Category: Business

The previous analysis of narrow network DIR fees generated significant attention, and several people were interested in more details about the medications that were severely underwater.

Notes

It is important to note that the 10 drugs listed below represent 10 drugs our pharmacy dispensed during a 3 month period to patients using one specific narrow network with a DIR fee. It is unlikely that these 10 medications are the only severely underwater products, but without a broader sample of claims data, this is unknown. Below I have established an estimate of best current (July 2015) available price using a variety of alternative generic wholesaler vendors for the drugs. Because the analysis was initiated retrospectively, determining an actual historical best available price was not feasible. For each drug, I have calculated a ratio of the approximate best net acquisition cost (after DIR fees were applied) to the product reimbursement. For example, if the best acquisition for drug X is $10 / tablet and the net payment after DIR is $2 /tablet, the ratio would be 5:1. These ratios are rounded, as contracts prevent a pharmacy from disclosing actual acquisition costs of items.

Drugs in the Trench

Amphetamine Salts XR 20 mg Caps (generic Adderall XR 20 mg) 

This medication has long been subject to underwater issues and represented 3 claims during the analysis period. Based on acquisition cost (before any rebates are applied) our pharmacy system shows losses of hundreds of dollars for this high dollar generic.  Unfortunately, because this is a Schedule II (C-II) controlled substance, buying from other sources is more challenging for a variety of reasons. It is also possible that some pharmacies could have better contracts on this medication than others. Based on our best acquisition price (after rebates): Ratio 4:1

Brimonidine 0.15% Ophthalmic Solution (10 ml)

There were only two prescriptions for this in our 3 month data set, but each one resulted in more than a $100 loss. A check of alternate generic wholesalers did not reveal any currently available product below our net (after rebate) acquisition cost. It should be noted that the other strength of this medication (Briminodine 0.2%) is significantly less expensive, possibly alluding to the basis of the ultra-low reimbursement. Ratio 6:1

Cefdinir 300 mg Capsules

This drug represented only one claim in the data set. Currently, there is a product available at a price significantly less than we paid back in March, 2015, but even with this lower priced product available today, the claim would remain underwater. It would take an acquisition cost of about $0.50 per capsule to break even. Ratio of 1.2:1

Chlorpromazine 50 mg and 100 mg Tablets

These two strengths of the drug represented ten claims during get test period and resulted in a loss of more than $2,800 by themselves. The product saw price a significant price increases back in September of 2014: the price increased by over 300%. The price has been falling slowly over the last couple of months, but remained steady during the analysis period. Reimbursement, after DIR fees were removed, were around $1/tablet (50 mg strength) and $1.40/tablet (100 mg strength). It is worth observing that the current reimbursement is in line with the pre-increase acquisition costs of the medication. Even given the best price today, losses for this drug would still be very significant. Ratio 3:1

Divalproex ER 250 and 500 mg Tablets

Our pharmacy serves many seizure patients, and because of this, we have a policy to minimize unnecessary changes in manufacturers for seizure medications that might result in the deterioration of seizure control of our patients. Reimbursement considerations make this infinitely more difficult, as the third party payor doesn’t have any stake in ER visits and hospitalization costs. This being said, our current divalproex ER products have remained stable for quite some time and have (thankfully) been the least expensive option available to us. Looking around for the best available price today (without respect to changing generic manufacturers) does alleviate some of the losses, but does not move the profit indicator out of the red. Ratio 3:1

Divalproex Sprinkle 125 mg

This product is an immediate release variant, and changing manufacturers is less of an issue. Looking at the best available price today does show one product (from a company I have never seen before) priced around $0.04/capsule. If one were inclined to trust this product (and if it was even available at this price in the first quarter of this year) one could have made a small profit on the product after the DIR fees. Therefore, this product was ignored for the purpose of ratio calculations.  Ratio 5:1

Donepezil 23 mg Tablets

There was only one prescription for this medication in the data set, but based on our best price at the time, we lost over $270. Back when the prescription was filled, only one product was available at a cost of more than $10/tablet. Today, with the a product now available for closer to $3/tablet, the loss would still not be eliminated. Reimbursement is closer to $1/tablet. Ratio was: 10:1 (would be 3:1 today)

