Category: Regulations

Legal and ethical issues for the thriving pharmacist.

Shall we play a game?

The title above comes from the 1983 movie WarGames. The plot of this movie centers around a young computer hacker that manages to access a Department of Defense computer. That computer asks the hacker, Shall we play a game? That game just happens to be Global Thermonuclear War, and as it turned out, the game was actually very real.

Sometimes, an apparently innocuous event can quickly become very dangerous, not unlike the game our hacker was playing. There are few tasks in the pharmacy world more potentially dangerous than filling controlled substance prescriptions. The risks exists on both sides of the prescription counter. Improper use by the patient can lead to significant morbidity and even death. Pharmacists face significant regulatory challenges trying to balance federal laws and DEA rules, all while assessing appropriate prescribing habits and patient outcomes.

Pharmacies and pharmacists are generally well-versed in complying with federal and laws and DEA regulations surrounding the ordering and managing of controlled substance inventory. A bigger challenge is ensuring prescriptions being filled meet all of the rules and regulations to ensure that it is valid. It is not enough to simply ensure that the prescription is not forged. To be valid, a prescription for a controlled substance must be issued for a legitimate medical purpose by a practitioner acting in the usual course of professional practice.  The pharmacy has a corresponding responsibility to ensure proper prescribing of controlled substances.

Recently, the DEA has started conducting audits of pharmacies, and they are not just looking at record-keeping for inventory and ordering. Failure to fulfill the pharmacy’s corresponding responsibility to verify the prescription is valid can result in fines of up to $10,000 per violation. Let’s look at some ways to ensure your pharmacy is not subject to this type of thermonuclear attack. Below are what I consider to be best practice principles for controlled substance dispensing.

Check the PMP (Prescription Monitoring Program) and Document Findings

This should go without saying, but every controlled substance prescription you fill should be checked every time. Even if you think you know your patient, and they have only ever used your pharmacy before, be sure they have not changed their habits. Be sure to document both your search and the results.

Determine and document the indication for the medication

If the pharmacist doesn’t know what the medication is being used for, they cannot assess the appropriateness of the therapy. While a pharmacist may be able to guess the probable indication, it is important to verify and document this information every time you fill a controlled substance. Included in this is the expected duration of therapy. All of this information does not necessarily have to come from the prescription or the prescriber, it may be possible to determine parts of this simply by speaking with the patient.

Understand the accepted guidelines for treatment

In order to be able to assess the validity of a prescription, you need to be sure you understand what the standard of care is for the condition being treated. For pain medications, especially, there is a accepted progression that should be followed. Once this is in the back of your mind…

Document previous treatments used and their outcomes

Did the prescriber jump right to an controlled substance (e.g. an opioid), or did they other medications first (e.g non-steroidal medications)? Is the etiology of the condition treatable with non-pharmacologic vectors, and if so, have they been tried? What were the outcomes? In the case of pain treatments, if the pain is chronic, is the patient being followed by a pain specialist? Do they have a pain contract? Each patient is a story, and without knowing and documenting the story, assessing validity of the therapy is more difficult.

Watch Trends

Every course of treatment will have a natural progression. An acute treatment may flare and wane with time and end. Chronic treatments may slowly escalate. All of these may be normal, but it is the pharmacists job to look for potential diversion of controlled substances. By watching trends and speaking with the patient about them as they occur, you can more easily spot diversion and take appropriate actions.

The reoccurring theme in these practices is documentation. While we use a clinical documentation platform (PharmClin) to document these types of activities, the documentation can be done in a variety of other ways. Having this documentation goes a long way toward satisfying corresponding responsibility.  Be sure to take the time to protect yourself, and make every controlled substance prescription a complete story. Make every encounter count!

Whitehouse Petition

Recently, a petition asking the Executive Branch of our government to look at the business practices of Pharmacy Benefit Managers was started on Whitehouse.gov. It is entitled:

CMS NEEDS TO ENSURE TRANSPARENCY IN ITS ROBUST BUSINESS RELATIONSHIP WITH THE LARGE PHARMACY BENEFIT MANAGERS (PBMS)

Three large PBMs manage prescription drug benefits for more than 180 million Americans. PBMs have clients on two sides – pharmacy clients and health plans/payors (Medicare, DoD TRICARE and FEHBP). They also own their own mail order and/or retail pharmacies and that puts them in direct competition with their small pharmacy clients. This leverage incentivizes them not to reimburse their small pharmacy clients in a fair and timely manner – this is not just and Congress needs to support CMS in their efforts to scrutinize these unfair practices.

