Pharmacies worried for future without change in rules
GREYBULL — A group of independent pharmacy owners, including two with connections to the ones in Basin and Greybull, recently made impassioned pleas for legislation that would better regulate pharmacy benefit managers (PBMs), telling members of the Joint Labor, Health and Social Services Committee that the survival of their businesses is at stake.
Craig Jones, the owner of Basin Pharmacy and part-owner of Greybull Drug, and his daughter, Camilla Hancock, a doctor of pharmacy at Basin Pharmacy, have spent the last several months warning residents of the threat posed by PBMs, as they are known.
More than 20 of the state's independent pharmacists have asked the Joint Labor, Health and Services Committee to pass legislation that mimics Arkansas Act 900. Passed in 2015, it amended the Arkansas PBM Maximum Allowable Cost statute.
According to the Legislative Service Office, PBMs are companies that manage prescription drug benefits on behalf of health insurers, with the goal of reducing or containing drug costs. They act as intermediaries between the health insurer, drug manufacturers and pharmacies, negotiating discounts, rebates and reimbursements. PBMs reimburse pharmacies for the cost of drugs covered by the insurer prescription drug plans. The health insurer, in turn, reimburses the PBM.
LuGina Mendez Harper works for Prime Therapeutics, which is a PBM. She told members of the committee that more than 266 million Americans rely on PBMs to help meet their health care needs. They do so by providing access to safe, effective, affordable medicines, helping them avoid adverse drug-to-drug interactions and educating them on how to use their prescription drug benefit.
Mendez-Harper explained the reasoning behind prescription drug prices. Eighty-five percent of the drugs that are prescribed are generic, but they account for just 15% of all drug costs. Brand name medicines account for 12% of the usage, 35% of the costs. Specialty medicines account for 3% of the usage, but 50% of the costs.
Mendez-Harper said PBMs simply serve as the intermediaries, saying they “see the entire picture.”
Hancock painted an entirely different picture, however. She asked committee members to imagine that they are a cattle rancher who raises 10 calves and takes them to auction confident of getting a good price.
“You’ve done the calculations and have concluded that you need $1,500 to break even, but you're confident you'll get more. The cows are healthy and the market’s good,” she said.
Your outlook changes, she said, when you get to the sale and informed that you’re only going to be getting $1,500 a head and not a cent more.
“You’re disappointed, but at least you can break even, so you accept the terms. Then, as your cows are being loaded and taken to the buyer, you hear the auctioneer on the phone speaking with the buyer. He tells him the cattle sold for 1,700 a head. You’re are upset and frustrated, but a deal has been struck and your cows are already gone so you feel like there’s nothing left to say.
“Next week you get a bill from the auctioneer who explains that during transport, each cow lost 10 pounds, so he’s charging you for every pound that’s lost. Three months later, you get another bill from the auction service, saying you owe another $100 because you failed to print your name above the signature line on the sales agreement. When all is said and done, you’ve lost money on the deal.
“All this is frustrating and to be honest sounds ridiculous, but it’s something independent pharmacies face every single day. PBMs are like the auctioneer. They are the middlemen. At first, the intent was good. It was to save money on prescription drug costs. But they have gone unchecked for too long.”
Hancock said PBMs practice “spread pricing,” where the reimbursement a PBM receives from a health insurer exceeds the PBMs reimbursement to a pharmacy. The spread between the two is the profit of the PBM.
She also decried “claw back” fees like the DIR. According to PBM Watch, DIR is a cover-all term that covers the monies a Medicare Part D plan/ PBM may collect to offset member costs. DIR fees can be in numerous forms, often unknown to the dispensing pharmacy who is forced to pay PBMs any assessed and arbitrary DIR fee. These fees can be in the form of service fees, network access fees, administrative fees, reconciliation, etc.
According to Hancock, DIR fees have gone up 91,500%. To put that into context, she said it would be like paying $3,660 for a gallon of milk.
“With numbers like these, it’s a miracle any of us are open,” she said. “But I promise you, if changes aren’t enforced and made into Wyoming law, we won’t stay open.”
Jones echoed her, informing the committee that he’s invested heavily in the Basin community, where he and his wife own not only the pharmacy, but also the Copper Corner Café and the town’s only grocery store, Wheelers Basin Market.
Rep. Jamie Flitner, who serves on the committee and was present for the testimony, asked Jones and Hancock what would happen if PBMs went away and customers were left with a free market system.
“Do you feel like you’d be able to provide that drug to me at a better cost?” she asked them.
Jones said yes, calling PBMs “a parasite on the health care system, like a tick on a horse sucking the blood out and providing resources that are already there.
“My wholesalers are already getting the best price they can from manufacturers and pharmacies like ours are already monitoring drug interactions and providing a level of care that PBMs cannot even begin (to match).”
Later in the hearing, Jones added, “What it boils down to is whether we want independent pharmacies in our communities or not.”
Holding up a thick stack of papers, he told committee members that each page contained 15 prescriptions for which he was reimbursed below cost. In total, there were 2,062 of them (although some were generic, for which he did receive a bit of a rebate).
“A couple of weeks ago, I distributed insulin to a patient,” he said. “My cost was $420.06, the patient copay was $60, and insurance paid $249, for a net loss of $110.53. I get no rebate on that. I basically paid Prime Therapeutics $110 for the pleasure of dispensing the medication.”
Jones said he can’t stay in business if that continues. He didn't make a profit, and while COVID-19 most certainly contributed, he urged committee members to consult the earnings report of PBMs, which show billions in earnings.
“Unless some of these things change, I’ll be gone and more than likely, so will the other businesses I own and we’ll be left with a county seat that’s a shell of a town. And the same thing will happen throughout the state.”
The June 11 discussion occurred during an interim meeting, but Flitner said it made a strong impression on the lawmakers who were present. She said it’s a difficult issue, but backs Olson and Hancock, calling PBMs “a tumor that is wrapped throughout the medical/pharmaceutical industry.
“They are doing great harm to independent pharmacies and my hope is for some sort of change. I was assigned by Chairman (Sen. Fred) Baldwin (R-Kemmerer) to head a working group along with Senator Bouchard (R-Cheyenne) to take a more in-depth look and study. We have not yet met with our group as we are still organizing. We are charged with a report back to committee at our September meeting with some workable, legislative solutions.”
She added that she’s hopeful that the committee will sponsor legislation for consideration at the next session.
“I do believe we will be able to come up with possible legislation that the committee will sponsor in the next session. There are other states that have already passed legislation and we will be looking at that with this working group. I believe whatever we come up with will definitely have a chance. We are still a long way from that point though with much study to be done.”