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PBM Tactics Once Again Put Profits Before Patients, Forcing California Pharmacy to Drop Medicaid and Medicare Drug Plans, According to Association of Community Pharmacists Congressional Network

Posted on: Monday, 3 April 2006, 09:01 CDT

WASHINGTON, April 3 /PRNewswire/ -- Using the usual PBM business tactics, pharmacy benefit managers (PBMs) help themselves to big profits and restrict patient access to the pharmacy of their choice. Financially choked by a PBM's below cost reimbursement for Medicaid and Medicare prescriptions filled for patients in the Health Plan of San Mateo (HPSM), Baneth's Pharmacy decided to drop out of the plan as of April 1, 2006. The large California based PBM, manages the Medi-Cal (California Medicaid drug plan) and Care Advantage (a Medicare drug plan) for the Health Plan of San Mateo. Nearly 5,000 prescriptions per month will be affected because of the inadequate reimbursements from the PBM.

"We are deeply troubled by what is happening in the public healthcare arena, specifically PBMs acting in their own self-interests instead of the interests of patients. Sadly, continuing to fill prescriptions for this plan threatened Baneth's Pharmacy's ability to serve our community, so we had to step aside from this poisonous relationship," said Richard Burge, CEO Baneth's Pharmacy. "PBMs threaten to make prescription medications far less available to America's neediest populations, the poor and elderly and this is wrong," added Burge.

HPSM contracted this large California based PBM on January 1, 2006 to manage its Medi-Cal and CareAdvantage drug programs. In three short months, Baneth's Pharmacy, an independent pharmacy serving the city of Menlo Park since 1959, plunged $75,000 in debt because it continued to fill prescriptions for patients while the PBM dramatically reduced reimbursements to Baneth's and delayed payments. Under the PBM's reimbursement rates, Baneth's lost about $7.00 for every branded drug it dispensed to HPSM patients and even more for generics. Prescriptions filled for these patients represent 35-50% of the prescriptions Baneth's pharmacy fills monthly. Driving these patients out of the care of their neighborhood pharmacy will likely lead to missed dosages, increased emergency room visits and soaring healthcare costs.

"Independent pharmacies repeatedly warned Congress turning over the Medicare drug benefit to PBMs would be disastrous for community pharmacies on which seniors depend," said Mike James, pharmacy owner and Director of Governmental Affairs, Association of Community Pharmacists Congressional Network (ACP*CN). "No business can survive being grossly underpaid for its services or products. Unfortunately for patients, other neighborhood pharmacies will likely be forced to either stop accepting Medicare and Medicaid prescriptions or go out of business," continued James.

What's hurting Baneth's and other pharmacies is the deceptive practice PBMs use in paying pharmacies a lower amount for prescriptions than they are charging plan sponsors for the same drugs. PBMs do not inform the plan sponsor the amount to be reimbursed to the pharmacy. This allows the PBM to keep the difference or "spread" between the amount it collects from the plan sponsor and the amount it paid the pharmacy.

Another source of mystery revenue is the rebates or kickbacks PBMs receive from drug manufacturers in exchange for promoting their drugs over others in a plan and thereby increasing marketshare for specific drugs. PBMs frequently do not tell clients the huge rebates they receive from drug manufacturers which could lower drug costs for the plan and patients.

Often called the middlemen of medicine, PBMs manage nearly 80% of all prescription drug expenditures in the US, according to the Pharmaceutical Care Management Association (PCMA). Their profit driven incentives are increasing the costs of Medicare drugs for seniors. The minority staff of the House Committee on Government Reform released two reports in February 2006 which found: 1) Medicare drug plans have raised prices for popular brand-name drugs by more than 4%; and 2) Medicare drug plans (managed by the PBMs) now charge 14% more for these same drugs than the Medicare drug cards previously charged. Profit, not care, is the goal of PBMs in managing the government's Medicare drug plans.

The real concern is more and more independent community pharmacies will have to make the painful decision to stop filling Medicare prescriptions or close the doors to their pharmacy because of low reimbursements. In either case, patient access to their medications will be severely restricted and plan costs will rise. Congress should not allow the best medication delivery system in the world to be destroyed.

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

Founded in 2002 and 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 of Association of Community PharmacistsCongressional Network, +1-202-829-0848

Source: PRNewswire

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