These petitions generally require 100,000 verified signatures to move forward. Currently, only 2000 persons have signed.

The wording of the petition is somewhat vague, and it could be stronger and more descriptive. Even so, it is a good start. The Thriving Pharmacist would like to see this petition move forward. I realize that we don’t have 98,000 readers, and even if we did, not every single reader will take the time to complete the process. Despite this, I would like to encourage everyone to take the time to consider signing. Better yet, if you agree, help spread the word! Make your voice heard.

Signing a Whitehouse petition is a two step process that requires a valid e-mail. Once you sign, you must respond to the verification e-mail whitehouse.gov sends you in order for your signature to be accepted.

I look forward to seeing many, many more signatures supporting PBM transparency on this petition. Make this encounter count!

Narcotics, Mail Order and the 90-Day Supply

Okay, maybe it seems that I am obsessed with writing about the 90-day supply. I have long maintained that our ability to care for a patient is directly correlated with the frequency we see them. Only seeing a patient every 90 days is often not frequent enough to enable quality care. But today, I hope, even strong proponents of mail order and the 90-day fill will agree that 90-day mail order fulfillment of narcotics is a really bad idea. Let’s begin today’s edition of Tales from the Counter.

Recently, while working to fill a prescription for generic Percocet (Oxycodone / Acetaminophen), the insurance rejected the claim. The claim response indicated that the prescription was filled by a mail order pharmacy about 40 days ago. Like most mail order prescriptions, it was filled for a 90-day supply.

Seeing this reject made my blood boil. The anger I felt was not because I lost business to an out of state pharmacy that provides a drugs as a commodity instead of providing personalized patient care. We see medications offered as an inexpensive commodity far to often, and getting angry about it doesn’t help. I was angry because of the  implications of mail order, 90-day supplies of narcotics.

Maintenance Therapy

The most common argument for the use of mail order pharmacy and 90-day supplies is that they are appropriate for maintenance medications. Once a patient’s therapy has been optimized and is stable, longer periods between monitoring by both the prescriber and the pharmacy may be acceptable. Medications for high cholesterol, for example, would be reasonable 90-day candidate.  Once the patient has been dosed on the appropriate statin intensity level and labs have been checked (e.g. liver function tests), then it may be appropriate for the pharmacist to assess the patient for adverse drug reactions every few months.  Other medications commonly promoted for mail order and 90-day supplies, though, may be less clear cut. Medications for diabetes and blood pressure, for example, certainly can benefit from more frequent monitoring by the pharmacist, and may not fit the 90-day model as well.

But are narcotics maintenance medications? I argue that while a patient might be dependent on opioid pain medications, and chronically using them, the treatment of even chronic pain should always be regularly monitored by both the prescriber and the pharmacy. The 90-day supply, quite frankly, isn’t conducive to this level of monitoring, and the lack of oversight is a significant concern.  Also, there are major concerns that opioids are overprescribed and overused and the 90-day supply increases the potential risk of this medication-related problem.

Besides monitoring issues, the potential for diversion also becomes a significant concern. This ties in with the epidemic of narcotic abuse both here, in the United States, and worldwide.  Narcotics delivered by the mail or currier services are at significantly higher risk of diversion. Unlike a retail pharmacy, where the patient and their caregivers are often known, a mail carrier or currier is at a significant disadvantage. HIPAA rules mean that the currier cannot know what the medication is or even that this is a narcotic. And while they may have to secure proof of delivery, the person accepting the delivery is generally unknown to the currier. Add to this the large quantities involved with extended day supplies, and the opportunities for diversion become even more significant.