Methylphenidate ER 18 mg Tablets (Generic Concerta 18 mg)

Back in November of 2014, the FDA determined that two of the three available generic versions of Concerta were did not meet FDA Orange Book guidelines for rate and extent of absorption, and therefore could not be considered generically equivalent (AB rated). This meant the product effectively became single source. The reimbursement, after DIR fees are accounted, hovers around the acquisition cost of the non-substitutable, less expensive product. Ratio: 5:1

Equity in Pricing

Note that contracts prevent pharmacies from disclosing their actual acquisition costs for products. It is safe to assume that larger groups of pharmacies (chains and large independent buying groups) may receive better pricing than smaller groups. By participating in a large buying group, independent pharmacies should be able to receive prices similar to large chain pharmacies, and this is mostly true. There are reports, however, of a few medications that are deeply discounted to individual groups. This is sometimes referred to as corporate contracted rates for a drug. Some of the drugs in the analysis above may be subject to these contracts, and the pharmacies receiving that special pricing may not actually lose any money on the prescriptions.

It is likely that the PBM industry leverages these deeply discounted contracts in their MAC price calculations, and this may explain some of the severely underwater reimbursements seen by pharmacies not receiving this special rate. The “black box” nature of MAC prices (the PBM considers their MAC pricing formula proprietary and a trade secret) makes it impossible to determine the reason behind underwater prices. DIR fees simply make the situation worse. Requests to the PBM to update the MAC price for a drug to account for real-world acquisition price often receive a “no adjustment required, product available at a lower price. MAC Price justified” type response. This is of little consolation to the pharmacy that cannot purchase the product at a rate even close to a break-even price. There is no “request to review” a DIR fee.

There are, however, reports that some wholesale drug companies and buying groups are looking at ways to help pharmacies (especially independent pharmacies). Currently, the wholesale drug companies and buying groups do not have skin in the game. There is talk, however, of these two groups offering pharmacies a form of price protection from severely underwater products in the form of rebates, thereby offsetting some of the losses. Without some for of safety net, pharmacists have to make some difficult choices in what to stock and not stock in their stores.

I have heard a lot different angles (mostly negative) about certain narrow network Medicare Part D plans. These plans are somewhat exclusive, and many chains and independents were not offered, or declined contracts due to the very aggressive reimbursement offered. Some aspects of the overly complicated DIR (Direct and Indirect Renumeration) fees this plan leverages have been previously discussed on this blog here.

This specific plan is so polarizing in pharmacy circles that some pharmaceutical wholesalers even have come into our store bragging that their member pharmacies (represented by their PSAO  – Pharmacy Services Administrative Organization) declined these contracts, essentially implying that stores participating in the narrow “Preferred” network were worse off having access to these lives. This is completely opposite of our feelings that access to lives is very important.

This specific plan reports DIR fees in a way that makes it very difficult to see  bottom line reimbursement; the plan reports DIR fees retroactively, attaching last months DIR fees to unrelated claims on the current pharmacy remittance information. Up until recently, when our PSAO, AccessHealth, began matching the DIR fees associated with each prescription for us, analysis of profit and loss was almost impossible. With this report, pharmacies can take a closer look at how this contract impacts their bottom line.

Analysis

AccessHealth (and presumably other PSAOs that did not sign this contract) analyzed the potential profitability of this contract before deciding to sign (or not sign). The fact that AccessHealth did sign the contract indicated that it was their belief that member pharmacies would benefit overall from this contract, fully understanding the “aggressive” reimbursement and DIR fees would make it important that pharmacies maximize this access to lives by leveraging other revenue streams to make up for the lower prescription revenue. Using the data recently provided to our pharmacy, 872 claims (January thru March) for this plan were analyzed for their impact on our pharmacy. The question being addressed is this: is participation in this narrow network sustainable for a medium to large independent pharmacy.

