#nc-02: Weekend at Nee-Nee’s

The N&O was hard at work this weekend with a puff piece propping up Renee Ellmers a lot like those two idiots in “Weekend at Bernies” propped up and carried around their dead boss.  According to that money-bleeding, slowly-dying McClatchy property, Renee is saving small pharmacies: REX_weekend_at_bernies_kab_140129_16x9_992

Some small-town pharmacists in North Carolina are hoping for new regulations that many say would protect them from losing money just by filling prescriptions.

At issue are transactions that happen behind the counters at more than 720 independently run pharmacies in North Carolina and at small drug stores across the country. The process is largely out of sight and unfamiliar to customers.

Pharmacies of all sizes buy medicines and rely on reimbursements from patients’ insurance companies to break even or make money on dispensing drugs. Chain stores often fare better because they have higher volumes of other merchandise sales which subsidize any losses on the pharmaceutical side.

The small, independently owned pharmacies stuck selling drugs below cost have little recourse to challenge the firms that control reimbursements, said Paige Thomas Houston, a third-generation pharmacist at the family-operated Thomas Drug Store in Dunn.

Of ALL the pharmacies they could have picked, HOW did they find their way to lil’ ol’ Dunn? Let’s read on: 

The system, Houston said, is causing some small drug stores to go out of business. Proposed regulations in Congress would benefit the nation’s more than 24,000 independently owned pharmacies by introducing new rules for pharmacy benefit manager corporations.renee

These PBMs, as they are called, are the middlemen that process prescription drug claims on behalf of insurance companies and Medicare. They decide which drug stores are in-network for customers and how much those pharmacies are reimbursed. Pharmacy benefit managers also act on behalf of insurance payers to negotiate prices and rebates from drug companies.

Generally, the proposed legislation would require PBMs to update their cost lists, explain the rationale behind their reimbursement maximums and offer an appeals process to pharmacists to recover losses when drug costs exceed reimbursements.


The number of independent pharmacies in North Carolina has actually grown about 6 percent over the past five years, according to the N.C. Board of Pharmacy. Some are finding other ways to make money, including medication therapy management where the pharmacists provide a variety of wellness and clinical services for a fee.

But that’s not an option for all independent drug stores. In Harnett County, four small pharmacies have shut down or sold out in the past two years, Houston said. She suspects a contributing factor was declining profit margins on prescription reimbursements.

“You’re going to continue to see that happen,” she said in an interview, adding that when independent pharmacies go out of business, customers lose access, choice and “personalized” service that may not be found at a larger store.obamacare2

For example, this month, Houston paid $343 to a wholesale drug company for a month supply of generic pills used to treat respiratory problems. The customer got his medication. The drug store was reimbursed $4 from the pharmacy benefit manager.

“I know before I hand it to the patient that I’ve lost money,” Houston said. But there’s no option to not dispense – pharmacies that are under contract to be in-network are obligated by PBM agreements to fill customers’ prescriptions.

Houston described the contract options with PBMs as “take it or leave it” for small drug stores such as the one that’s been in her family since 1954.

“Take” the contract, and pharmacists brace for unpredictable changes in how much they pay for medicine and how much they’ll be reimbursed, she said. “Leave it,” and pharmacists can expect to see a drop-off in customers because they’ll be dropped from a pharmacy benefit manager’s in-network or preferred pharmacy list.

“I don’t hate PBMs, I just want a fair price,” Houston said. “I’m filing prescriptions and losing money. You cannot run a business and survive by losing money.”

That’s the scenario Houston and other pharmacists in U.S. Rep. Renee Ellmers’ district have described over recent years as small business owners ask for scrutiny of the PBM market.

[…]  Ellmers is the only North Carolina representative co-sponsoring the proposal for new regulations, called the Maximum Allowable Cost Transparency Law. The bipartisan bill was introduced last January by Reps. Doug Collins, R-Ga., and Dave Loebsack, D-Iowa. […] 

Aha.  So, this story heads to Dunn, the hometown of congresswoman Ellmers, while she’s locked in a crowded fight for renomination.  The main source for the story?  A close friend of Ellmers who happens to have dumped at least four figures into her campaign coffers. 1obamacare_screwed1

I’d be willing to bet this dilemma for Houston and other pharmacists has a lot to do with onerous regulations like those found in ObamaCare — which Renee Ellmers has refused to fight. But will price-fixing at the federal level actually fix the problem?  Citizens Against Government Waste says NO: 

H.R. 244, the “MAC Transparency Act” and H.R. 793 the “Ensuring Seniors Access to Local Pharmacies Act of 2015,” may sound like prudent concepts, but in reality they would stifle competition and drive up costs for Medicare beneficiaries and taxpayers.

The MAC (maximum allowable cost) process was created by public and private payers, such as health insurance companies, to stop them from having to pay significantly higher prices for drugs than the average acquisition cost paid by pharmacists. The system has increased both competition and the dispensing of generic drugs, as well as encouraging pharmacists to shop around for the best deal. The cost savings are passed onto consumers and taxpayers.

H.R. 244 would force participants in these negotiations to increase the disclosure of sensitive financial information, which in turn would increase both direct costs and litigation costs. As Emory University Associate Professor Joanna Shepherd pointed out in the May 2013 Cornell Law Review article entitled, “Is More Information Aways Better?,” such “regulations foster tacit collusion” and reduce the ability of pharmaceutical benefit managers to “negotiate discounts with pharmacies and rebates with drug manufacturers. As a result, drug prices will rise and total prescription drug spending will increase.”mouth

H.R. 793 would force prescription drug plans to accept any independent pharmacy (known as the “any willing pharmacy” policy) to participate in their preferred network if one or more of their stores is located in a “medically underserved area.”

The Federal Trade Commission noted in its March 7, 2014 comments on 2015 policy and technical changes to Medicare Part D “any willing pharmacy provisions threaten the effectiveness of selective contracting with pharmacies as a tool for lowering costs. Requiring prescription drug plans to contract with any willing pharmacy would reduce the ability of plans to obtain price discounts based on the prospect of increased patient volume and thus impair the ability of prescription drug plans to negotiate the best prices with pharmacies.”

Americans purchase a multitude of products every day. Confidential and intense negotiations among manufacturers, wholesalers, intermediaries, and retail establishments occur vigorously behind the scenes. Purchasers of healthcare services and prescription drugs, as well as taxpayers, are primarily concerned about final prices and good customer service. This is certainly true with pharmaceutical purchases under Medicare Part D. H.R. 224 and H.R. 793 are attempting to fix something that is not broken.[…]