Previously, we wrote about narcotic diversion and the responsibilities of the pharmacist in a blog entitled Pharmacy Street Blues (Link). Most of the methods pharmacists use to detect forged or counterfeit narcotic prescriptions rely on the pharmacists relationship with both local prescribers and the patients. A narcotic prescription doesn’t have to be forged to be illegal, either. There are prescribers writing for narcotics that are not following the DEA guidelines. Being a local provider makes it much easier to recognize this type of behavior. Any pharmacy without a local storefront, is going to be at a significant disadvantage in spotting both forged and illegally prescribed controlled substance prescriptions.  Patients with pain issues need to have a team of providers who are communicating closely with each other to ensure appropriate patient outcomes.

The other side of the narcotics epidemic is what is sometimes called fringe prescribing. These are narcotic prescriptions that are legally prescribed but probably not fully compliant with the prescriber’s responsibilities according the DEA. Spotting these problems and addressing them is very difficult when you are dealing with a local prescriber and patient. State run Prescription Monitoring Programs are an important tool, but these documents, which show the patient’s controlled substance history at all state pharmacies and from all prescribers, are difficult to interpret due to frequent inaccuracies. Having a local relationship with the providers makes the process of spotting real and potential issues possible.

Obviously, controlled substances prescriptions are being mailed, and this practice is legal. Pharmacies participating in this practice are certainly aware of the issues and likely have some safeguards in place to minimize issues. The problem is that distance creates a large impediment to performing all of the necessary due diligence. With the large volume of prescriptions mail order pharmacies process, it is not hard to imagine that problems are more likely to slip through. It is my opinion that the risk associated with mail order narcotics outweighs the convenience of the service. Your comments are welcome below.

Re-Blog: Apple, FBI, and the Burden of Forensic Methodology

What does the current court order requiring Apple Computer to assist the FBI by “hacking” into a criminal’s phone have to do with pharmacy? One word: privacy. More and more, our patients are using their “smart phones” to keep and store their health records. Apple even includes Health Kit in their core operating system on their phones, which allows the user to store and display many different types of protected health information (PHI) in what is essentially a mini electronic health record (EHR).

It appears that many are siding with the FBI in this case without fully understanding the legal ramifications of the case. If you are interested in why the FBI’s request is far more intrusive to your patients’ privacy, skip over to Zdziarski’s Blog of Things and read Apple, FBI, and the Burden of Forensic Methodology, an excellent summary description of the implications of this case. After reading it, consider how save any PHI stored on a phone would be if Apple loses this case.

Pharmacy Street Blues

It may not be at the top of the list of things people consider when they think about what a pharmacist does all day, but one important, and over-looked aspect of the profession is a form of law enforcement. Specifically, pharmacists are constantly on the look-out for drug seekers and forged controlled substance prescriptions. Criminals are becoming more and more sophisticated in their attempts to secure controlled substances without a valid prescription, and today’s blog is going to describe some of the challenges pharmacists need to be ready to embrace.

Drug Seekers

One of the more common problems encountered is the drug seeker. Most of the time, these present as a patient with an otherwise valid prescription for a controlled substance. The problem is that the person is using many different doctors and many different pharmacies. Spotting a drug seeker is generally not very difficult as long as the pharmacy has proper training and policies in place. These often present as new patients to a pharmacy who request a cash price for the controlled substance.

When presented with a potential seeker, pharmacists and pharmacies should check the state registry for a controlled substance dispensing history (sometimes called a PMP for Prescription Monitoring Program). These lists, while often a week or so behind, quickly reveal multiple pharmacies, physicians and insurance / cash histories.

Once a problem is identified, however, pharmacists are confronted with an even more difficult task: what do you do? The answer is far from trivial, because there is likely a real medical issue being treated alongside physical dependence to the controlled substance(s). A pharmacy may elect to refuse to fill a prescription in this cases, but that does not address the underlying problem. It just moves the patient to a different pharmacy or pharmacist. A better approach is to speak with the patient about their issue and then send a short clinical note to each of the recent prescribers alerting them to issue, directing them to the PMP for details. The goal is to get all of the prescribers on the same page and have one prescriber and pharmacy manage the patient. Addressing the root of the problem takes effort and fortitude.

