Jonesboro, AR – (JonesboroRightNow.com) – Dec. 12, 2024 – Local pharmacies in Jonesboro are fighting to maintain their profit margins, and if there’s not some legislative light at the end of the tunnel soon, they could be forced to call it quits.
There’s an aspect of the prescription drug supply chain that’s putting these operations in a squeeze: the pharmacy benefit managers, or PBMs. Insurance companies use PBMs to act as middlemen between the insurer and a pharmacy.
PBMs do not manufacture or distribute medications, and they are not healthcare professionals. Their main focus is corporate profit and high returns for their shareholders, not patients. They achieve this by artificially inflating drug prices, capturing portions of the discounts they negotiate for insurers and pocketing the difference between what insurers pay and pharmacies receive.
PBMs can also directly reimburse pharmacies on behalf of an insurer. Both public and private insurers, including Medicaid, Medicare Advantage plans, employer-sponsored insurance plans and individual market plans use PBM services.
“It’s not a transparent process,” said Donna Camp, an independent pharmacist in Jonesboro. “The PBMs don’t disclose what kind of rebates they’re getting. Nobody governs the PBMs. So, they can pretty much do what they want to.”
Camps Medical Pharmacy started on Church Street in 2000 and then moved to Johnson Avenue about a decade ago.
“Let’s say it costs $300 for a box of insulin. The manufacturer tells the PBM that they will sell them a box for $200. The insurance company gets billed the $300. That comes out of the patient’s pocket, it comes out of the premiums, and it comes from the pharmacy. The PBMs pocket the extra $100,” Camp said.
PBMs, who started as claim processors only, have worked their way into almost every transaction.
“If we cut them (PBMs) out, and we could just send our claims straight to the insurance company and let the insurance pay, that would be great,” Camp said. “But they (insurance companies) think they need this middleman to make all of these deals for them, so they can get the best price, but they don’t even have a clue as to how much the PBMs are ‘saving them.'”
The PBMs don’t even pay the cost of the drugs, Camp said. Regularly, she fills prescriptions all day, only to lose money.
“If it costs me $200, I might get $185 to $190. It’s gotten so bad in the last few years, there’ve been a number of pharmacies go out of business. So far in Arkansas, this year, 18 pharmacies have closed.”
“Ozempic costs me just under $1,000 for one month’s worth of medicine,” Camp said. “It’s nothing to get $35 to $40 below my net cost for reimbursement on this $1,000 drug. That’s illegal. In Arkansas, there is a law that says it is illegal for them (PBMs) to pay us below what it cost us.”
If a pharmacy is not making any money on medicines, they’re forced to look for other ways to generate revenue. Camp pointed out that this is why there’s different types of merchandise in pharmacies, everything from candy to clothing. It’s an effort to make money in other parts of the business to offset the losses on prescriptions.
If a patient has a co-pay, the pharmacy doesn’t get that.
“Most people think that if they have to pay a $50 co-pay, all of that is total profit and goes into my pocket. But that co-pay is actually part of the cost of the drug. What a customer pays at the pharmacy is not the pharmacy’s money. If I fill a prescription today, it’s minimum two to three weeks before I get my money,” Camp said.
Big pharmacy chains don’t have the same problems because of the volume of business they do. Chains like CVS have an even greater advantage: they are owned by a corporation that also owns a PBM.
CVS Caremark, Express Scripts and Optum Rx are the three companies that control the majority of the PBMs. Camp is subject to CVS Caremark for the amount of money she receives. The likelihood of preferential treatment for the CVS pharmacy over independents is an all-too-real example of the situation local pharmacies find themselves in.
Because of Camp’s Hilltop location, NEA Baptist employees will stop in to get a prescription filled. Camp can only fill one month of their medicine for “x” price. But if the patient goes to CVS, they can get three months at a time, and sometimes at a lower price, because CVS Pharmacy is owned by that PBM.