General Statistics:

• This plan represented 872 claims (Jan-March), each with an associated DIR fee
• The total adjudicated amount for these claims was $66,855 before DIR fees
• DIR fees were withheld from 568 of these claims totaling $14,694
• “Negative” DIR fees (money returned to the pharmacy) were paid for 317 claims, totaling $2,020

Looking at these numbers, it is interesting to note that there were over 300 generic drug claims that were reimbursed at a MAC (Maximum Allowable Cost) that was BELOW the DIR’s contracted rate. This effectively gave money back to the pharmacy in the form of a NEGATIVE DIR. This “feature” of the DIR actually may help protect the pharmacy from some overly aggressive MAC prices for certain drugs. That being said, the withheld DIRs dominated these returned DIRs. The net DIR total for this plan in our pharmacy bottom line is about $4,000 per month returned to the plans in exchange for participation in the network.

Watching the Bottom Line (Profit or Loss)

Calculating profit or loss on a prescription is normally not that difficult, and it can be usually be done at the point of sale before the prescription leaves the pharmacy. The addition of DIR fees complicates this tremendously, because these DIR fees are unknown to the pharmacy until well after remittance arrives. The pharmacy may also receive a rebate on some generic products (based on the pharmacy’s purchase volume), though the pharmacy can usually estimate the rebate before it is actually received. Not every generic product, however, may be rebatable.

Once the pharmacy knows both the DIR and the rebate, a profit or loss can be calculated for each prescription. When a prescription is reimbursed by the PBM for less than it costs the pharmacy to purchase the product, is often described as “underwater.” For the 872 claims above, more than 90% of the prescriptions were generic. Other descriptive statistics for the claims include:

• 72 claims (8%) were “underwater” before DIR fees were applied to the claims
• 304 claims (35%) were “underwater” after DIR fees were applied
• DIR fees averaged an additional 19% discount from the adjudicated claim amount

To a pharmacy owner, any underwater claims are unacceptable, and the large number of underwater claims for this plan is very discouraging finding. The more important statistic, however, is the gross profit or loss for these prescriptions, and applying the rebates should offset losses and have a positive impact the pharmacy bottom line. If the estimations done by the PSAO before signing the contract adequately reflected actual claims finding, the total profit for these claims should be positive.

Before generic rebates were applied to the above claims (but after the DIR fees were withheld), the pharmacy lost $6,552 on these 872 prescriptions. The amount pharmacy receives in generic rebates is variable (dependent both on the pharmacy’s purchase volume and the other contractual obligations), and for this reason, a range of rebate rates for generic drugs was calculated. For our buying group, rebates are calculated as a percentage of invoice price for qualifying items. This type of rebate application may not be representative for other buying groups outside the one which our pharmacies maintain membership.

For the purposes of this analysis, generic rebate rates of 20%, 25%, 30% and 35% were used. These calculations assume that every generic drug dispensed was eligible for a rebate. There are cases, however, where the least expensive drug (after accounting for rebates) is not a rebatable product. The assumption that all generic drugs were subject to a rebate may, thereby, overstate the effects of rebates on the pharmacy’s bottom line. The calculations below are then only estimates that should be representative of ballpark profit or loss on these prescriptions.

In the table below, the first line (Rebate Total) represents to total rebates (based on the generic rebate rate in each column) that the generic drugs included in the 872 claims should have garnered the pharmacy. The second row is the Net Profit or Loss for the 872 prescriptions based on the rebates received, and the last row represents the average profit or loss per prescription for each of the 872 claims.

Several observations can be made from the table above. The most important, however, is that significant rebates are necessary in order to even break even on these prescriptions. While the disclosure of our generic rate is restricted by contractual agreement, I will state our pharmacy did not profit from these 873 prescriptions. I will further state that few if any independent pharmacies are likely to receive rebates that exceed 25-30%.

The distribution of the profitability of the claims is also enlightening. The chart below shows profit / loss ranges in $5 increments for all 873 prescriptions after subtracting the DIR fees but before rebates were applied. There are 78 prescriptions showing a loss of more than $25. On the other side of the histogram, only 48 prescriptions profited more than $25.