Criminals

Less common, and far more difficult, are forged prescriptions. Criminals are becoming amazingly sophisticated with their tactics, making the job of the pharmacist recognizing an invalid controlled substance prescription increasingly difficult every day. The criminals plan carefully, usually targeting a pharmacy at a busy time or just before closing, trying to catch the staff in a hurry. Spotting a forged prescription is an art. The pharmacist relies on many different pieces of information to spot a fake, but don’t look for me to publish a list. The last thing we want to do is make it easier for criminals to fool the pharmacist. Instead, I will detail several common tactics:

  • A out of town or out of state doctor.
  • Trying to fill the prescription after the physician’s office is closed, making contacting the prescriber inconvenient or impossible
  • Coupled prescriptions: presenting one controlled and one non-controlled prescription together to make them both appear more legitimate.
  • Someone other than the patient on the prescription presents the prescription and wants to pick it up.

If a prescription is not passing the sniff test, the pharmacist has to make a choice of what to do next. My first advice is to trust your gut. When it doubt, consider the prescription suspect and do not fill it.

The law does not necessarily cover what a pharmacist can, and cannot do in these circumstances: we are generally left to figure this out on our own. The advice of the thriving pharmacist is this:

  1. Request the identification (photo ID) of the person requesting the prescription to be filled. Make a photocopy of this information in case the prescription is determined to be fake.
  2. Stall. Tell the person the pharmacist needs to verify the prescription and it will not be released until that has been complete. This may not be possible until the next business day when the prescriber’s office opens.
  3. Do not risk your safety. Starting with the items below, the situation could become risky. It is in your best interest to call the police now and alert them to a possible situation. It cannot hurt to have the local law enforcement nearby or even at the store.
  4. Do not relinquish the suspect prescription to the patient until it is verified as valid by the prescriber. If the patient demands the prescription back before this, suggest the local law enforcement stop by to discuss the problem. (They may even be outside by this time if you followed step 3)
  5. If the person actually waits for the police to arrive and discuss, the prescription may actually be real, and you should follow the advice of the officer(s), returning the prescription if directed to do so.
  6. Provide all information to the police, including information obtained from a verification check and any video surveillance if available.
  7. Report the incident to your local PMP or state board. Many states maintain a mailing list alerting pharmacies to current threats.

The Rubber and the Road

Neither of the above scenarios are easy to handle, and either can become dangerous. Physical dependence and criminal intent can be a tricky combination. Each issue presents its own set of challenges, and successfully foiling a scam may mean the pharmacist has to testify in court. This is an important part of the profession: a part that does not involve any reimbursement–but should.

In the words of Sergeant Esterhaus (Hill Street Blues):  Let’s Be Careful Out There. Make every encounter count.

Does Size Matter?

The other day, during a conversation I was involved in, an employee questioned the number of persons employees by small businesses in the United States. I recalled having heard that the number was significant and might even have been more than 50%.

When I was younger, I would have had to go to an encyclopedia to find the information, but today the answer is easily found using the Internet. As it turns out, I was fairly close. According to statistics taken from the most current US Census data, small businesses make up [1]:

  • 99.7 percent of U.S. employer firms
  • 64 percent of net new private-sector jobs
  • 49.2 percent of private-sector employment
  • 42.9 percent of private-sector payroll
  • 46 percent of private-sector output
  • 43 percent of high-tech employment

The origins of pharmacy are squarely rooted in the small business world. Back in the 1950’s, even small towns had one or more independent pharmacies. My own father-in-law, a long time pharmacist, regularly recounts more than a dozen pharmacies in our area, most of which resided downtown.

Mergers and Acquisitions

Over the years,  the number of small, independent pharmacies has decreased. Today, they are actually becoming rather rare in many areas of the country. Where once there were over a dozen in my area, today only a few continue to survive.

Chain stores with pharmacy departments have slowly taken the place of the neighborhood drug store. In fact, these chains routinely purchase and then close independent pharmacies to expand their own business. Rarely a month goes by that we don’t receive multiple inquiries asking if we want to sell our practice.

This merger and acquisition process is not limited to chain stores buying independent pharmacies, either. Recently, CVS purchased Target’s pharmacies [2]. In a response reminiscent of the cold war arms race, Walgreens is now looking to acquire Rite Aid [3]. This merger would combine the nation’s second and third largest chain stores, which would catapult Walgreens over CVS in number of stores.

