They Sell You | NCPA Executive Update | May 3, 2024

NCPA May 2, 2024

Dear Colleague,

Doug HoeyMedicare Part D contracts for 2025 have been showing up (well, at least sometimes they show up) at pharmacies over the last month. This is important for PBMs because the contracting process with pharmacies is what results in their biggest asset: your pharmacy.

PBMs have made a cottage industry riding on your pharmacy's coattails. One of the most basic services they provide to their customers (payors, employers) is a network of pharmacies. In a functioning market, the PBMs provide something of value to the network pharmacy (e.g. reasonable reimbursement) and in return, the pharmacy provides something of value to the PBM (e.g. prescription accessibility). Of course, that is in a functioning marketplace not the actual take it or leave it indentured servant marketplace that exists between PBMs and pharmacies.

Lately, NCPA members are telling us of PBMs digging deeper into their bag of tricks and deception to add pharmacies to their networks. Some of the examples we have heard about are:

1. Opt-out contracts with short turnaround deadlines

2. Phantom faxes that never appear at the pharmacy (and why, by the way, is a Fortune 500 company relying on faxes in the 21st century? Could it be because they are more difficult to verify receipt and to verify reply? Surely not?!)

3. Continuing to allow the pharmacy to process prescriptions, even after the pharmacy has opted out.

It underscores the fact that PBMs actually do need community pharmacies in their network despite propaganda from the PBM's trade association that the number of pharmacies is stable or growing. The truth is that the number of pharmacy options available to consumers is shrinking. Between 2017 and 2020, the number of pharmacies available to patients shrunk by 2,200—that's 4 percent. For more than a year now, pharmacies—independents and chains—are closing at a rate of almost three each day. As the saying goes, there are fewer "fish in the pond" for PBMs to add to their network, yet, counterintuitively, our members tell us that the contracts they are receiving continue to get worse.

Last month, the FTC along with the Justice Department and the U.S. Department of Health and Human Services, launched a site that anyone can visit and report anticompetitive health care practices. That's right—you and your patients can report potentially unfair practices to people who can do something about it. It's the latest effort by the three agencies to promote competition in health care markets to ensure that every American has access to high-quality, affordable care.

That's great that the FTC has shown an interest in the anti-competitive, anti-consumer practices of PBMs after decades of being one of their key enablers. However, surprising to absolutely no one, the PBMs have resisted cooperation, so investigation progress has been slow.

We're making progress on Capitol Hill, the administration, and in the courts, where we are involved in several cases and legal initiatives on behalf of independent pharmacists. Any one of these efforts can help provide balance to the one-sided negotiations and transparency to the high drug costs PBM business practices cause.

But importantly, always read the contracts (especially those that you receive), evaluate if it makes sense for your business, and remember, they're selling you.


Doug Hoey

B. Douglas Hoey, Pharmacist, MBA