After applying rebates, the histogram shifts to the right somewhat, but a large number of severely underwater claims remain. The histogram below represents a 25% rebate level (one that is assumed to be fairly representative for most independent pharmacies). The loss for these 78 prescriptions was between $8,500 (using a 20% generic rebate) to $6412 (using a 35% generic rebate). That is an average of more than a$95 loss per prescription. These prescriptions are not underwater, they reside at the bottom of the Mariana Trench. The total profit for the “highly profitable” prescriptions (netting more than $25) was between $2,698 (using a 20% generic rebate) and $2,720 (using a 35% generic rebate). The discrepancy between the heavily underwater prescriptions and the highly profitable prescriptions represents most of the losses recognized by the pharmacy. 

The number if “highly profitable” prescriptions do not change much after rebates, with the $20-25 bin increasing only by 1 prescription. The most noticeable change is the number of marginally underwater claims (those $10 to $15 underwater). The number of claims losing more than $25 does not change significantly because these claims are obscenely negative. The group of claims losing more than $25 deserves further examination. The graphic below further describes the left-most column in the two histograms above. This one column is broken into 6 groups: losing $25-50, losing $50-75, losing $75-100, losing $100 to 200, losing $200-500 and losing more than $500. A seventh group (the far right columns below) entitled losing less than $25 was added to house any prescriptions moving OUT of the trench. Blue bars represent losses before applying generic rebates, and the green bars represent losses after applying generic rebates.

The effect of rebates on these severely negative claims is small. The number claims losing more than $500 does not change after applying generic rebates. There is a small shift overall to the right in the other columns (indicating the positive effects of the rebates on these prescriptions), but only one prescription losing more than $25 before rebates actually “graduated” to a loss of less than $25. In other words, these claims are so far underwater based both on MAC and the DIR fee that even a very high 35% generic rebates cannot rescue them.

Looking closer at the drugs residing at the bottom of the Mariana Trench, several high dollar generic drugs appear to be the culprits. Looking at just one example, chlorpromazine, we see a claim for 186 tablets reimbursed at $595.18 minus a DIR fee of $336.67. Based on purchase price, the prescription started out underwater by over $1200. Because the purchase price is large, the rebate is proportional, resulting in $280 to $500 being returned to the pharmacy in the form of rebates. This still leaves the pharmacy between $650 and $900 underwater on ONE prescription. In fact, removing only 15 high priced generic medications from the analysis removes most of the 73 claims residing in “the trench”. If these claims were adjudicated in a fairly, the total of the claims would graduate from a net loss of $1791.65 to a net profit of $5161.23 (using a 25% generic rebate rate), which is a net profit of more than $6 per prescription. It would seem that the MAC and DIR calculations being used by this plan break down when generic drugs are very expensive.

Closing Remarks

It should be reiterated that the across the board application of rebates to all generics is an assumption, and that this will overestimate the effects rebates actually have on the bottom line of a pharmacy. That the bottom line is still red with this over-correction only emphasizes the need for reform.

Just breaking even on a prescription by the calculations above is not enough, either. No overhead costs were taken into consideration, and these are a significant part of a pharmacy’s expenses. It has been estimated that a pharmacy has to make an average of $9 to $12 per prescription to cover expenses (including a reasonable profit). The best case scenario (using a 35% rebate level) in the analysis above falls significantly short. This means that pharmacies need to find a way to make  and additional $10-$12 for each prescription filled under this plan from OTHER services. Giving the patient a flu shot once a year, or selling the a bottle or two of over the counter vitamins 12 times a year is unlikely be enough to offset the significant losses these prescriptions currently bring to the pharmacy. I have always been a proponent of access to lives, but the above analysis shows that the pharmacy is paying the benefit manager a king’s ransom for the “privilege” of servicing these patients.

On a positive note, if the BPM were to correct their processing of a small number of medications (generic medications with very high acquisition costs) by correcting the MAC and /or and DIR components, the plan would draw considerably less ire from pharmacies and pharmacists. The concepts of MAC pricing and DIRs, if applied in a fair manner for all medications, might even be considered reasonable. The draconian manner in which it is currently being applied, however, creates significant problems. Pharmacies could address this problem by refusing to stock a small number of medications that are responsible for a majority of the losses being seen. It would be unfortunate if a shortsighted PBM’s policies resulted in a widespread loss of accessibility of certain medications to patients.

