Months into a brand new Biden administration coverage meant to decrease drug prices for Medicare sufferers, impartial pharmacists say they’re struggling to afford to maintain some pharmaceuticals in inventory.
“It would not matter if the governor himself walked in and said, ‘I need to get this prescription filled,’” mentioned Clint Hopkins, a pharmacist and co-owner of Pucci’s Pharmacy in Sacramento, California. “If I’m losing money 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, attainable rebates, and different changes made after the prescription was crammed. 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 drugs, pharmacists say.
Pharmacies are already fighting employees shortages, drug shortages, fallout from opioid lawsuits, and rising working prices. Whereas impartial pharmacies are most susceptible, some huge chain pharmacies are additionally feeling a money crunch — notably these whose mother or father corporations don’t personal a pharmacy profit supervisor, corporations that negotiate drug costs between insurers, drug producers, and pharmacies.
A prime official on the Facilities for Medicare & Medicaid Companies mentioned it’s a matter for pharmacies, Medicare insurance coverage, and PBMs to resolve.
“We cannot interfere in the negotiations that occur between the plans and pharmacy benefits managers,” Meena Seshamani, director of the Heart for Medicare, mentioned at a convention on June 7. “We cannot tell a plan how much to pay a pharmacy or a PBM.”
However, CMS has reminded insurers and PBMs in a number of letters that they’re required to offer the medication and different advantages promised to beneficiaries.
Chopping again on model names
A number of impartial pharmacists advised KFF Well being Information they’ll quickly reduce on the variety of drugs they carry on cabinets, notably brand-name medication. 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 reasonably priced for Medicare sufferers, hoping to enchantment 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 discount down drug costs with producers.
Greater than 51 million individuals have Medicare drug protection. CMS officers estimated the brand new rule lowering pharmacy prices would save beneficiaries $26.5 billion from 2024 by 2032.
Medicare sufferers’ prescriptions can account for not less than 40% of pharmacy enterprise, in accordance 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 might not get their drugs there.
The crux of the issue is money circulation, the pharmacists say. Underneath the outdated system, pharmacies and PBMs reconciled rebates and different behind-the-scenes transactions just a few occasions a 12 months, leading to pharmacies refunding any overpayments.
Now, PBM clawbacks occur instantly, with each crammed prescription, lowering pharmacies’ money readily available. That has made it notably tough, pharmacists say, to inventory brand-name medication that may value tons of or 1000’s of {dollars} for a month’s provide.
‘We took a $40 loss’
Some sufferers have been compelled 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 minimize its reimbursements to pharmacies.
“We had a lot of Wellcare patients in 2023 that either had to switch plans to remain with us, or they had to find a new provider,” Tempo mentioned.
Tempo mentioned one affected person’s drug plan not too long ago reimbursed him for a fentanyl patch $40 lower than his value to accumulate the drug. “Because we’ve had a long-standing relationship with this particular patient, and they’re dying, we took a $40 loss to take care of the patient,” he mentioned.
Conceding that some pharmacies face cash-flow issues, Specific Scripts not too long ago determined to speed up cost 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 not too long ago 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. “But that’s not going to come close to making up the loss generated by the prescription sale,” Talley mentioned.
His pharmacy additionally delivers medicines packaged by the dose to Medicare sufferers at assisted dwelling amenities and nursing houses. Reimbursement preparations with PBMs for that enterprise are extra favorable than for filling prescriptions in individual, he mentioned.
When Congress added drug protection to Medicare in 2003, lawmakers privatized the profit by requiring the federal government to contract with business insurance coverage corporations to handle this system.
Insurers provide two choices: Medicare Benefit plans, which often cowl drugs, along with hospital care, physician visits, and different providers; in addition to stand-alone drug plans for individuals 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 usually 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 may typically 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 likely receive lower payments under the new Medicare Part D rule,” spokesperson Greg Lopes mentioned. His group opposes the change.
Recognizing the brand new coverage might 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 heard pharmacies saying that they have concerns 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 action even after we brought potential violations to their attention,” she mentioned.
Contact Susan Jaffe at Jaffe.KHN@gmail.com or @susanjaffe on the social platform X.
KFF Well being Information is a nationwide newsroom that produces in-depth journalism about well being points and is without doubt one of the core working packages at KFF — the impartial supply for well being coverage analysis, polling, and journalism.
