Month: April 2020

I own and operate an independent community pharmacy. Since the middle of March, we have made numerous changes to our operating procedures to accommodate the safety of my patients and my staff. One significant change that we had to make was to close our doors to the public and instead rely on delivery and curbside service. This has been very well received by our customers and I anticipate that even after the global pandemic is over, we will have customers that will continue to want these conveniences.

Many of the things we have done have cost the business. These costs has spanned across all areas including a large uptick in our expenditures for personal protective equipment to an increase in staff required for the additional services. But not all costs are so easy to quantify or realize.

Recently I was on a conference with some outstanding pharmacy owners and a hidden cost and risk was brought to the forefront. This increased cost of doing business is subtile but significant, and I suspect that many pharmacy owners and managers have given it very little thought. The culprit? Credit card transaction fees.

Since we closed our doors and have relied exclusively on curbside and delivery for our prescriptions, we have also necessarily increased our use of “card-not-present” transactions on or register. This may seem obvious, but the ramifications are not: credit card companies stratify their fee schedules based on the types of transactions.

Swiped or “dipped” (chip) card transactions have lower transaction fees, with these fees increasing depending on the card type, the presence of reward incentives like cash back, and ultimately the transaction type. Card-not-present transactions have some of the highest fees per transaction because they also have the highest risk to the card issuer. Fraudulent transactions are almost exclusively this way.

All of the pharmacists I was talking to had noted a significant increase in transaction fees due to the abrupt decrease in in-person transactions inside the store. To date, I am unaware of any announcements from card issuers to waive the differential fees during the pandemic. And while this is not deliberate, the card issuers are profiting because of this.

To make matters more worrisome are the possible ramifications this change in business model has from your credit card processor. Processors are a lot like PBMs: they sit between the card issuer and the merchant. These companies look at a businesses card history when drawing up contracts. The client’s rate of “card-not-present” category, which poses additional risk, is looked at carefully when they draw up contracts and agree to process for you. A drastic change could put you in jeopardy of being dropped by your processor!

There are some things you can do to ammilorate some of the damage, though these changes do come with additional overhead of their own. First, you could create in house charge accounts for regular customers and get their permission to put their card on file and bill them at the end of the month. This can decrease the number of fees you see. This means the pharmacy will be carrying additional accounts receivable burden. A second option is to move card transactions out of the pharmacy with a mobile payment terminal: the patient could to insert their card and complete the transaction at curbside or at their door. Of course this creates yet another surface that needs to be disinfected each time a customer touches the device. In a perfect world, all customers would have a contactless payment method they could use with that terminal. Finally, you could carry the card into the pharmacy and complete a swipe transaction. This defeats some of the advantages of curbside service or delivery offer.

Incorporating measures like these may help decrease the pain, but the added expense is still there. And pharmacy is not the only industry being hit in this manner. Many restaurants in my area are now limited delivery and curbside as well. The financial windfall to the credit card companies is undoubtedly large. I spent some time this week talking to my State Attorney General’s office about this problem, and they informed me that they are not able to take action. Any action must happen at the Federal level.

So today’s “Encounter” is an assignment: contact your US Representative and Senators. Talk to them about this issue, and ask them if there is something that they could do to address the unintentional profiteering taking place in the credit card industry. Spend a few minutes of your time today to make this encounter count.

A few days ago, Will Maddox wrote a column for D Magazine entitled Amazon Teams Up With Local Pharmacy Benefits Manager. This news article, discussing the partnership between CerPassRx (a PBM) and Amazon’s PillPak, demonstrates the huge discrepancy in how the profession of pharmacy is perceived today.

Maddox’s article describes the hot-button issues of medication adherence and cost in the pharmacy world. The PBM industry has a long history of touting its success in reducing costs to payers, but cost is generally not an issue anymore. Pharmacies routinely receive reimbursement that does not even cover the cost of the medication on a large percent of the prescriptions they dispense. So PBMs are looking for something else to keep themselves relevant.

Adherence has become a big part of the PBM marketing focus. This started several years ago with the emergence of EQuIPP’s metrics for Percentage of Days Covered (PDC) as applied to specific medications being taken by Medicare Patients. The general premise: medications do not help if you don’t take them regularly. Adherence is often touted as a main driver in keeping overall healthcare costs down, but as we will see below, it is not the complete picture.

Near the end of the article, you will find the following statement:

Buscetto sees this move as one more step on the way to eliminating retail pharmacies, which he doesn’t see as part of the future of medication delivery.

Now this is not a direct quote from Mr. Buscetto, so I cannot take him to task. But clearly Will Maddox was left with this impression after interviewing the CerPassRx executive. This is where the descrepancy I alluded to above becomes apparent.

If you read the 409 words penned by Mr. Maddux, you will find the word care just once: when describing his company as a value-based care PBM. The word cost and the word patient appear 3 times each. What is entirely missing in the article, and what is missing in most discussions of medications coming from PBMs, is the combination of the two words to make patient care.