Mergers have not been limited to pharmacies, either. The business of pharmacy involves pharmacy benefit managers (PBMs). A decade ago, dozens of national benefit managers serviced insurance companies and pharmacies. Today, however, the merger and acquisition bandwagon has left just 3 or 4 very large PBMs responsible for almost all prescription claims processing in the United States.

The Price of Big

If one goes back and compares small businesses to the much larger corporations, some things become very obvious. A Small business employs, on average only a few employees. Recall that almost half of all workers are employed by small businesses, and that small businesses represent 99.7% of all firms. By contrast, then, the remaining 0.3% are large firms who employ the other half of all workers.

These larger corporations have a some advantages over smaller businesses. They are capable of generating significantly more revenue than smaller companies. This gives these companies considerably more clout when it comes to politics, were money and influence go hand in hand. The proliferation of mega PBMs and Mega Chain Pharmacies, is in part, a power struggle.

But larger corporations also have weaknesses. The larger a company, the slower it is able to adapt to market conditions. Recently, an executive for a large company visited our store to evaluate one of our proprietary pieces of technology. The process of this evaluation has continued over many, many months, and we were becoming frustrated by the pace of the progress. The executive explained that his company was “like an aircraft carrier — taking several miles to make a turn.” Our small business, on the other hand, was essentially a jet ski running circles around them. The analogy makes a lot of sense.

What is the Goal?

The idea of four dollar generics did not come from independent pharmacies. This idea from larger companies was designed to loss-leader their pharmacy department to drive customers into their stores with the goal of making money on their other purchases. The loss-leader programs played into the PBM industry’s main tool: reducing drug costs. The PBMs used these programs to further push reimbursement for these products well below that four dollar level. Both large and small companies alike  continue to look for ways maximize efficiencies and reduce costs as reimbursement continues to plummet. Today, many products are being reimbursed at levels well below the cost to dispense them. This is not a sustainable goal.

Given the current emphasis on quality care at reduced costs, community pharmacists have been tasked to make sure that the patient achieves their therapeutic goals. The least expensive medication may not be the one that saves the health care system the most money. Pharmacy with an emphasis on patient care is increasingly being recognized for its ability to decrease total health spend. This is aligns well with the new goals Medicare and other payor are gradually adopting. Care is the new goal.

It will take a lot of effort for the large chains to turn their ships in this new direction. Without reimbursement for this professional service, however, the large ships have little incentive to change course. While small independent pharmacies can change course quickly, they are faced with an equally difficult challenge: with reimbursement levels now so anemic, sustaining a practice without other revenue streams is becoming near impossible. This pharmacy driven care initiative is in jeopardy. The jet skis can lead larger ships only if they continue to have fuel.

Congress needs to recognize the problem and take action. Congress needs to look past the large and powerful lobbies preaching savings from reducing drug cost. The real game is patient care. Congress needs to recognize the contributions made by pharmacists and allow them to be paid for these contributions. This is going to involve more than pharmacists receiving provider status under Medicare.

To make care a driving force, Medicare Part D plans must have a stake in the total health spend. This will force them to broaden their product-only strategy. Congress should reward the Part D plans for reducing Medicare’s health-spend, and the Part D plans should pay pharmacists for making this happen. A care-centered revenue stream is what pharmacy practice needs. This will also create the necessary incentive required to help the larger ships at sea to start their turns.

Pharmacists need to unite in a grass roots campaign to reform the system at the federal level. Now is the time. Make your voice count.

[1] https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf

[2] http://www.nytimes.com/2015/06/16/business/dealbook/cvs-agrees-to-buy-targets-pharmacy-business-for-1-9-billion.html

[3] http://money.cnn.com/2015/10/27/investing/walgreens-rite-aid-deal/

 

Flexing

Pharmacists are acutely aware of the power the PBMs wield over their practice. With the recent House Judiciary Hearings on PBMs and other reports of PBM abuse starting to grab the public’s attention, now is a great time to teach the world about the a relatively new PBM power tool: Flexing.

Flexing, as defined by one of the big three PBMs in their contracts as:

the ability to change reimbursement rates a pharmacy receives to meet their (the PBM’s) client guarantees.

