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Lots of fingers pointing at CVS

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* An independent pharmacy is closing its doors in Lincoln, so the SJ-R takes a look at one of the reasons why it couldn’t remain in business…

The Springfield-based Illinois Pharmacists Association says many owners of the state’s more than 500 independent pharmacies and smaller chains are being paid less than the “acquisition cost,” or wholesale cost, of the medicines they dispense to Medicaid patients.

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

Advocates for managed-care organizations and [pharmacy benefit managers] say the managers save states money in their Medicaid systems. But advocates for pharmacy owners say Illinois’ less-than-transparent managed-care contracts conceal what may be unfairly high profits by PBMs that are being earned at the expense of independent pharmacies.

And because at least one PBM, CVS Caremark, is owned by the huge chain that operates CVS pharmacies, independent pharmacies say Caremark’s rate cuts may be designed to put independents out of business.

“We’re seeing in other states the exact same problem,” said state Rep. Greg Harris, D-Chicago. “We’ve got something going on that’s against the public interest.”

* Speaking of CVS…

Hospitals have been closing at a rate of about 30 a year, according to the American Hospital Association, and patients living far from major cities may be left with even fewer hospital choices as insurers push them toward online providers like Teladoc Inc. and clinics such as CVS Health Corp’s MinuteClinic. […]

The risks are coming following years of mergers and acquisitions. The most recent deal saw Apollo Global Management LLC swallowing rural hospital chain LifePoint Health Inc. for $5.6 billion last month. Apollo declined to comment on the deal; LifePoint has until Aug. 22 to solicit other offers. Consolidation among other health-care players, such as CVS’s planned takeover of insurer Aetna Inc., could also pressure hospitals as payers push patients toward outpatient services.

…Adding… The Washington Post published an interesting story on who’s behind some of this fight. Click here. And Axios put it into some more perspective this month. Click here.

posted by Rich Miller
Thursday, Aug 23, 18 @ 11:29 am

Comments

Health care for profit. That’s the fundamental flaw.

Comment by Skeptic Thursday, Aug 23, 18 @ 11:43 am
Sorry independent pharmacists. These are simply the market forces that occur in a capitalistic, free-trade economy.
Now, believe the GOP when they hand you that clap trap about small businesses being the backbone of the economy.

Comment by efudd Thursday, Aug 23, 18 @ 12:02 pm
I used to go out of my way to use an independent pharmacy. After the pharmacist retired, they transferred my prescriptions to one of the big chains. The services they can offer are much better, especially in integrating technology. I can manage everything from an app on my phone. Hate to do it, but I’ll stick with what is best for me as a consumer.

Comment by SIUEAlum Thursday, Aug 23, 18 @ 12:23 pm
It smacks of classic price-fixing collusion: CVS’s supply arm squeezes the independents with the “administrative fees”for the meds they dispense at a fixed price, then when the independent store is driven into the red, helpful CVS corporate offers to buy them out and convert the store to… a CVS. Do we not do anti-trust anymore at all?

These guys are street thugs in suits.

Comment by Anonymous Thursday, Aug 23, 18 @ 12:32 pm
As consumers, we can only guess at the depth of racketeering and corruption in the pharmaceutical industry.

Comment by Vole Thursday, Aug 23, 18 @ 12:44 pm
Capitalism is a bad way to provide essential services (housing, water, food, and healthcare) period.

Even granting that free consumer choice is the best way to allocate resources, consumers can’t opt out of purchasing these goods. The supposed benefits of capitalist competition - that consumer choice will drive down costs - doesn’t even work on paper for these industries.

Comment by Actual Red Thursday, Aug 23, 18 @ 1:16 pm
MCO is supposed to stand for Managed Care Organization; instead it stands for Managed Cost. The fewer services provided the less it costs the MCOs and the state. It will be interesting to see what else PBM stands for.

Comment by Ga. Dawg Thursday, Aug 23, 18 @ 1:30 pm
How could we use a PBM that also owns drug stores? Of course there is going to be self dealing.

Comment by Da Big Bad Wolf Thursday, Aug 23, 18 @ 2:30 pm
@Da Big Bad Wolf, there is supposed to be a firewall between the two divisions. And for the record no one has yet proven there isn’t, the remarks about CVS are mostly supposition, conjecture and innuendo.

Very likely and logical supposition, but still supposition.

And I’ve heard 45 cents thrown around a lot, I wonder which of the 7 MCOs are only paying $0.45 as a dispensing fee. Because there are 7 different companies that each have their own fee schedule, there isn’t just one “MCO program”.

Comment by Perrid Thursday, Aug 23, 18 @ 2:36 pm
Grrr. The loss of hospitals in rural areas is a huge, huge issue. It is the Governor’s RESPONSIBILITY to make sure that people in our state have access to healthcare. But no, all he cares about is his own extremist anti-union agenda. How many more minutes until he’s gone?

Comment by Soccermom Thursday, Aug 23, 18 @ 3:31 pm
It is frustrating to me as a free trade capitalist that capitalism writ large is getting blamed for today’s economic problems that result simply from our failure to enforce our anti-trust laws any more.

If market concentration was viewed as a risk to the whole economic system today the way it was in most of the 20th century, I think we wouldn’t have such stagnant wages, smaller cities wouldn’t be getting so squeezed as corps merge and flock to the coasts, people would feel more powerful as individual economic actors, and socialism wouldn’t sound as appealing to young people.

Comment by hisgirlfriday Thursday, Aug 23, 18 @ 3:46 pm
I smell a whopper of a anti trust class action based on price fixing law suit. Law dogs on boths sides will make a mint on this.

Comment by NorthsideNoMore Friday, Aug 24, 18 @ 6:49 am