Independent Pharmacies In Danger
Byline: Monique Whitney
CVS is buying Aetna, but it could be the independent pharmacies and their patients who pay the price, according to a local pharmacy owner who, like several other community pharmacies, is already struggling to fill patient prescriptions while being reimbursed below cost by Pharmacy Benefit Manager (PBM) companies like CVS/Caremark, a division of CVS Health. CVS, the $153 billion health conglomerate, formally announced its intention last week to acquire insurance giant Aetna for $69 billion.
The merger is cause for alarm to pharmacies nationwide. A Newburgh-area independent pharmacy owner says the move would force more patients into the CVS retail pharmacy system and away from the community pharmacies they currently use. With fewer patients to serve, independent and community pharmacies would be at risk of closing, potentially creating obstacles for patients who either don’t want to use a large retail pharmacy or who have had longstanding relationships with their existing pharmacies.
“This is bad for patients and for healthcare in general,” said the pharmacy owner, who declined to be named, citing a confidentiality “gag” clause in his contract with a PBM that prohibits him from speaking out. “We’re talking about one company that would control the doctors, the insurance and the pharmacy. There’s no doubt it’s bad for patients. If it keeps trending this way it will put small pharmacies out of business, which would mean less competition for CVS but also less choices for patients, who have few choices to begin with when it comes to their health care.”
PBMs are third-party administrators contracted by health plans, large employers, unions and government entities to manage prescription drug benefits programs. Originally intended to process claims on behalf of clients, PBMs now serve as intermediaries in nearly every aspect of the drug supply chain from negotiating prices and rebates with pharmaceutical manufacturers to determining the patient’s copay.
“The biggest concern is the lack of transparency in the process,” said Kathy Febraio, Executive Director for the Pharmacists Society of the State of New York (PSSNY), “PBMs exert enormous, unchecked power over the selection of which drugs are covered, the amount the patient pays, and the amount the pharmacy is reimbursed. They do not share the factors they use in making these decisions.”
The National Community Pharmacists Association (NCPA) spoke out against the CVS-Aetna merger, noting a $1 million civil monetary penalty assessed against Aetna in 2015 by the Centers for Medicare & Medicaid Services for “significant disruption to patients and community pharmacists that occurred as a result of the company’s inaccurate representation of ‘in-network’ pharmacies in some plans.” In a statement issued last week, NCPA said, “ CVS/Caremark is already the pharmacy benefits manager for Aetna, and independent pharmacies have been foreclosed from Aetna’s Part D preferred networks for the last two years. Consolidation of the two companies will only strengthen their ability to steer patients to CVS/Aetna-owned retail or mail order pharmacies.”
Following the CVS-Aetna merger announcement, PSSNY released the following statement: “The merger between CVS Health and Aetna will not help patients, as it purports, nor will it improve health outcomes or generate cost savings. It will decrease patient choice. It will put CVS Health/Aetna in the position of determining where a patient can go for care, which medications are available to the patient, and how much those medications will cost, severely limiting a patient’s right to make his or her own choices in the personal matter of health care. A healthcare organization presiding over more than 20 million lives should never have that much power over an individual’s health care or the shaping of the overall healthcare delivery system. In the consolidation of primary care, insurance and pharmacy there’s no oversight, no accountability and no room for a second opinion.”
PBMs manage the formularies, or lists, of drugs covered by individual health plans and as a result manage the reimbursements back to the pharmacies filling prescriptions on behalf of the health plan. Because of separate confidential contracts between the PBM, the insurance company and the pharmacy, no one except the PBM knows the drug’s true cost.
In October, local pharmacies experienced their third, and deepest, set of PBM cuts to drug reimbursements for the year. The change was not announced in advance by the PBM and took pharmacy owners across the country by surprise. The Newburgh-area pharmacy lost nearly $30,000 between October 26 and November 18, until reimbursement levels were “restored” — but by then they, like many pharmacy owners, were contending with the reality that they might not be able stay in business if further cuts to reimbursements were to continue.
Still, many patients prefer the level of care they receive at independent pharmacies, and continue to fill their prescriptions at local pharmacies in spite of attempts by large corporations to get them to switch. Community pharmacists are quickly able to diagnose problems with a patient’s course of treatment, often through everyday “how’s it going”-level conversations.
“Our patients see the value of the local pharmacies. They’re upset when CVS contacts them multiple times to get them to move their prescriptions,” said the Newburgh pharmacist. “They’ll pay the higher copay or even out of pocket because they don’t want to go through mail order or a big box chain. PBMs can only win by forcing patients to go where they want them. But take the mandate away, and the independents will beat them every day.”