ALEXANDRIA, Va. (Feb. 18, 2020) -The surge in vertical integration in the healthcare industry has created "an oligopoly of integrated healthcare companies controlling nearly all aspects of the healthcare and pharmacy supply chain," said the National Community Pharmacists Association (NCPA) in comments submitted today to the Federal Trade Commission (FTC) and the US Department of Justice Antitrust Division (DOJ).
"These vertical mergers have allowed a handful of massive companies to exercise enormous power over patients and the marketplace. In many cases, we believe they are creating for themselves unfair advantages that are driving up patient costs and killing local businesses," said B. Douglas Hoey, NCPA CEO.
Earlier this year the FTC and DOJ issued draft guidelines on vertical mergers in the healthcare industry. NCPA submitted comments this afternoon that point out that the three largest pharmacy benefit managers (PBMs) now control more than three quarters of all prescriptions filled in America—equaling over 3.3 billion prescriptions. All of them have corporate ties to large pharmacy chains and health insurers. Drug prices haven't gone down for patients, however, and in many cases the monster mergers have left many local communities without a pharmacy.
"A health insurer or PBM that merges with a large retail pharmacy chain may have the incentive to exclude competing pharmacies from preferred networks or to provide financial incentives to utilize the acquired pharmacies over the patients' pharmacy of choice," said NCPA. "This risk is particularly acute for pharmacies and other healthcare providers that care for underserved patient populations."
It's also tempting for such big players to charge its smaller competitors "untenable reimbursement fees" as way to squeeze them out of the market. "Independent pharmacies have very little negotiating power when contracting with PBMs like CVS Caremark, and routinely must agree to take-it-or-leave-it contracts to be part of a PBM's pharmacy network," said the group.
Hoey said that independent pharmacies are not afraid of competition, but for their sake and their patients, the competition must be fair.
"There are 21,000 independent pharmacies in the country. That's larger than any one chain. And they are integral to the national health care system. In fact, in many cases, they are the only healthcare providers in their communities," said Hoey. "The big players are systematically trying to muscle them out of business. Stopping that sort of thing is exactly why antitrust protections exist, and we want the FTC and the Department of Justice to be more vigilant, more active, and more aggressive at enforcing them."
For more information about NCPA, please visit www.ncpanet.org.
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Founded in 1898, the National Community Pharmacists Association is the voice for the community pharmacist, representing 21,000 pharmacies that employ 250,000 individuals nationwide. Community pharmacies are rooted in the communities where they are located and are among America's most accessible health care providers. To learn more, visit www.ncpanet.org.