PBM Issues

Just When I Thought I Had Seen It All... | NCPA Executive Update | May 13, 2016

by NCPA | May 13, 2016

Dear Colleague,

Each year in May, I think about the thousands of pharmacy students graduating this month and that reminds me of my own graduation—now 24 years ago. I've been in and around pharmacy for almost 35 years and just when I thought I had seen everything, a New Orleans investigative reporter has shown me—nope, you can still be amazed.

Lee Zurik, an award-winning investigative reporter for Fox 8 TV news in New Orleans has done a series of stories over the past week on PBM consumer copay clawbacks. Be more specific, you might say, since PBMs claw back money from pharmacies in a variety of ways. Zurik's investigation has focused on the practices of the PBM charging the patient a copay, paying the pharmacy a miserly low fee, and then clawing back the rest of the copay the patient paid. Here's the math using an example from the segment:

Medication cost   $4.92

Pharmacy fee   $1.75

Patent copay   $11.67

Amount paid   ($5.00)

The PBM "clawed back" $5 by charging a copay $5 higher than what the PBM paid the pharmacy and later, taking the $5 back from the pharmacy. Another way of looking at it is that the consumer is charged more than what the pharmacy is paid. The pharmacy is used as a collection agency for the PBM.

It's outrageous PBM behavior and it's not new. It has become more prominent though in recent years. We sent letters to Optum and Catamaran complaining about the copay clawbacks and their MAC lists which were resulting in below pharmacy cost payments at a much higher rate than other PBMs. We also talked with CMS and members of Congress. However, the vast majority of examples of consumer copay clawbacks have taken place outside of government programs.

The news segments from Fox 8 New Orleans have been excellent in the way they have plainly described the practice and how patients and pharmacists are affected. Note that the identity of the pharmacist is obscured and his voice altered—like a "60 Minutes" interview with an undercover agent—to shield his identity because of fear of PBM retaliation. Sad.

Zurik, the investigative reporter, has a long list of awards recognizing his work. They include: two Peabody Awards, three DuPont Silver Batons, five National Edward R. Murrow Awards, the IRE Medal, two IRE Certificates, three Sigma Delta Chi Awards, a National Headliner, and the Gannett Award for Digital Innovation in Watchdog Journalism.

Most of the content from the segments won't surprise community pharmacists, but one statement from an Optum spokesman made my jaw drop.

"OptumRx's Pharmacy Reimbursement Overpayment Program helps ensure the millions of people we serve have affordable access to the drugs they need."

Let's dissect the absurdity of this statement a little more. In the example mentioned above, out of the $11.67 that the patient paid, the pharmacist was paid $4.92 to cover the cost of the medication plus a $1.75 dispensing fee. Where did any "overpayment" occur? In the buck seventy-five dispensing fee? UnitedHealth, the parent of OptumRx, paid $12.8 billion for Catamaran just last year, which is probably a better indicator of where Optum's pharmacy "overpayments" are really going.

So what could fix this problem? One of the segments includes an interview with Sen. Bill Cassidy (R-LA), a physician who expresses shock over the practice. See for yourself. Normally, I prefer the government stay out of legitimate business relationships but, unfortunately, the relationship between PBMs and retail pharmacies is a one-sided power grab. Federal legislation such as H.R. 244, the MAC Transparency bill, is needed. On the DIR front, NCPA continues to lead community pharmacy's advocacy in urging CMS to finalize the DIR Rule and enforce the new MAC regulations in Part D.

Louisiana's state insurance commissioner, Jim Donelon is also interviewed in one of the segments and expresses his concern over this practice. NCPA recently submitted comments and testified to the National Association of Insurance Commissioners on its Health Carrier Prescription Drug Benefit Management Model Act.

Kudos to the Louisiana Independent Pharmacies Association (LIPA) for its work in the series. LIPA's Executive Director, Randal Johnson, is interviewed in the first segment.

These segments are part of a busy week for community pharmacy in trying to level the playing field. In Oklahoma, Gov. Mary Fallin signed a bill that improves transparency legislation passed two years ago. Judging by how hard the PBMs fought against the legislation, it must have hit a nerve. Missouri also passed MAC legislation which, considering Express Scripts one of the largest corporations in the state, is noteworthy.

The WVUE Fox 8 series on consumer copay clawbacks is one to remember. In the opening, Zurik asks an 11-year old what is the definition of a "copay". She did a good job defining what it should mean. Unfortunately, in the PBM's dictionary, copay sometimes means "full pay—and then some".