Dear Colleague,
I made a deal with my youngest son. He wanted an iPad to replace a mini-iPad with a cracked screen that had been handed down from his older siblings. That poor little iPad had taken a beating, and he wasn't wrong when he said its time had passed. But I didn't want to enable couch-potato habits with more electronics, so I told him that if he ran a mile and a half three times a week, I'd spring for the new iPad. BUT, if he didn't fulfill his end of the bargain, the iPad went on eBay.
That worked for a couple of years but a couple of weeks ago, when I did my periodic check-in to ask if he was keeping up with his running. "Oh, that. Yeah. Well, when it was icy and snowy a few months ago, I couldn't run and I sort of got out of the routine," he confessed. So, in other words, no. Hello eBay! John Wooden, the greatest college basketball coach of all time, once said, "The true test of a man's character is what you do when no one is watching."
One of the provisions in the FTC settlement Caremark, et al: Proposed Decision and Order (ESI Respondents) with Express Scripts required ESI to offer "cost-plus" reimbursement. Not surprisingly, the FTC didn't specify how much pharmacies should be paid. The FTC is in the business of ensuring there is fair marketplace competition and not specific contract terms. They figured that the marketplace would sort it out, and pharmacies would reject contracts that cause them to lose money, even though ESI is dominant in certain markets and rejecting an ESI contract could put you out of business.
Fast forward a few weeks later and independent pharmacy owners started receiving contracts from ESI that were to reflect the FTC settlement, whether you knew it or not since contracts were faxed and in many cases were "opt-out," so no action was equivalent to pharmacies signing.
NCPA has heard members' impressions of this first example of how the settlement is playing out in the marketplace. Like Coach Wooden said, character shows up when no one is looking. We think the FTC should also hear from you. How is their settlement with ESI playing out now that the contracts are "in the wild?" Let the FTC know by emailing Chair Andrew Ferguson. The best way to reach him is through his two key staff members, Brad Albert, assistant director of healthcare (balbert@ftc.gov), and Gary Barnett, chief of staff (gbarnett@ftc.org). Focus your comments on what you've seen since the settlement in early February. Are consumers being protected? Is fair competition being promoted?
ESI's cost-plus offering is not the first and won't be the last. This week OptumRx announced Optum Rx Introduces Industry's First Transparent Pharmacy Care Model - UnitedHealth Group they will be offering a "cost-based" prescription model to all their customers. OptumRx and CVS-Aetna had previously made cost-based pharmacy reimbursements an option for their customers.
Cost-plus (or better yet, "Cost-plus-plus") could work, but pharmacies have to be paid fairly. Cost to dispense studies show that it costs pharmacies between $12 and $15 to dispense a prescription. Paying pharmacies less than that will result in pharmacies choosing to reject the contract or create pharmacy deserts after the pharmacy closes. It's not a hard concept, yet PBMs continue to offer pharmacies reimbursement below their cost of doing business.
As far as my son and his iPad, he was able to rescue it from eBay by getting his running commitment back on track, and he now understands character is your behavior when no one's looking. Does ESI? Let the FTC know what you're seeing.
Best,
B. Douglas Hoey, Pharmacist, MBA
NCPA CEO