Allow me paraphrase: If a PBM guarantees that it is going to save a client $X or Y% in a period and they failed to do so, they will take the difference from the pharmacy, and the pharmacy can do nothing about it.

Origin

Where did this language originate? Like many tactics developed by the PBM industry, this language was introduced into contracts several years ago. While the language was likely questioned at the time, the PBM undoubtedly responded that the language was not being implemented and did not effect rates.

One might ask how a contract with such language was signed. Unfortunately, the network pharmacies (including chains, PSAO groups and independents) have very limited ability negotiate with a pharmacy benefit manager. The PBM considers the “flexing” language to be non-negotiable. This means take it, or leave it.

Once the contract is signed, the language might stay dormant for months or even years. Much like the dreaded Shingles, it can erupt and decimate pharmacy reimbursements at any time. Unfortunately, there is not vaccine for this disease.

To me, what is most irksome is that if a PBM makes a promise to a client and it cannot keep, it doesn’t shoulder the responsibility. Instead of taking a loss on the poorly executed agreement, they use their monopsony-like power in the marketplace to enter language into contracts and pass their failures on to the providers.

Care is Between a Rock and a Hard Place

A pharmacy will probably not immediately recognize that they are being reimbursed at a lower than contracted rate. When they finally do, they might go back to their contact or their contracting organization and request clarification. Typically, it is well after the change takes place that the change is discovered. The PBM is not required to announce when they start implementing the change in the contract. Many pharmacy owners that are less hands-on will only find out when their contracting organization communicates to pharmacies what has occurred. This can be months after the effective change date. At this point, damage is already done.

PBM reform is desperately needed. Many states have taken steps to put constraints on this otherwise unregulated industry. Unfortunately, it appears that it will take a concerted federal effort to reign in the power the big three PBMs now possess. And that is made even more difficult because the PBM industry, with billions upon billions in profits, has deep pockets and a very strong lobby.

I always like to come back to patient care. None of the tactics and techniques use by the PBM middlemen emphasize patient care. They are  motivated entirely by drug cost. This hurts pharmacy, as reimbursement for drug is currently the only significant revenue pharmacies have. Without revenue, pharmacies evaporate. And by evaporate, I mean close. And a closed pharmacy cannot provide drug product. More importantly, it cannot provide patient care.

Keep in mind that  the very use of a middleman in the healthcare model adds costs. Every dollar of savings touted by a middleman comes as a result of a larger reduction in the payment to the provider. In other words, every dollar in savings comes at the cost of patient care. The middlemen are making billions of dollars in revenue without selling any product or providing any care to patients. The providers (pharmacies) that remain receive so little for a prescription that selling a single box chiclets could actually net them more profit.

Now more than ever, pharmacists need to “flex” their own muscles. They need to enter into a intensive grass-roots campaign. Congress needs to be made aware of these problems: Non-negotiable contracts, lack of transparency, anti-competitive behaviors and other abuses. The tactics used by the PBM are effecting patient care more than ever before in history. Remember: the PBM is a middleman. They provide no product. They provide no care. They only sell access to a network. If the current trend continues, pharmacies will continue to close. Soon the pharmacy network landscape will contain only middlemen and no pharmacies or pharmacists. Is that what is best for the patient? Is that what is best for the country? I don’t think so. Do you?

Catch-22

Recently I have been in a discussion about several 2016 Medicare Part D plan that are appearing at the top of the savings lists when comparing plans with Medicare.gov and iMedicare.com (a third party plan comparison tool using the Medicare information). The issue we are regularly seeing is generics being listed around $1.00 per month. That is not a copay, but the entire reimbursement for the product. Examples include:

  • Atenolol 50 mg #30: $1.02
  • Simvastatin 20 mg #30: $1.21
  • HCTZ 25 mg #30: $1.40
  • Doxazosin 2 mg #30: $1.20
  • Captopril 25 mg #90: $5.29
  • Lantanoprost 2.5 ml: $1.37
  • Warfarin 6 mg #30: $1.38

Note that this is not an extreme example: this is a reproducible trend.