You see, while adherence is important, it is not the end-game. Patient outcomes are what matter. Is the patient achieving their blood pressure goal? Are they experiencing any adverse effects? Adherence means nothing if the medication is not achieving the desired goal, or the patient is not reaching the appropriate outcome. The wrong medication taken 100% of the time is still the wrong medication. Adherence alone does not ensure that the patient won’t end up in the ER or the hospital.

Outcomes are what matter in drug therapy management. And these are the things that are not strengths of mail order pharmacy. It is the personal relationship with the patient and the repetitive nature of monthly refills that allow the pharmacist to do far more than just dispense medication.

The PBM industry has focused entirely on drug spend for decades, but they completely ignore the bigger picture: patient care by the pharmacist has a large impact on the effective utilization and optimization of medications. Other subtleties, like the fact that sometimes a more expensive medication will actually save the payer significantly more in overall health spend than the differential drug cost, or that making formulary choices based on rebates does not improve patient care, are largely ignored by PBMs.

So ignoring the inherent limitations of mail-order packaged medications* and the challenges that mail order would face should we end up living in a world without “retail” pharmacies**, we still have to come to grips with the fact that drug product by itself is not a panacea. Pharmacists are essential health care workers, and the personal relationship between the pharmacist and the patient is an important part of patient care.

There will always be someone pushing an agenda that runs counter to patient care. The PBM industry has been doing this for years under the guise of saving money. But there is something more important: pharmacists pushing the patient care agenda. And it is imperative that every community pharmacist works their hardest to ensure that they are actually taking care of their patients. If you don’t make THIS encounter count, perhaps Amazon truly is going to replace the community pharmacy.

Footnotes

* PillPack, like many of the similar options used for commingled drug packaging, works well until a medication change is made. Adding a medication is fairly easy: one just sends a second strip pack with the new medication This is not ideal, but it is a generally accepted work-around. Discontinued medications, however, create real problems. The patient has to manually remove the medication from the pack each time they take medications until the pack ends, and that completely erases the advantage of the med packaging. The problem is aggravated by the use of extended day-supply (90 day) orders. If PillPack were to send a new pack out the the patient, they would necessarily have to waste the medications, and no insurance will pay the pharmacy, even if they are Amazon, for dispensing the same medication twice.

** There are many cases where patients require same-day fills of medications. While these are mostly acute medications, mail order really cannot do this. If Amazon were to create the capacity to do same-day delivery of medications around the country, they would essentially have “retail” pharmacies in or near every community and their supposed “competitive advantage” would be completely eliminated.

I have been hearing complaints about Allowable Drug Prices (ADPs) in the pharmacy community for years. Most recently, I have listened as pharmacists have described significant prices drops on medications during the current Covid-19 pandemic.

The trouble with these prices, and by extension, any complaints about them, is that most ADPs are MAC (Maximum Allowable Cost) applied to generic medications, and these are considered proprietary information by the Pharmacy Benefit Managers (PBMs). For this reason, one cannot just download the data and analyze what is happening. Furthermore, because every pharmacy has a slightly different profile of medications it dispenses each month, each pharmacy is impacted by these prices and their changes differently.

Like online reviews, people are much more likely to take time to complain about a bad experience than they are to take the time to provide positive feedback. It is possible that I am only hearing the unsatisfied pharmacies complaining while many, perhaps even a majority, might be satisfied.

I am skeptical of my last statement, of course. ADPs, and especially MAC prices, serve only the PBM. Which brings me back to the question: How are these prices changing, and do they make sense?

There is not a good way to answer this. It would take data from an aggregator like a switch to do a proper analysis across all regions, PBMs and drugs, and I don’t have that type of access. But I do have access to my own pharmacy’s data, and I thought it might be timely to look at where my own ADPs have gone in the last 6 months.

To do this, I calculated the an ADP per unit (tablet, capsule etc) for each month the past 6+ months. This represented 3715 different medications from claims processed between October 2019 and early April 2020. ADP was calculated by subtracting the dispensing fee allowed from Adjudicated Amount and dividing it by the units dispensed. These results aggregate the allowable price over one or more different insurance plans during any given month.

Because I wanted meaningful trends, I further segregated the data to look only at medications where I had dispensing data in every one of the 7 discreet months sampled. The net result was 855 medications with data in all 7 month. Below is a histogram of items dispensed at my pharmacy during one month, March, grouped by their Allowable Drug Price per Unit.

The shape of this histogram is definitely not a normal distribution. It shows that a majority of medications dispensed–nearly 70%–are adjudicated at less than $0.50 per unit. These low cost medications also represent a majority of all claims (53%) during the month. To put this into perspective, if a PBM pays the pharmacy a high (by PBM standards) $1 dispensing fee, a medication with an allowable cost of $0.50/unit equates to a $16 transaction for a 1 month supply. That is not profit, that is the total paid to the pharmacy.

