Still ugly as sin, but maybe not for long | NCPA Executive Update | September 1, 2023

NCPA September 1, 2023

Dear Colleague,

Doug Hoey

Back in March, right when Medicare Part D contracts started arriving for 2024, NCPA looked at three of the most popular brand drugs and their reimbursements—minus the usual cuts. It shows, in no uncertain terms, how much these health-insurer PBMs squeeze independents. "It's ugly," we said in qAM that day.

It's still ugly, but there is cause for optimism.

Perhaps the most interesting marketplace development comes from California, where Blue Shield will stop using CVS Caremark for most services by early 2025 and open their doors to others, including the struggling Amazon Pharmacy and entrepreneur Mark Cuban's firm, Cost Plus Drugs. They'll keep CVS Caremark for managing specialty drugs. But, by being willing to change the current pharmacy payment model, Blue Shield estimates they'll save $500 million each year in drug costs for the five million Americans they serve. This definitely "changes the pharmacy payment model" which has been NCPA's focus for years.

The flip side of Blue Shield's shuffle is that while disintermediating the PBM will provide some economic value, they swing and miss on improving patient quality of care.—as currently constructed—is just another mail order model, which has been rejected by most patients when given a choice. For one, mail order prescriptions are, on average, 10 times more costly than a retail pharmacy. As if that weren't bad enough, according to a survey NCPA conducted a couple of years ago, 98 percent of community pharmacists say they've heard from patients whose mail order drugs arrived late or not at all. Nearly two-third of pharmacists said their patients' drugs were left out in the weather, too, and nearly half said their patients received the wrong quantity of medication in their shipment. Moving from a PBM model to one anchored around mail order pharmacy is a case of "meet the new boss, same as the old boss" (Thanks, Pete Townshend!).

Americans always need access to bricks-and-mortar pharmacies, and they especially need access to them in times of crisis. During the pandemic, that became desperately obvious as other healthcare providers closed their offices and for tens of millions of Americans, the pharmacy was their healthcare epicenter. Then, when the COVID vaccines were released, it was pharmacists and their teams in bricks-and-mortar pharmacies that administered over 300 million vaccines.

Real pharmacies are real places where real people get the drugs they need and the trusted advice they want. Increasingly, thanks to many of you, they are also places where patients can receive vital clinical services. It's a trend that accelerated during the pandemic, and it has led to better healthcare for patients and more revenue opportunities for pharmacies. After all, no mailbox or delivery truck has ever vaccinated a single patient!

Health-insurer PBMs are still the ugliest part of healthcare today. The news in California about Blue Shield might just be lipstick on the pig (it's too early to tell), but it does change the pharmacy payment model. With its overreliance on mail order, they may not have gotten it right but a model in which PBMs are no longer the center of the prescription benefit universe is on the right track. Look for others to follow suit in new and better ways.


Doug Hoey

B. Douglas Hoey, Pharmacist, MBA


We're just six weeks away from the 2023 NCPA Annual Convention. Learn from and share ideas with the most innovative pharmacy owners in the country. If you haven't registered yet, now is the time!

Editor’s note:
A quick note to say that qAM will return to its normal schedule on Tuesday. Have a fun and safe Labor Day.