By Jeffrey Young - 05/23/06 12:00 AM EDT
A bitter fued between pharmacies and the companies that administer the drug benefit for Medicare Part D health insurers is heating up as groups representing small, independent drugstores descend on Washington this week to complain they are being paid too little and too slowly.
The National Community Pharmacists Association (NCPA) is hosting a conference in Washington this week and focusing its lobbying efforts on criticizing the practices of pharmacy benefit managers (PBMs) and the structure of the new Medicare prescription-drug benefit. The NCPA says that low payments that can take more than a month to arrive are causing many drugstores to shut their doors. In rural areas, that could force people on Medicare to travel great distances to get their prescriptions filled, pharmacies warn.
The NCPA’s lobbying effort is being bolstered this year by an aggressive grassroots campaign run out of the Raleigh, N.C., headquarters of the Association of Community Pharmacists (ACP), a group that typically lobbies the state legislature. The ACP’s new Congressional Network (ACPCN), based on a database of 15,000 independent pharmacies across the United States, has been marshalling drugstore owners to target their home-district and home-state lawmakers in Washington.
Pharmacies and PBMs have long had a contentious relationship in the marketplace and in Washington. The rhetoric has been heating up since Part D debuted in January.
Medicare is saving money by trimming the higher payments pharmacists had grown accustomed to, the PBM lobby says. The pharmacies reject the implication that they were being overpaid.
The pharmacies argue their wholesalers require them to pay more quickly than the money is coming in. They also say that their share of a drug’s sale is much smaller under Medicare than when Medicaid covered medicines for the low-income elderly.
The PBMs defend the timeliness of their payments and say that the lower drug costs under Part D are the product of the free market, not squeezing pharmacists.
“We have a very good track record in the commercial market,” said Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt.
The PBMs are a vital part of the new, privately managed Medicare drug benefit. The companies, such as Medco and Express Scripts, cut volume-discount and rebate deals between drug manufacturers and health-insurance companies and are responsible for paying pharmacists for the medicines they dispense.
Merritt suggested the drugstores are exaggerating and questioned “whether this is even a problem.” He added, “I haven’t seen any independent study corroborating” pharmacies’ claims that Part D is underpaying them and driving them out of business.
The pharmacies likewise lack a high regard for the PBMs. “The difference between us and them is we’re healthcare providers. They’re corporate middlemen,” said Charlie Sewell, NCPA vice president for government affairs.
The ACP and NCPA have been lobbing press-release hand grenades at the PCMA in recent weeks. The NCPA plans an inside-the-Beltway advertising push this week to coincide with its annual meeting.
The PCMA has not taken the attacks sitting down. The group rolled out its ad campaign earlier this month to tout the PBMs’ promising to pay pharmacists within 30 days of a claim being filed, which matches the standard time frame for Medicare to pay doctors and hospitals.
But the pharmacists insist that dispensing drugs provides them with little or no profit under Part D. Through the PBMs, Medicare only pays for the cost of the drug, not the service provided, said Mike James, the ACP’s vice president of governmental affairs. Small pharmacies do not generate enough revenue from other sources to make up for the narrow margins, he added.
The small-pharmacy lobby has kicked up enough dust to get noticed by some lawmakers but faces an uphill battle getting its concerns addressed this year. The two leading “prompt pay” bills, along with several others, would require PBMs to pay claims within 14 days.
The pharmacies appear to have more support in the Senate, where legislation requiring PBMs to pay more quickly was introduced last month by Appropriations Committee Chairman Thad Cochran (R-Miss.) and is co-sponsored by Health, Education, Labor and Pensions Committee Chairman Mike Enzi (R-Wyo.) and 14 others.
Reps. Walter Jones (R-N.C.) and Marion Berry (D-Ark.) sponsored the House companion, which has been referred to Ways and Means as well as Energy and Commerce. None of the measure’s 58 other co-sponsors is part of the GOP leadership or is a Ways and Means Committee Republican, though it has attracted some support from Republicans on Energy and Commerce.
The Energy and Commerce Committee’s Health Subcommittee is holding a hearing on Part D’s effects on pharmacies today.
The bills also include language designed to give pharmacists a greater role in so-called medication-therapy management, which is intended to help patients who take multiple drugs take better care of their illnesses. Pharmacists maintain that their training and relationships with patients make them the most qualified to offer these services.
PBMs and health insurance companies typically provide medication therapy over the telephone and through other means, but the legislation would shift the focus to face-to-face consultations with pharmacists. The PCMA argues that requiring or favoring in-person counseling will be more costly.
The National Association of Chain Drug Stores also supports the Cochran and Jones-Berry bills but is not making as aggressive a push as the independent pharmacies, said Lee Verstandig, the senior vice president for government affairs.
Because large chain drugstores, such as CVS, and large retailers with pharmacy departments, such as Wal-Mart, make money selling products such as over-the-counter drugs and groceries, they are less vulnerable to changes in prescription-drug payments, he said. “The business model is different for chains … than it is for independents.”