The ball is now back in the contracting organization (PSAO) to work with the PBM to address the problems outlined above. The current MAC and DIR calculation formulas appear to be broken for certain high cost generics, and this needs to be addressed immediately. Even if a pharmacy is not contracted with this specific plan, these tactics are becoming commonplace in the industry. Pharmacies need to be working closely with their contracting organizations to reform these tactics now. Normally I end each blog post by telling pharmacists everywhere to make every encounter with their patients count (a phrase so important that we even registered it as a trademark). Today I am asking every pharmacist to have an “encounter” with their PSAO. Make it count. Pharmacy is a great profession. Pharmacists bring significant value to healthcare. Reimbursement reform should be a goal every pharmacist works toward.

As a pharmacy owner, I tend to visit pharmacies (especially independent pharmacies) when I travel. There is a lot of history to be seen in some stores, and even new ideas to be hatched. While visiting an independent pharmacy in Little Havana (Miami Fl) that was right out of the 1950’s, it occurred to me that the front end (non-prescription area) of a pharmacy tells a story about the pharmacy and its philosophies. Immediately I recognized that even chain pharmacies are aware of this. Consider the recent national headlines generated as CVS announced that they would no longer sell cigarettes in their stores. Their rationale was simple: cigarettes are the polar opposite of health care.  And while CVS is should applauded for this stance, the chain’s merchandise still includes many items that, while not as polarizing as cigarettes, certainly are not healthy or even related to health and healthcare.

Walking into any pharmacy tells a story. Today, the front end merchandise at many chains bears more resemblance to a grocery or convenience store than a pharmacy.  I am sure that this merchandise mix helps draw customers and profits, but it has little to do with pharmacy. Save a few aisles of over-the-counter medications and health supplies, front ends of chain drug stores today are decidedly not health care oriented. Independent pharmacies are not exempt from this phenomena, either. Many smaller independent pharmacies have front end merchandise filled with gift, antiques, cards, and other sundries.

Part of this merchandise mix is tradition, part demographic, and part customer demand. Another part, though, is survival. Today, reimbursement for prescriptions is at an all time low. The pharmacy department historically was the revenue generating area of a store, with the front end almost an afterthought. Today, without strong sales and revenues from the store front end, both independent and chain pharmacies often struggle to generate acceptable profits needed to stay viable businesses.

Independent pharmacies today are at an even bigger disadvantage today than ever before. Independent pharmacies are generally smaller than chains. Their front ends are generally much smaller, too. The strategy being used by chains really does not translate to most independent pharmacies. For the independent, the story the front end tells must be different. For independents, the front end is becoming increasing health-care centered. This differentiation from chain drug stores is one part of how independent pharmacies are trying to survive in the market today.

Our pharmacies have emphasized the apothecary style store for years. Our front end is all health related, and includes the usual assortment of vitamins, wound care, laxatives and other over-the-counter remedies. Included in the merchandise mix is a healthy dose of durable medical equipment, including walkers, canes, crutches, and wheelchairs. Our philosophy is to make the pharmacist accessible, and our pharmacists are positioned on the counter in a manner that they can easily spot customers in the store needing help and quickly step into the front end to offer personalized care and answer questions.  The image we want to project is a professional health center.

The next time you enter any pharmacy (chain or independent), take a look around and ask yourself: “what is the image that this store is projecting?” If you work for a pharmacy or even own one, ask your customers the same question, and they ask your self if that is the image you want to project.

 

The other day, my business partner and I had a conference call with our wholesaler and our PSAO about the impact that DIR fees were having on our bottom line.  The representative from our PSAO kept emphasizing that the reason why they signed the contracts with some preferred networks (with very low pharmacy reimbursement) is because they wanted to make sure that their network of pharmacies had access to lives.  We do not disagree with this statement, but where our priorities began to diverge from our PSAO is when the PSAO representative described ways to increase revenue for those patients in the store. The emphasis was on selling them other items to make up for the losses on the drug product. The emphasis was not on clinical services, but what other products you may be able to offer patients coming to your practice.

