Understanding Competition in U.S. Prescription Drug Markets: Entry and Supply Chain Dynamics
As a pharmacist of over 40 years I have seen the formation and progression of the PSAOs and the PBMs. Their uncontrolled, unregulated power over us, the independent retail pharmacy, is now in the realm of "legalized robbery." There are so many "middlemen" in the game now and every one of them wants a piece of the pie. This is why medication prices are out of control. Although "big pharma" gets a lot of blame, these middlemen are the main culprits in my opinion. Are you ready to play? First, we have our wholesaler, which is responsible for acquiring medication from the source or big pharma. They are obviously marking the products way up because they make different deals with multiple buying-group joint ventures for a better, cheaper deal. We are then sworn to secrecy on these deals and basically have no choice not to buy into a buying-group. (We tried to stand alone for a while but could not afford to.) Next, our wholesaler also owns and manages the PSAO that signs contracts with the PBMs on our behalf. (Again, we have also tried to do this on our own but the PBMs won't give us the time of day.) Ironically, the PSAO signs contracts and agrees to terms, on our behalf, which is below the cost that they are charging us for the medications. Isn't that a bit unethical? When we start complaining to our PSAO about being paid below cost, it's the PSAO's responsibility to "challenge" the PBM but nine times out of 10, it just comes back denied with no reason for the under payment. So we start thinking "can we buy it better" or is our wholesaler just selling the product too high? The PSAOs say they too are helpless against the PBMs and many times presented with "take it or leave it" negotiations. They sign the deal and patients get to use our pharmacy or they don't sign it and patient loose access to care. I am in rural NM so patient access is a big deal but I'm being forced to operate in the negative. At what point did it start being ok to pay the pharmacies below the cost of the mediations with little to no dispensing fee (to cover my overhead)? If I stated paying only half of my bill to the wholesaler because that's all I got paid, they would cut me off. And I mentioned "buying better" which really proves what's happening with price gouging by the wholesalers because I can get a bottle of 1000 tablets of the same generic medication from one of my secondary sources for $50 verses $600 from my primary wholesaler. And I have many of those examples! Even examples on brand name medications being treated the same way. As for the PBMs, they do as they please and no one has any authority over how they operate, what fees they inflect on the pharmacies (in addition to already paying below cost) including transactions fees, claim adjudication fees, re-credentialing fees, and DIR fees. They have outrageous audit policies that can result in them taking back hundreds to thousands of dollars, deals with big pharma that set formularies and force the pharmacies to use brand name medications (regardless of the available generic), gag clauses in contracts that forbid us from notifying the patient when they are paying too much by using their insurance, and mandated mailorder to their self-owned pharmacy. Bet they're not under paying themselves to fill all of those mandated mailorder claims. All of this from PBMs who started out as simple prescription processers and now report billions in net profits. Some of the PBMs practice "claw backs" from prescription copays and most recently a couple of the PBMs have dropped medication reimbursements to a fraction of the cost. For example, at the beginning of the year, one of our patients medications was reimbursing at $63 for a mediation that cost me $57 (keep in mind that the cost of dispensing the medication is approximately $11 as reported by CMS) but now that same prescription, same patient, same medication has ticked down monthly for a current reimbursement of $8.83! There have been no changes to contacts and no change in the cost of the medication. We are being told by our state authority and PSAO's that there is nothing that can be done but to continue to dispense the mediation at a loss. None of them care because it's not their loss! Now, you tell me that all these "middlemen" are not responsible for the high costs of medications in this nation! As an independent pharmacist, I do my best to serve my patients but these unregulated entities need more regulations and transparency, after all, the biggest payer of healthcare is the government and I am tired of seeing my patients have to stop taking their mediations because they can't afford them and neither can I at this rate. I am tired of play all of the games just to take care of my patients! What happen to competition breeds fair trade? Three PBMs control approximately 80% of all the prescriptions in this country. They all own and operate their own mailorder pharmacies and now health plans for a couple of them. At what point is a monopoly considered? I've never been for too much government but something needs to be done at this point. An outside entity that does not have their hand in the cookie jar needs to be part of the drug trades discussion, set fair medication reimbursements with an adequate dispensing fee. We should be able to sign contracts that are conducive to operating a business and treating patients. If you want to control our sky rocketing medication prices, then get more control and transparency from all the middlemen and start holding them accountable.