Understanding Competition in U.S. Prescription Drug Markets: Entry and Supply Chain Dynamics
I have been in the pharmacy business for 44 years and in my current location for 34 years. When I started my current location there were 33 Independence Pharmacies in Chester County, Pennsylvania. I am now one of five remaining. The PBM's of the world are controlling the industry. Their contracts are very simple...it's based on a take-it-or-leave-it theory. If I leave it, I lose my customer base therefore I must take it. Their contracts are not fair for example: as I mentioned I've been in business 34 years at my current location I am on the 4th generation of multiple families that want to still get their prescriptions from me but because their insurance contract says they cannot stay with me anymore they must go to one of the big Mega chains or if they do want to stay with me they have to pay a differential copay or they must go to mail order...all the above is just not fair to the consumer or quite frankly to me the provider. Oh, I didn't mention that as of October 26th of 2017 CVS/Caremark, one of the largest PBM's, has made a decision that they have reduced their maximum allowable cost(MAC). This means for an example if a drug COST me $50, and that's my MAC, they can pay me for example $40. How long can I stay in business doing this. I either have to accept what they want to pay or go to my customer/patient and identify to them that...I'm sorry I can not dispense this prescription to you because your insurance company is paying me below cost. I will therefore lose the customer. The FREEDOM OF CHOICE to where a consumer is allowed to go shopping is being restricted. What's next? Are we going to be told where I have to buy a mattress, a car, a home? Are we going to be controlled by what and where we want to buy something? Is this still the United States of America? It's all geared to lean-the business towards the PBM and their contracted Pharmacy Company which half the times are jointly owned. FTC it's time to do something and to do it quickly. These contracts are not saving money for the consumer they're only making more money for the PBM's. They are un-Fair to all providers. I would be more than glad to show you actual examples and if you wish to call me. My pharmacy number is [redacted]. We can set up an appointment and actually show you proof of what is happening. Thank you for your attention. Sincerely, Al Gagliardi, R.Ph.