What?!  We were in disbelief! From our perspective, access to lives means that we have an opportunity to provide clinical services that impacts the care of these patients.  If clinically we did our job, then patients should attain their therapeutic outcomes through safe and effective drug therapy regimens.  Those patients who achieve their therapeutic outcomes should be healthier and have less health care spend than those patients who do not achieve their therapeutic outcomes.   It is our contention that pharmacists SHOULD be paid a FAIR fee for high performance.  Obviously, with underwater MACs, DIR fees, claw-backs, and other PBM business practices, the payment for product has rapidly become insufficient to cover the costs associated with dispensing. Product reimbursement certainly leaves nothing to pay for a pharmacist’s clinical activities and cognitive services.  To add insult to injury, the performance payment from one PBM for our performance on pharmacy performance measures was extremely anemic.  This is unacceptable, and as a profession we should demand more from our strategic partners, which include our wholesaler, our PSAO, our network, our buying group, and the PBMs themselves.  At this point, the partnership seems to be benefiting everyone but the community pharmacist who is in the trenches taking care of patients (and who is getting paid less to do this).  It makes no sense.  But to have one of the strategic partners verbalize that we have to do more than just offer clinical services and look at other products that we can sale to patients as a way to enhance our revenue was enough to put us over the edge.

We want to be good community pharmacists.  We offer an extensive list of clinical services. We have partnered with a local payer, who has stayed committed to us because of the outcomes we have been able to generate with their clients (our patients), and we consistently achieve a high performance on our pharmacy performance measures on the EQuiPP platform.  We own two professional pharmacies that have small front ends.  We only sell medical related items and we already have a flourishing DME business.  So if our strategic partners are suggesting that we are suppose to sell paint and hardware or milk and eggs as a way to generate new revenue, then question if they are truly our partner.  It should be about patient care.  It should be about the services we provide.  It should be about the outcomes we achieve.  We have worked hard to change the paradigm of our practice, but now we are working just as hard to change the paradigm on how community pharmacist are paid.  It seems everyone within the drug distribution system is “making their money” including the all the strategic partners that have been mentioned previously, but the community pharmacist is left to provide the care, identify and resolve drug therapy problems, take calls from patients 24/7, be responsible for patient outcomes, and not paid sufficiently for any of it.  Access to lives should not be about finding new ways of selling products to improve the bottom line, but rather it should be about quality patient care, fair reimbursement for that care, and bonus incentives if expectations are met. How can anyone rationally look at the current system and say that it is fair and that pharmacist are reimbursed sufficiently?  The financial viability and survivability of independent community pharmacist is on the line.

As we move forward, we will continue to fight for what we believe is fair reimbursement for services rendered.  We will continue to put pressure on our strategic partners to help us in our quest for fair and equitable reimbursement.  In the short term, we also will continue to put pressure on our strategic partners to make sure that we are receiving the best price for our costs of good sold, including rebates.  We will continue to communicate with our legislators about fair reimbursement for pharmacists.  And we will continue to support our local, state, and national professional organizations as they continue to fight for pharmacists recognition as providers.  It has been a tough year, and next year looks to bring the same.  We also realize that we are not alone, as other owners have expressed similar concerns.  All of us can make a difference,  but we have to be willing to challenge the status quo and our help strategic partners to change.

The other day I sat contemplating the pricing of a large pizza. Yes, I am a bit of a math geek, and I was having trouble wrapping my head around why the price of a 16 inch pizza was only a couple of dollars more than a 12 inch pizza despite the exponential nature of the area as pizzas get larger (113 sq inches for a 12 inch pizza vs 153 sq inches for a 16 inch pizza, almost a 40% increase in size). I am sure someone has looked at all of the variables( ingredients needed, time required to assemble the pie, pizza oven space requirements, baking time etc.) and justified the discrepancy, but it still bothered me.

