Pharmacy acquisition costs for many generic drugs have jumped by as much as 600% or more this year, impacting both community pharmacies and their patients, according to a survey by the National Community Pharmacists Association.


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Pharmacists cite spikes in generic acquisition costs

December 9th, 2013

ALEXANDRIA, Va. – Pharmacy acquisition costs for many generic drugs have jumped by as much as 600% or more this year, impacting both community pharmacies and their patients, according to a survey by the National Community Pharmacists Association.

NCPA said Monday that of 1,000 community pharmacists polled, 77% reported 26 or more instances of a large upswing in a generic drug's acquisition price over the past six months. Twenty percent said they had more than 100 such instances during that time frame.

The generic drugs most often cited in the survey included benazepril (for high blood pressure), clomipramine (antidepressant), digoxin (control heart rate), divalproex (for seizures and psychiatric conditions), oxycycline (antibiotic), budesonide (asthma), haloperidol (psychotic disorders), levothyroxine (hypothyroidism), methylphenidate (Attention Deficit Hyperactivity Disorder), morphine (pain), nystatin/triamcinolone (fungal skin infections), pravastatin (high cholesterol and heart disease), and tizanidine (muscle relaxant).

"Once generic drugs become available, lower costs typically follow and community pharmacists are leading the way to maximize the savings for patients and health plans from the proper use of generics," NCPA chief executive officer B. Douglas Hoey said in a statement. "However, pharmacy acquisition costs for more and more generic drugs are rising in rapid, breathtaking fashion. This is having a negative impact on a number of patients, particularly Medicare beneficiaries. Meanwhile, reimbursement from pharmacy benefit managers (PBMs) is not keeping up, leaving pharmacists out in the cold and putting patient access to pharmacist care on unsustainable footing."

According to NCPA, 86% of pharmacists surveyed said it took the PBM or other third-party payer two to six months to update its reimbursement rate, and the reimbursement isn't retroactive.

"In an era of instant communication, it is indefensible for PBMs to wait weeks or even months before updating their payment benchmarks in the wake these price spikes — without ever reimbursing pharmacies retroactively," Hoey noted. "Pharmacists' appeals to PBMs to update payment rates are consistently denied or ignored. This situation is untenable for small-business community pharmacies, and we urge PBMs to update their reimbursements."

Pharmacists polled suggested that PBMs be required to update their reimbursement within a certain time period to reflect current market conditions, NCPA said.

Eighty-four percent of pharmacists said the acquisition price spikes and slow reimbursement have a "very significant" impact on their ability to remain in business and continue serving patients. In some instances, community pharmacies were faced with having to refrain from filling prescriptions that would have resulted in losses of $40, $60, $100 or more per prescription filled, NCPA said.

Patients covered through Medicare and Medicaid, in particular, are feeling the impact of the generic drug price hikes, according to the survey. Pharmacists report patients declining their medication because of higher co-payments. In addition, the combination of higher co-pays and larger charges to drug plans are pushing seniors into Medicare's coverage gap, or "doughnut hole," where they must pay more out-of-pocket costs.

"This trend raises a troubling fiscal question for employers, government agencies and other sponsors of health plans," Hoey added. "Are PBM middlemen taking advantage of these price spikes by reimbursing pharmacies low, charging health plans high and pocketing the difference?" He cited an October article in Fortune magazine that examined high costs and other issues regarding drug benefit managers. 

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