Because the raw Allowable Cost data represented multiple carriers, many medications showed a some variability in price from month to month. For this reason, regression lines were run on all 855 medications over the 6+ month period. Allowable Price increases were defined as a slope of at least $0.01 per month and Allowable Price decreases were similarly defined by a slope of -$0.01 per month.

Change in Price (slope) over 6+ months	# of Medications	Ave ∂ /unit/month
Increased by > $0.01/unit/mo	245	$0.15
Decreased by >$0.01 /unit/mo	202	$0.10
Unchanged (slope between -$0.01 and 0.01	408	$0.00

The average change up or down in the price of a medication was actually much higher than the $0.01/month used to define changing prices, with price increases averaging $0.15 per unit per month and decreases averaging $0.10 per unit per month.

Looking at this table, one see that price increases appear to outpace price decreases. This runs contrary to what I regularly hear. A closer look is probably in order. Perhaps we should look at how prices change with respect to the allowable cost of the medications. Below is a graph showing the price changes broken down by the overall allowable cost per unit.

This begins to paint a picture that agrees more closely with what I have long observed. In short, price decreases outpace price increases for all inexpensive medications. Only after about $0.70/unit do price increases outpace decreases. Remember, left third of the graph represents almost 70% of products in the sample, and well over half of all claims.

The nature of these decreases at the low end of the price scale are actually amplified by the low dollar nature of the claims: a change of only a few cents per unit can create a 10-30% decrease in reimbursement for a medication with a cost of less that $0.30 per unit. Remember that these items are the most commonly dispensed items.

The increases in ADPs are predominantly on the higher priced medication. The problem with this type of “balancing” is that every pharmacy sees a significant number of price decreases because they are happening mostly to inexpensive maintenance medications that represent a majority of prescriptions filled. Price increases, which are skewed toward the more expensive medications, happen less often and are a smaller percentage of total sales. A pharmacy must fill a significant mix of prescriptions that pick up enough winners on this end just to keep level on the low end. There is no skill involved. It is random, and this is the reason so many pharmacy complain.

Which brings be back to the original question: are prices continuing to be pushed lower during the COVID-19 pandemic. The answer for me appears to be yes. This is disappointing, as both independent and pharmacies are being asked to man the front lines to ensure continued access of medications for everyone. While operating expenses are going up due to changes we have to make to work around the current crisis, the PBMs are doing business as usual and continuing to drive prices to the floor.

But it is not all doom and gloom. The prize here is the opportunity for pharmacies to show that they are more than just a provider of drug product. We are seeing many new opportunities during these trying times. These opportunities further our goal of being paid not for product, but for the value and service we provide. So be sure to watch your bottom line, but don’t forget to Make Every Encounter Count. Especially now.

March 2020 was one I will likely never forget. Living in a University town, March means spring break—the university and the local schools are on break one week in March each year. University students often head south to the beaches of Texas or Florida. My family was planning a ski trip to Rocky Mountains in Colorado.

As March progressed, the pandemic was gradually becoming more real to those in the United States. Things were beginning to become serious during the second week of the month, with a few states announcing the close of schools. We were concerned with the potential interruption of our travel plan, so we called the ski resort the day before we left to see if there were any changes in their plans for operations.

The resort had no plans to shut down, so on Friday March 13th we began driving from Iowa to Colorado. In retrospect, perhaps we should have been more circumspect about our departure date: Friday the 13 is not generally associated with good luck.

We stayed overnight in Kearney Nebraska and continued our trip the next morning. After a quick stop at the Denver Airport to pick up a family member, we finished our drive into the mountains, arriving Saturday after about 2 pm. We were all excited: this was a very good snow year and we were ready to hit the slopes.

That afternoon, while we were in line to rent our ski equipment, several resorts, thankfully not ours, announced on Twitter that they were closing immediately. By 10 pm, every ski resort in the state of Colorado was shut down by order of the Governor. Disappointed, but understanding the gravity of the situation, we left for home the next morning.

People of a certain age can tell you where they were when historic events happened: the assassination of JFK, the moon landing, the Challenger explosion or September 11th. In many ways, the moment that the current Pandemic became real to each of us will likely make it onto the list. This pandemic is truly that type of event. My pandemic shortened “road trip” weekend is when this pandemic became very real for me.

Now, Every morning and every evening, on my drive to and from my store, I listen to CNN on my radio. Over the past couple of week, I have become almost numb to the numbers. At our pharmacy, our preventative measures and procedures change almost daily. The new normal is decidedly NOT normal

But with great turmoil also comes potential. With doctors and hospitals overwhelmed, pharmacies have an opportunity to take a more central role in health care. Pharmacists, technicians and pharmacy students have an opening to become recognized for more than just being a source of medication.

So at the same time you are navigating your way through your new normal, keeping both your staff and patients safe, be thinking about what you can do to enhance your practice. Become accountable. Make this opportunity count.