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Pharmaceutical Benefit Managers Reap Huge Profits Under Medicare Drug Plan

Posted on: Thursday, 16 March 2006, 09:00 CST

WASHINGTON, March 16 /PRNewswire/ -- Pharmacy Benefit Managers, (PBMs), who the federal government hired to manage the new Medicare drug plans have demonstrated again, that their profits take priority over providing healthcare to our nation's seniors. Since the start of the Medicare drug benefit in January 2006, many independent community pharmacies have received slow, fractional reimbursements by PBMs for the Medicare prescriptions they have filled within the 30 day timeframe outlined in their contracts.

As a result, many independent pharmacies are owed thousands of dollars by PBMs and have been forced into debt to keep their doors open. If PBMs continue to withhold reimbursing pharmacies, seniors living in rural America may not have a pharmacy to turn to. In a news story that ran Monday, March 13, 2006 on the CBS Evening News, Mark Merritt, President Pharmaceutical Care Management Association (PCMA), a trade group representing PBMs said, "What's really at issue here is drugstores are unhappy that insurers are now negotiating lower prices and lower profits between themselves and America's seniors."

"This couldn't be a bigger fabrication of the truth. There is no negotiation. The insurers and PBMs do not negotiate with pharmacies; they present a take-it or leave-it contract to the pharmacies. If the pharmacy does not accept the contract, the pharmacy will not be allowed to serve its patients. PBMs are negotiating high prices and huge profits between themselves and drug manufacturers at the expense of America's seniors," said Mike James, owner of Person Street Pharmacy, Director of Governmental Affairs, Association of Community Pharmacists Congressional Network (ACP*CN). "Typically, pharmacies receive razor thin profit margins of 1-2% on each prescription filled for private and Medicaid insurance plans," added James.

"To care for their patients under the Medicare drug plan, independent pharmacies are filling prescriptions at a loss. In many cases, PBMs are not even reimbursing my pharmacy at the cost of the drug. If things do not change, many older Americans living in rural areas will lose access to community pharmacies because these pharmacies just can't afford to stay in business," concluded James.

Pharmacists are unhappy that they may not be able to continue serving their communities. According to the Association of Community Pharmacists Congressional Network (ACP*CN), which consists of over 15,000 independent pharmacies nationwide, the only three pharmacies remaining in Northampton County, North Carolina are on the verge of closure, if they don't receive larger reimbursements on Medicare prescriptions. These three independent pharmacies are within a 16-mile radius of each other and serve a total population of 22,000 people, nearly 30% of which are over age 55.

Northampton County covers 533 square miles and the closest chain drug store is about 25-30 miles from Jackson, the center of the county. If these pharmacies are forced to close, needy seniors will have no where to turn to get their prescriptions filled. Last month, Bill Futrell, owner of Futrell Pharmacy in Jackson, one of the three drugstores, filled two generic Medicare prescriptions and was only reimbursed a total of $8.00 for both drugs.

Medco Health Solutions, one of the nation's largest PBMs, reported earnings of $37.9 billion in net revenue in 2005, $2 billion of which was gross profit. According to the 2005 Pfizer Digest, the average independent pharmacy will lose an average of $123,000 per store because of the Medicare Part D program. Currently, an independent pharmacy is losing money on most Medicare prescriptions being filled. Where is all the money going, straight to the PBMs.

Under the Medicare drug plan PBMs are not required to reveal to the government the amount of rebates they receive from the drug manufacturers or the amount they are reimbursing pharmacies for dispensing drugs.

Tragically, America's seniors are underwriting the huge profits PBMs are making from administering the Medicare drug benefit. In fact, if Medicare reimbursements to independent pharmacies continue to scratch the bottom of the barrel, many seniors living in rural parts of the country may soon discover the independent community pharmacy on which they have always depended is extinct and is no longer there to serve their health care needs.

About the Association of Community Pharmacists Congressional Network (ACP*CN)

Based in Raleigh, NC, the Association of Community Pharmacists Congressional Network consists of 15,000 independent pharmacists nationwide dedicated to serving the communities in which they live. ACP*CN is dedicated to the survival and growth of the independent pharmacy owner, who often times is the only pharmacy operating in rural towns across America, where access to pharmacies is extremely limited. Our network of pharmacists do more than just fill prescriptions, they counsel patients on medication use and many times act as the front line healthcare provider for individuals and families who can't afford or don't have direct access to a doctor.

Association of Community Pharmacists Congressional Network

CONTACT: Crystal Wright for Association of Community PharmacistsCongressional Network, +1-202-829-0848

Source: PRNewswire

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