.

The plan is run by a pharmacy benefit management company (PBM), which the state says will reduce costs by negotiating lower drug prices. In exchange, employees must accept restrictions on where they fill their prescriptions.

“They bought a pig in a poke,” contends John Rector, senior vice president for government affairs at the National Community Pharmacists Association (NCPA). More often than not, he says, it’s more expensive to use a PBM. These companies own their own mail order pharmacies and have financial ties to major drug manufacturers. Benefits are often structured to boost profits for the PBM and its affiliated drug company, not reduce costs or provide high-quality care.

One reason that PBMs are more costly is that they underutilize generic drugs. On average, more than half the drugs dispensed by a retail pharmacy are generics, but under PBMs, the rate is only 28 percent. Name-brand drugs are favored because PBMs commonly receive kickbacks from drug makers. Several employers, including the state of West Virginia, have filed suits alleging PBMs pocketed rebates and discounts, and did not deliver the cost savings they promised.

In terms of quality of care, Rector says the decision-makers in Harrisburg should visit the U.S. attorney in Philadelphia, who filed suit against Medco, the nation’s largest PBM, in September. The complaint alleges that Medco routinely shorted customers by mailing less than the prescribed number of pills but still charging full price; creating false records indicating physicians had been contacted to discuss medications when they had not; and favoring drugs manufactured by Merck, Medco’s former parent company, over less expensive alternatives.

The NCPA is working on several fronts to prevent PBMs from forcing independent pharmacies out of businesses. The association and its members have persuaded 33 states to adopt laws that bar health plans from limiting patients’ choice of pharmacies or imposing higher co-pays on those who choose community pharmacies over chains or mail order.

The NCPA has also filed a class-action suit against Medco and AdvancePCS, which together manage drug benefits for 140 million Americans. The suit charges that the companies violated antitrust laws by using their market power to force retail pharmacies to accept one-sided contracts and artificially low reimbursement rates. It accuses them of steering consumers to their own mail order operations by, for example, barring retail pharmacies from providing more than a 30-day supply, while the mail order firms routinely dispensed 90-day supplies.

— National Community Pharmacists Association

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About Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance, and directs its Community-Scaled Economy Initiative, which produces research and analysis, and partners with a range of allies to design and implement policies that curb economic consolidation and strengthen community-rooted enterprise.  She is the author of Big-Box Swindle and also produces a popular monthly newsletter, the Hometown Advantage Bulletin.  Connect with her on twitter and catch her TEDx Talk: Why We Can’t Shop Our Way to a Better Economy. More

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