Dear Colleague,
$15,000 in 15 minutes. That's how much some pharmacies will save — or protect from losing, depending on how you view it — if they spend about 15 minutes before Thanksgiving checking the biggest dollar investment in their business.
Wholesale Acquisition Costs (WACs) for a number of popular drugs are coming down. WACs for products have only gone one direction—UP—for decades, but that's changed the last few years. Collectively, the biggest WAC reductions in the history of the pharmaceutical industry are happening now! Some industry experts are estimating that product WACs may be decreased by as much as $50 billion.
If you don't take away anything else from today's EU, take this: Review your inventory, cross check the products with WAC decreases, and streamline your inventory immediately! Not doing so could cost you tens of thousands of dollars!
You should have received notices from your wholesaler(s) about specific products with upcoming WAC decreases, and there are some BIG-name products on the list, like Eliquis, Jardiance, and Farxiga. Depending on the wholesaler's policy, pharmacies are in danger of being stuck with the higher priced drug vs the same drug with a lower WAC. Let's use Farxiga as an example. Let's say you have four bottles of Farxiga on your shelf. You bought those four bottles from your wholesaler based on the current WAC of approximately $600. Let's also say hypothetically, AstraZeneca reduces Farxiga's WAC by 30% — lowering its WAC by $180. You know the PBM's won't delay in changing the basis of their reimbursement based on the new, lower WAC, so if you dispense the Farxiga on your shelf that you bought at the higher WAC, that could be one extra-UGLY reimbursement — probably way below your acquisition cost. Now multiply that across all the medications with WAC reductions and they could add up to be a crippling loss for pharmacies.
Wholesalers have already started to implement return blocks for some products with WAC reductions and more of those product return blocks are coming, so if you haven't already returned those products, you're likely stuck with those higher WAC products. That's why you must take action now.
There's one other "must do" before Thanksgiving (and the sooner the better): Enroll in CMS' Medicare Transaction Facilitator program. We're hearing some anecdotal reports that only 60-70% of independent pharmacy owners have enrolled so far. Technically there is no deadline but waiting until December to enroll is akin to showing up at the airport at 8:58 a.m. for your 9:00 a.m. flight. You're not going to get on that plane. Same principle applies here. It will take some time for CMS to process your enrollment and get you activated, so do it now. The consequence of not enrolling is that you may not receive ANY manufacturer refund payments for the first 10 Medicare negotiated drugs. Don't get left holding the bag.
And, to be clear, my writing about reviewing and streamlining your inventory where appropriate and enrolling in the MTF program STAT doesn't mean NCPA loves any or all the components of these changes. Telling you about the work we've done to influence the IRA/MFP program and educate about WAC reductions to help get them to a better place than where they were headed is for another day.
With Thanksgiving less than two weeks away, enroll in the MTF program and go over your inventory now. Check your will call for prescriptions for WAC affected medications that may be returned to stock. Pay close attention to the WAC Reduction announcements from your wholesaler. And, importantly, take full advantage of on demand ordering.
Eat something good for Thanksgiving; don't eat your inventory.
Best,
B. Douglas Hoey, Pharmacist, MBA
NCPA CEO
