Understanding Competition in U.S. Prescription Drug Markets: Entry and Supply Chain Dynamics #00281

Submission Number:
Richard de Blaquiere
Initiative Name:
Understanding Competition in U.S. Prescription Drug Markets: Entry and Supply Chain Dynamics
Ladies and Gentlemen, Thank you for taking comment on the issue of drug prices. I am a community pharmacist and a part owner of three independent pharmacies. As such, I get to see people's experiences and many numbers that many in the industry don't see. With that I hope my observations and opinions hold some value even though I am a small part of the overall system. In general, with a few exceptions, generic drug prices are as low as they have ever been and there are more generics than ever before. The big question is whether or not patients see this benefit. I would argue that there are several factors precluding their full benefit. One example comes from Humana, which instituted a "quality network" for pharmacies this last year. For this program, Humana actually raised the price of many inexpensive drugs so that they could take a fee from the pharmacy. For this program they made the minimum cost of a drug $5 - even if in the previous year the drug claim was valued below that amount. That $5 was immediately taken from the pharmacy and then had to be earned back through performance in quality measures. Humana argued for this by saying that they use the fee to keep premiums down. While it is questionable as to if premiums were lower because of this program - it is verifiable that Humana beneficiaries are paying more for many claims at the pharmacy because of their program. Another example of a systematic way of keeping lower costs from reaching patients occurs in the now well-known "clawback" schemes that some PBMs are using. In these situations, the patient may pay, for example, $15 for a drug at the pharmacy. As part of that same transaction, the pharmacy is made to send a portion (often an amount greater than the pharmacy would make on the claim) of that $15 to the PBM who processed it. Again, this is a verifiable action by the PBM industry that increases costs for patients. Other actions by the middlemen of this industry are equally as suspicious. For example, CVS/Caremark recently instituted a reimbursement decrease to pharmacies for many of their plans on October 26th. This just weeks prior to the announcement that they will take on more debt to merge with Aetna insurance. In this case, pharmacies will be paid less yet patients will see little to no benefit. Funds will likely be used to fund the corporate merger but the argument will be that patients benefit. Recently there was a lawsuit filed by patients against pharmacies alleging that they could have offered a less expensive cash price when compared to the higher copay from the insurance. The very next week, a major insurance company/PBM (United Healthcare) sent out a letter reiterating that our contract with them states that we cannot offer one of their beneficiaries anything but their insurance copay. The practice of offering the lower of a discount card or cash price to patients is an issue that CMS addressed years ago and is allowed. An insurance/PBM stifling that type of activity that benefits patients is not only against what CMS allows but harmful to patients. Another issue that needs to be addressed is rebates. The rebate system has caused the increase of prices. As concessions from manufacturers grow, the price has to go up. The amount of money in rebates is at an all time high - yet nobody can say exactly where that money goes. The PBM industry states that they have to be secretive in order to keep getting good rebates for patients and plan sponsors. Conveniently this secrecy also enables them to potentially keep the majority of this money. Patient benefit cannot be proved. Meanwhile people keep losing choice. Patients are forced to obtain services at certain pharmacies owned by the PBM or a PBM own mail pharmacy. A true provider relationship is avoided. I always say, behind every problem in healthcare is a conflict of interest. As companies merge and the waters get muddier, the conflicts of interest grow. Thank you