As I thought about this some more, it occurred to me that pharmacy (and more specifically the pharmacy benefit managers or PBMs) are doing the same thing. The emphasis on the 90 day refill is high in the industry, even to the point of incentivizing the patient with a lower copay (just like pizza) to “upsize” their prescription. Like the pizza industry, I am sure someone has measured all of the variables and come to the conclusion that, like the large pizza, 90 day fills are better.

But is this wisdom actually accurate? Whom does this benefit? Remember that the PBM industry has, by and in large, made this judgment using their variables. Is it good for the payor,  the patient, or the pharmacy? What is the goal or outcome that is being sought? To a pharmacist, the goal should be improved outcomes and a decrease in total health care spend. For some reason, I doubt that these are the outcomes cherished by the PBMs.

Benefits of a 90 day “Super Size” Rx

The Patient: 

A super size Rx may result in fewer trips to the pharmacy. This assumes that the patient doesn’t visit the pharmacy for other reasons, of course. Patients also pick up necessities at their local pharmacy (think OTC items), receive vaccinations, have their blood pressure checked or cholesterol tested, or to ask questions or advice from their pharmacist. Even after implementing a medication synchronization program, many of our “sync” patients still come the the pharmacy just as often as before. Indeed, fewer trips to the pharmacy may actually be a bad outcome for patients.

Compliance is often touted as a benefit of a 90 day refill. This, however, turns out to be somewhat difficult to prove. Claims data may show better compliance, but it is impossible to know if the patient is actually taking the medication properly and achieving the optimal outcomes with claims data alone. When a pharmacist takes time to talk with a patient, they can actually assess both compliance AND outcomes. Super size refills creates fewer interactions with the pharmacist to assess the patient and can actually delay the pharmacist’s ability to address compliance and intervene to improve outcomes.

Cost is used an incentive for Super Size refills. The patient will often pay less for a 90 day supply than they would for three 30 day supplies. For many patients, this savings, over multiple prescriptions and over the course of the year can be significant.

The Payor:

Insurance companies are the ultimate payor. In the case of Medicare Part D, the payor is Medicare. To the entity holding the purse strings, 90 day fills offer little real advantages. While it is possible that a supe rsize refill costs the payor less than a 30 day refill, drug costs are only a fraction of the costs that the insurance has to consider. Any savings, in the form of improved outcomes from medications can far exceed any savings for 90 day prescription fills. A recent program between a pharmacy in Iowa and a major insurance payor demonstrated that pharmacists can impact total health spend for their patients, and the degree of this impact can be very substantial. Overall, the payor may benefit more from an increase in patient-pharmacist interactions rather than a decrease.

The PBM:

Extended day supplies benefit the PBM in several ways. Many extended day contracts feature both decreased pharmacy reimbursement and decreased dispensing fees (the two places pharmacies are actually paid for their effort). This directly benefits the PBM by decreasing their cost. Another potential benefit is for the PBM to emphasize their own mail-order pharmacy. Extended day fills are really the only way this type of pharmacy can exist. Any emphasis on extended days supply creates opportunity for the PBM owned mail order pharmacies to extend their business.

The Pharmacy:

The pharmacy stands to loose the most from extended day supplies. While the PBM argues that extended day supplies are easier for the pharmacy (only having to fill a prescription 4 times a year versus 12 times a year), this benefit is negated by a myriad of negative economic impacts on the pharmacy, including decreased front end sales and diminished reimbursement of the prescription itself. A prescription, to a pharmacist caring for the patient, is a lot more than just a bottle, label, and drug product. It is a chance to make that encounter with the patient count. Pharmacy is a profession, not a product.

The Real Pharmacy Benefit: Pharmacists

In the end, the PBM industry has pushed its own agenda by forcing down reimbursement for drug product and emphasizing its own metrics. It is time for the patient and the payor / plan to start recognizing the importance what the pharmacist does and how it impacts patient care. It is also imperative that pharmacist step up, if they are not already working as a clinical interventionist. Every pharmacist should be working to make every encounter with their patients count!