NCPA implores Express Scripts to revise its contract terms

contractIn April, NCPA pushed Cigna’s Express Scripts, Inc. (ESI), to revise contracts to align with its obligation to offer “reasonable and relevant” terms and conditions for participation in a Medicare Part D pharmacy network, and to revise its “bonus pool fee” to align with federal policy.

On average, one independent pharmacy closed every day in 2023, and the trend appears to be continuing in 2024—a fact that lends the clearest sense of urgency to this issue, NCPA CEO Douglas Hoey wrote in a letter to Adam Kautzner, president of ESI, and David Cordani, chairman and chief executive officer of the Cigna Group.

“We cannot help but note that Cigna-Express Scripts has publicly announced a desire to work with independent pharmacies and has even formed an Independent Advisory Committee in the last year,” Hoey wrote, which NCPA publicized in a press release. “Unfortunately, and ironically, business conditions dictated by ESI to independent pharmacies have only gotten worse since ESI’s announcements—especially regarding Medicare Part D terms that our members tell us are out of market relative to Cigna-ESI’s competitors.”

Hoey’s letter follows a February NCPA survey of independent pharmacy owners/managers in which almost half said that ESI was the PBM causing the most financial stress in Part D. CVS/Caremark came in at 35 percent.

What does “reasonable and relevant” really mean? It’s a matter of negotiation pertaining to reimbursement rates. NCPA urges member pharmacies to speak with their Pharmacy services administrative organizations (PSAOs), if applicable, and carefully evaluate the financial and other terms of any proposed contract and to adhere to PBM deadlines and any specific notice requirements in their contract with any PBM.

It is also important to remember CMS requires Part D sponsors to have a contracted pharmacy network that meets network adequacy requirements. Here are the requirements: At least 90 percent of Medicare beneficiaries in urban areas must live within two miles of a network pharmacy; at least 90 percent of Medicare beneficiaries in suburban areas must live within five miles of a network pharmacy and at least 70 percent of Medicare beneficiaries in rural areas must live within 15 miles of a network pharmacy.

NCPA has been communicating with its members all spring, warning them that some PBMs may be offering new contracts for Medicare Part D 2025 plan year networks to individual pharmacies that are “opt-out” contracts, impacting the entire 2025 plan year. However, if the pharmacy is part of a PSAO network and the PSAO chooses to enroll in the network, that PSAO agreement supersedes any agreement between the individual pharmacy and the PBM.

Members should review contract terms to determine if they may be below product acquisition cost and include vague payment terms such as Maximum AWP Discounts and Minimum Dispensing Fees, which will vary depending on plan sponsor.