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Pharmacists say they’re being pushed out of business

Monday, Apr 30, 2018

* SJ-R

Many owners of the state’s more than 500 independent pharmacies and smaller chains — including those in the Springfield area — are being paid less than the “acquisition cost,” or wholesale price, of the medicines they dispense to Medicaid patients.

[Garth Reynolds, executive director of the Illinois Pharmacists Association] said pharmacies also have seen their per-prescription “dispensing fee” from Medicaid — designed to cover professional services — drop from $5.50 for generics and $2.40 for brand-name drugs under the previous “fee-for-service” system to the current 45 cents per prescription.

As a result, many pharmacy owners say their overall payments from Medicaid have dropped by half or more because of rate cuts instituted by companies known as pharmacy benefit managers, or PBMs.

At least one of those PBMs, CVS Caremark, pharmacy benefit manager for the huge CVS Pharmacy chain, appears to be working with CVS Pharmacy to put smaller pharmacies out of business so CVS can acquire them, Reynolds said.

“It’s kind of a predatory market practice and misuse of state tax dollars,” he said.

* Many problems are surfacing about these pharmacy benefit managers. And it’s not confined to Illinois

Did you know that for every 60-mg caplet of duloxetine dispensed in Ohio through a Medicaid-contracted managed-care company, taxpayers pay a middleman $1.54, but the middleman passes only about 18 cents of that to the pharmacy that supplies the drug and pockets the $1.36 difference?

* Check this out

CVS’s benefit manager cut Medicaid reimbursements to local Ohio pharmacies this past fall, which some say put them in financial jeopardy. Then CVS’s “acquisition unit” sent letters to many of those same pharmacies, saying times are tough and asking whether they would be interested in selling their business.

That appears to be happening in Illinois as well.

* Illinois legislators are being flooded with calls from their local pharmacists who are worried they’re about to go out of business

Kate Gainer of the Iowa Pharmacy Association encouraged lawmakers to further investigate pharmacy benefit managers, saying they engage in unfair practices that go largely unregulated. Gainer blamed the contracts for the closure of dozens of pharmacies across Iowa.

More background is here.

- Posted by Rich Miller        

22 Comments
  1. - Demoralized - Monday, Apr 30, 18 @ 10:29 am:

    Sounds to me like there is a giant conflict with CVS managing the prescription program. If this isn’t the definition of an unfair business practice then I don’t know what is.


  2. - Peoria Guy - Monday, Apr 30, 18 @ 10:30 am:

    I go to a small town pharmacy and they are fabulous. They go out of their way for me in ways the chains never would. The large pharma companies and wholesalers will stop at nothing to increase their profits.


  3. - Anon - Monday, Apr 30, 18 @ 10:37 am:

    Not sure how autocorrect chose Doerneker to fix “for their clients.” That was just strange, and I blame the PBMs. 😁


  4. - wordslinger - Monday, Apr 30, 18 @ 10:38 am:

    It’s good to be the middleman.

    Where’s the state chamber and IRMA looking out for the independent pharmacies, or are they too busy shining Rauner’s shoes to eyeball his managed care contracts?


  5. - Anonymous - Monday, Apr 30, 18 @ 10:40 am:

    Usually the market works these things out. Good and services are not provided when companies cannot make a profit.


  6. - Demoralized - Monday, Apr 30, 18 @ 10:42 am:

    ==Usually the market works these things out==

    The market is being manipulated here.


  7. - Thoughts Matter - Monday, Apr 30, 18 @ 10:42 am:

    I have to agree with demoralized. Sounds like a huge conflict of interest. We shouldn’t be expecting pharmacies to basically donate their services just because it’s Medicaid or the state employees health insurance ( also managed by CVS PBM). I wonder if they even get enough to cover the cost of the medication itself.


  8. - Lt Guv - Monday, Apr 30, 18 @ 10:43 am:

    Sounds like a case for Ron Stephens.


  9. - Ducky LaMoore - Monday, Apr 30, 18 @ 10:51 am:

    CVS bought my local pharmacy and shut it down. Not gonna find too much love for them in my neck of the woods. Now I see why the pharmacy little chain sold out to them. CVS was making all the profit anyway.


