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Below-cost reimbursements pinch pharmacists

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NCPA survey highlights lingering problem with generics pricing

ALEXANDRIA, Va. — Below-cost reimbursements continue to squeeze community pharmacies in the wake of generic drug price spikes over a year ago, a new survey by the National Community Pharmacists Association finds.

NCPA said Tuesday that of the 700 community pharmacists polled, almost all experienced a “large upswing” in the acquisition cost of a generic over the past six months. During that period, nearly 82% of pharmacists said a generic’s cost jumped in at least 26 instances, and 27% reported a generic price hike in more than 100 instances.

The association spotlighted the generic drug pricing issue in December 2013, when it conducted a survey of pharmacists following surging pharmacy acquisition costs for many generics, some of which had soared as much as 600%, 1,000% or more.

However, NCPA noted that generic reimbursement rates remain inadequate and fail to cover the cost of filling prescriptions. In fact, 93% of community pharmacists said the situation has become worse since the 2013 NCPA survey.

Eighty-seven percent of pharmacists reported that it took a month or longer for reimbursement rates — often maximum allowable costs (MACs) — to be updated by the insurance plan’s pharmacy benefit manager to reflect market costs.

What’s more, 92% of pharmacists polled said the problem of slow MAC updates has deteriorated since 2013, and appeals to update reimbursement benchmarks are typically denied or ignored by the PBM. The survey revealed that nearly 57% of pharmacists said the PBM rejects their appeal to remedy MAC underpayments for generics, and about 26% said they get no response from the PBM on this matter.

“For decades, community pharmacists have promoted the appropriate use of generic drugs to lower costs. However, more recently, the price for some of these medications has skyrocketed 1,000% or more virtually overnight, while reimbursement rates paid to community pharmacists have inexcusably lagged behind for weeks or months,” NCPA chief executive officer B. Douglas Hoey said in a statement.

“This survey finds that this problem has only grown more severe over the past two years and requires urgent attention from federal and state policymakers,” Hoey added. “Community pharmacies cannot be expected to continually fill many prescriptions at a significant loss. Ultimately, patients are impacted as well. Some patients are already skipping medication due to higher prices and co-pays or are forced into the Medicare coverage gap or ‘doughnut hole’ sooner. Others will likely find it more difficult to find certain generic drugs at all because their pharmacy can no longer afford to stock and dispense them.”

NCPA also released an online video in which a procession of community pharmacists describe the frequency in which they encounter below-cost reimbursements for generics and how this impacts their business as well as their community outreach.

“There isn’t a single day in the pharmacy where we don’t dispense a prescription in which the reimbursement is below cost,” Hashim Zaibak of Hayat Pharmacy in Brookfield, Wis., said in the video.

“It eventually trickles down into our total revenue, our ability to stay in business and our ability to help the people in our community,” said Joe Moose of Moose Pharmacy in Concord, N.C.

Robert Frankil of Sellersville Pharmacy in Collegeville, Pa., noted, “We have to override a claim when we’re paid below cost. That happens probably in one out of four claims nowadays, which is insane.”

Comments from pharmacists responding to the survey also have been posted online at NCPAnet.org/pharmacyaccess.

In the survey, the most commonly cited medications for below-cost reimbursements were benazepril (high blood pressure), clomipramine (antidepressant), digoxin (control heart rate), divalproex (for seizures and psychiatric conditions), doxycycline (antibiotic), budesonide (asthma), haloperidol (psychotic disorders), hydroxychroloquine  (rheumatism arthritis and malaria), levothyroxine (hypothyroidism), methylphenidate (attention deficit hyperactivity disorder), morphine (pain), nystatin/triamcinolone (fungal skin infections), pravastatin (high cholesterol and heart disease), tamsulosin (benign prostatic hyperplasia-BPH) and tizanidine (muscle relaxer).

NCPA said that to address the generic drug reimbursement problem, Reps. Doug Collins (R., Ga.) and Dave Loebsack (D., Iowa) have introduced The MAC Transparency Act (H.R. 244), which would require MAC benchmarks to be updated every seven days to reflect market costs and enable pharmacists to know the source by which such benchmarks are set. The legislation would apply to Medicare Part D, the military’s TRICARE program and the Federal Employees Health Benefits Program (FEHB).

In addition, NCPA said the Centers for Medicare & Medicaid Services (CMS), in response to the association’s concerns, issued a final rule last May to require price updates in Medicare Part D every seven days, starting in 2016.


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