Months into a brand new Biden administration coverage supposed to decrease drug prices for Medicare sufferers, impartial pharmacists say they’re struggling to afford to maintain some pharmaceuticals in inventory.
“It could not matter if the governor himself walked in and mentioned, ‘I must get this prescription stuffed,’” mentioned Clint Hopkins, a pharmacist and co-owner of Pucci’s Pharmacy in Sacramento, California. “If I’m shedding cash on it, it’s a no.”
A regulation that took impact in January adjustments prescription costs for Medicare beneficiaries. For years, costs included pharmacy efficiency incentives, doable rebates, and different changes made after the prescription was stuffed. Now the changes are made first, on the pharmacy counter, lowering the general value for sufferers and the federal government. However the brand new system means much less cash for pharmacies that purchase and inventory medicines, pharmacists say.
Pharmacies are already scuffling with workers shortages, drug shortages, fallout from opioid lawsuits, and rising working prices. Whereas impartial pharmacies are most susceptible, some large chain pharmacies are additionally feeling a money crunch — significantly these whose mum or dad companies don’t personal a pharmacy profit supervisor, firms that negotiate drug costs between insurers, drug producers, and pharmacies.
A high official on the Facilities for Medicare & Medicaid Providers mentioned it’s a matter for pharmacies, Medicare insurance policy, and PBMs to resolve.
“We can’t intervene within the negotiations that happen between the plans and pharmacy advantages managers,” Meena Seshamani, director of the Heart for Medicare, mentioned at a convention on June 7. “We can’t inform a plan how a lot to pay a pharmacy or a PBM.”
Nonetheless, CMS has reminded insurers and PBMs in a number of letters that they’re required to supply the medicine and different advantages promised to beneficiaries.
A number of impartial pharmacists informed KFF Well being Information they’ll quickly reduce on the variety of medicines they carry on cabinets, significantly brand-name medicine. Some have even determined to cease accepting sure Medicare drug plans, they mentioned.
As he campaigns for reelection, President Joe Biden has touted his administration’s strikes to make pharmaceuticals extra inexpensive for Medicare sufferers, hoping to attraction to voters troubled by rising well being care prices. His achievements embody a legislation, the Inflation Discount Act, that caps the worth of insulin at $35 a month for Medicare sufferers; caps Medicare sufferers’ drug spending at $2,000 a 12 months, starting subsequent 12 months; and permits this system to cut price down drug costs with producers.
Greater than 51 million folks have Medicare drug protection. CMS officers estimated the brand new rule lowering pharmacy prices would save beneficiaries $26.5 billion from 2024 by way of 2032.
Medicare sufferers’ prescriptions can account for at the very least 40% of pharmacy enterprise, in line with a February survey by the Nationwide Group Pharmacists Affiliation.
Unbiased pharmacists say the brand new rule is inflicting them monetary bother and hardship for some Medicare sufferers. Hopkins, in Sacramento, mentioned that a few of his newer prospects used to depend on a neighborhood grocery pharmacy however got here to his retailer after they may not get their medicines there.
The crux of the issue is money movement, the pharmacists say. Underneath the previous system, pharmacies and PBMs reconciled rebates and different behind-the-scenes transactions a couple of instances a 12 months, leading to pharmacies refunding any overpayments.
Now, PBM clawbacks occur instantly, with each stuffed prescription, lowering pharmacies’ money available. That has made it significantly tough, pharmacists say, to inventory brand-name medicine that may value a whole lot or 1000’s of {dollars} for a month’s provide.
Some sufferers have been pressured to decide on between their pharmacy and their drug plan. Kavanaugh Pharmacy in Little Rock, Arkansas, not accepts Cigna and Wellcare Medicare drug plans, mentioned co-owner and pharmacist Scott Tempo. He mentioned the pharmacy made the change as a result of the businesses use Specific Scripts, a PBM that has lower its reimbursements to pharmacies.
“We had loads of Wellcare sufferers in 2023 that both needed to swap plans to stay with us, or they needed to discover a new supplier,” Tempo mentioned.
Tempo mentioned one affected person’s drug plan just lately reimbursed him for a fentanyl patch $40 lower than his value to accumulate the drug. “As a result of we’ve had a long-standing relationship with this specific affected person, and so they’re dying, we took a $40 loss to handle the affected person,” he mentioned.
Conceding that some pharmacies face cash-flow issues, Specific Scripts just lately determined to speed up fee of bonuses for assembly the corporate’s efficiency measures, mentioned spokesperson Justine Periods. She declined to reply questions on cuts in pharmacy funds.
Specific Scripts, which is owned by The Cigna Group, managed 23% of prescription claims final 12 months, second to CVS Well being, which had 34% of the market.
In North Carolina, pharmacist Brent Talley mentioned he just lately misplaced $31 filling a prescription for a month’s provide of a weight management and diabetes drug.
To attempt to cushion such losses, Talley’s Hayes Barton Pharmacy sells CBD merchandise and specialty gadgets like studying glasses, bathtub merchandise, and books about native historical past. “However that’s not going to come back shut to creating up the loss generated by the prescription sale,” Talley mentioned.
His pharmacy additionally delivers medicines packaged by the dose to Medicare sufferers at assisted residing amenities and nursing properties. Reimbursement preparations with PBMs for that enterprise are extra favorable than for filling prescriptions in particular person, he mentioned.
When Congress added drug protection to Medicare in 2003, lawmakers privatized the profit by requiring the federal government to contract with industrial insurance coverage firms to handle this system.
Insurers supply two choices: Medicare Benefit plans, which normally cowl medicines, along with hospital care, physician visits, and different companies; in addition to stand-alone drug plans for folks with conventional Medicare. The insurers then contract with PBMs to barter drug costs and pharmacy prices with drug producers and pharmacies.
The phrases of PBM contracts are typically secret and prohibit what pharmacists can inform sufferers — for instance, in the event that they’re requested why a drug is out of inventory. (It took an act of Congress in 2018 to remove restrictions on disclosing a drug’s money worth, which might generally be lower than an insurance coverage plan’s copayment.)
The Pharmaceutical Care Administration Affiliation, a commerce group representing PBMs, warned CMS repeatedly “that pharmacies would seemingly obtain decrease funds beneath the brand new Medicare Half D rule,” spokesperson Greg Lopes mentioned. His group opposes the change.
Recognizing the brand new coverage may trigger cash-flow issues for pharmacies, Medicare officers had delayed implementation for a 12 months earlier than the rule took impact, giving them extra time to regulate.
“We have now heard pharmacies saying that they’ve issues with their reimbursement,” Seshamani mentioned.
However the company isn’t doing sufficient to assist now, mentioned Ronna Hauser, senior vp of coverage and pharmacy affairs on the Nationwide Group Pharmacists Affiliation. “They haven’t taken any motion even after we introduced potential violations to their consideration,” she mentioned.