  10. - former southerner - Monday, Apr 30, 18 @ 11:16 am:

    And the CVS/local pharmacy/medicaid reimbursement is a classic example of why the GOP’s near religious belief in deregulation is stupidity exemplified.

    Regulation isn’t needed if everyone behaves in a fair and ethical manner but that behavior is absent in the real world and exists only in the minds of zealots.


  11. - seenenough - Monday, Apr 30, 18 @ 11:50 am:

    PBM,s are profiting at the expense of taxpayers and independant pharmacies. They continue to harass our existence. They force people to their own mail-order/pharmacy and reimburse themselves at a higher rate. Racketeering at work


  12. - afraid for retaliation - Monday, Apr 30, 18 @ 11:53 am:

    I post anonymously because I fear a giant audit from CVS. Our pharmacy feels like we can compete with the big chains for price and service. However, when they pay themselves substantially more than independents, then offer to buy us out, it is difficult to compete in that environment.


  13. - Say no to big government - Monday, Apr 30, 18 @ 11:56 am:

    It was stated above that CVS/Caremark is the PBM for state employees health insurance. That is only partly true. It is the PBM for the self-insured health insurance plans. Some of the employee/retiree plans are fully-insured and some are self-insured. Health insurance companies either own their own PBMs, like Humana, or don’t, like Aetna. Those that don’t have to hire a PBM. So, for the fully-insured state plans, the PBM might be CVS/Caremark.


  14. - no tread on snek - Monday, Apr 30, 18 @ 11:59 am:

    In addition to profiting at the expense of pharmacies, the MCO contract is $23 billion dollars over budget and the OIG audited the 2016 years expenses and HHS could not account for $7.11 billion dollars it paid them. How much proof is needed to show this is hurting Illinois?


  15. - (not Tony) Stark - Monday, Apr 30, 18 @ 12:32 pm:

    There are laws in place prohibiting physicians from owning labs and other ancillary companies so they dont drive business to these for pure financial gain. So why aren’t there Stark laws for the PBMs? Seems like the same structure to me! CVS “Health” directs their pharmacy business to CVS “pharmacy” and manipulates reimbursement for its competition to get a edge.


  16. - Pharmacist - Monday, Apr 30, 18 @ 12:49 pm:

    If Illinois tax payers found out how much Pharmacy benefit managers “PBMs” were making on the backs of Hardworking Illinoisans they would be outraged. They are making windfall profits on “spread pricing” (what they get paid by the MCO vs what they pay the pharmacy). If the PBMs have nothing to hide why don’t they prove us wrong?


  17. - Liandro - Monday, Apr 30, 18 @ 3:13 pm:

    “predatory”

    On the surface this seems like an accurate description.

    “The market is being manipulated here.”

    Also appears accurate. It’s not free market to use government regulation and tax dollars to squeeze out the little guys.


  18. - Southern Illinois Guy - Monday, Apr 30, 18 @ 3:28 pm:

    This is just the surface of the problems with these PBMs/MCOs. The profits gained on Taxpayers and Independent Pharmacy owners backs are obscene.


  19. - Pharmacy Guru - Monday, Apr 30, 18 @ 4:37 pm:

    @Wordslinger - IRMA = Walgreens, so there will be no efforts made on behalf of independent pharmacies by IRMA.


  20. - Joe Joe - Monday, Apr 30, 18 @ 8:15 pm:

    “they engage in unfair practices that go largely unregulated” - Yep, and the only solution is going to be increased government regulation. This is capitalism run amuck.

    “overall payments from Medicaid have dropped by half or more because of rate cuts” - Medicaid is very happy with PBMs like CVS. As CVS becomes bigger and more efficient, they drive down costs for Medicaid.

    “The large pharma companies and wholesalers will stop at nothing to increase their profits” - That is pretty much what their fiduciary duty to their stock holders requires.


  21. - Wiseguy - Tuesday, May 1, 18 @ 8:24 am:

    Something to ponder…Does CVS Caremark get to use a state action defense (its state PBM contract) when the antitrust suit comes around???


  22. - Anonymous - Tuesday, May 1, 18 @ 9:04 am:

    Sounds almost like Healthlink where you pay them a 6% fee for the privilege of taking care of their network patients at a loss.


Sorry, comments for this post are now closed.


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