“Patients are not going to be able to fill their prescriptions wherever they want to go. They’re going to have to go to Walgreens or CVS because that’s all there will be,” Camp said. “People in rural areas that have a local pharmacy that goes out of business are in trouble because they may have to drive 50 miles to find one of the big box pharmacies. It’s putting a hurt on the rural areas the most because there’s nowhere for these people to go.”
But it’s not just the rural areas with trouble on the horizon.
“Not only do they force you to go to their store here in town, they push you to do mail-order…so it happens automatically. Customers can get a prescription filled at their pharmacy but then the rest of the year, they have to receive it by mail or insurance won’t pay,” Camp said. “That’s not patient choice. It’s illegal to tell somebody where they have to go to get a prescription filled. But somehow, they’re getting around it.”
Brandon Cooper with West End Pharmacy said PBM-owned mail order pharmacies and “preferred” chain pharmacies are paid above what locally owned, independent pharmacies are reimbursed for certain medications.
“Sometimes ‘preferred’ pharmacies like CVS are paid thousands of dollars more for the same medication,” he said.
Arkansas was the first state in the nation to enact regulatory PBM legislation in 2015, putting them under the Arkansas Insurnace Department (AID). The law was challenged in court, with the case making it to the U.S. Supreme Court in 2020 with Rutledge v. PCMA. The Court ruled 8-0 that states had the authority to regulate PBMs, with Associate Justice Amy Coney Barrett not voting.
Emergency Rule 128, which would require PBMs to include dispensing fees in their reimbursements to pharmacies for prescription drugs, is moving through Arkansas legislature. It passed the Arkansas Legislative Council Sept. 20, but it is a temporary rule and is set to expire Jan. 18, 2025. It must pass the Insurance & Commerce Committee, Rules Committee and ALC Committee to be sustainable.
“If the PBM does not increase the reimbursement to cover the cost of the medication, then we can file a complaint with AID and the PBM will have to reimburse at least the invoice cost of the medication. AID can also levy fines on PBMs of $5,000 per occurrence,” Cooper said. “The only problem with this system is that we simply get the reimbursement back to the cost of the medication…so basically we break even on that claim. I can’t think of many businesses that would survive for very long if they only had their cost of goods covered without some added fee or profit margin. This is why we need a level playing field so that we can be reimbursed an actual dispensing fee to cover the overhead costs of doing business.”
Kristy Reed, with Super V Drugs, says she has been negatively impacted by PBMs since their inception.
“Every day, we are ‘paid’ negatively below our cost of buying the drug. I may lose $2, $20, or even $200 on a prescription that our patients need and for each prescription, I have to fight and appeal for fair payment,”” Reed said. “Many times, we dispense the prescription regardless of our reimbursement because we care about our patients, and we know they need the medicine. Every minute spent appealing claims is time taken away from patient care. That’s the part that concerns me the most; patients are the ones truly affected and should be concerned.”
John Vinson is the CEO of the Arkansas Pharmacist Association. JRN contacted Vinson for comment and below is a portion of his response:
“PBMs’ unfair low reimbursements, as well as unfair overcharges, are anticompetitive and are especially harmful for patients receiving end of life services in hospice, patients living in independent living facilities, patients in nursing homes, patients in rural or underserved areas, and for children or animals who need compounded products. Our patients deserve access to their preferred pharmacy of choice and should never be forced to pay higher prices and receive less service at pharmacies owned and rigged by out-of-state, billionaire PBM middlemen.
We are very appreciative of Arkansas Gov. Sarah Huckabee Sanders and Arkansas Insurance Commissioner Alan McClain for recent active investigations into PBM violations of state law as well as various bulletins and rules to address and more clearly study and define fair and reasonable reimbursement requirements established by the PBM law of 2015. We also appreciate Arkansas state legislators who are listening and reviewing Arkansas Insurance Commissioner rules and enforcement standards.
We have made significant policy strides in the right direction to turn this broken market around but still have much work to do.”