There are two possible explanations for this consistent low valuation for generic drugs by the plan: 1) the numbers are correct or 2) the numbers are incorrect and have not been updated on the Medicare web site since being published in October

Case: If the Number are Correct:

Let us consider the implications of the above mentioned reimbursement levels being correct. The plan in question lists a dispensing fee for 30 day supplies for 2016 of $1.00/rx. This means that the product reimbursement in each of the above cases is actually lower (by $1.00) than the number above. Let that sink in for a moment.

These prices would be MAC (Maximum Allowed Cost) prices set by the plan. When a contracting organization looks at signing contracts, one of the items it considers is GER (Generic Effective Rate). This is the average discount on Average Wholesale Price (AWP) taken by the plan for generics. GER is typically specified in contracts. Historically, GERs for plans have been in the ballpark of AWP – 78%. Some very aggressive plans this year quote a GER greater than AWP – 90%.

If the prices above are correct, the effective GER for the 7 drugs listed is AWP – 99%. This GER (granted that it is on just 7 drugs) is significantly lower than even the most aggressive GER listed by our contracting organization (and is much lower than the GER listed in this plans contract). Theoretically, the plan is required to reimburse network pharmacies for the difference if their GER is higher than that specified in the contract, though this might not happen until well into the next plan year. It is also worthwhile to note that the captopril actually costs a pharmacy about $65 after rebates, so the MAC price for this single drug loses the pharmacy $60 by itself. Any GER greater than 43% would result in a loss on this product, but contracts do not have address cases where AWP is not high enough.

There is not a pharmacy in existence than can make a reasonable profit on numbers as low as these. Given that a prescription vial, lid, and label cost nearly $0.20 alone, the remaining $0.80 certainly does not come close to covering overhead, labor, and a reasonable profit, even if one fills many hundreds of prescriptions an a day.  A pharmacy filling 1000 prescriptions a day would show revenue just over $1000 before expenses. If the pharmacy filled 100 prescriptions per hour over only 10 yours, this revenue  does not even cover the salaries for a single pharmacist and three technicians (what many might consider the bare minimum necessary to fill this volume) for the day. The pharmacy would not be capable of providing any care at this pace, either.

Case: The Numbers are in Error:

This scenario is just as troubling as the previous one, because if the numbers are systematically lower now than they will be starting January 2016, the patients that chose the plan will effectively be subject to a bait-and-swith scheme. Remember, the plan consistently shows up at the top of the Medicare.gov plan finder only because the adjudicated about for the medications are so much lower than other plans for the same medications. This  makes the plan have the lowest reported total cost when considering both premiums and copays.

The copays are so low, in fact, that the plan actually does not share any of the drug cost. An analysis of the plan often shows that the patient pays 100% of the drug cost for the entire year because they do not meet the deductible for the plan. Let that sink in for a moment. The patient pays a premium to the plan for the privilege of paying 100% of their drug expenses. Once the patient does meed the deductible, the patient continues to pay most of the drug cost because the copay is lower than the advertised copay for a generic drug.

If the prices are significantly higher in January, the patient’s actual out of pocket would be significantly higher, resulting in a patient reaching the coverage gap sooner than they anticipated or having a much higher than anticipated True Out-of-Pocket (TrOOP) expense.

Only Losers?

A similar bait-and-switch also occurred in the Medicare Part D landscape last year. One plan last year advertised a much larger pharmacy network during enrollment, but come January patients were told that their plan had a much more limited network of pharmacies. This meant that many patients would be forced to switch pharmacies despite choosing a plan than originally allowed them to continue to use their pharmacy of choice. Last year, Medicare stepped in and gave pharmacies the opportunity to sign-up or patients to switch.

It would seem that a similar scenario is on tap for January. Either pharmacies and their contracting agents are going to complain about lower than contracted reimbursement due to a GER close to 100%, or patients will be duped into a plan that does not perform as advertised. If I had to make a guess, I would lean toward pharmacies being slighted by the plan, because Medicare is less likely to censure the plan unless significant numbers of pharmacies terminate their contracts, leaving the plan with insufficient pharmacies to meet federal Medicare access requirements.

Medicare, pharmacies and patients are all being abused by the pharmacy benefit managers. Unless Medicare and Congress take steps to hold the PBMs accountable, this will continue. With the recent hearings on PBM transparency, now is the time for pharmacy leaders and grassroots pharmacists to make themselves heard.