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Pharmacy is propelling long overdue Medicare reform

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Tune-ups. Spring cleaning. Check-ups. However tedious it can be, maintenance is a part of life. We do what we can (most of us do, anyway) to keep things moving as smoothly as possible, triaging as we go to stay on track.

B. Douglas Hoey

The Medicare Part D benefit has been in effect for around 16 years now. If it were a car, it would be long overdue for a tune-up. Some might say it might warrant a complete overhaul.

Part D was created at a time in the early aughts on a fee-for-service chassis. The result has been a siloed benefit that blindly pummels prescription drug costs but has almost no tie back to overall health care costs or health care outcomes. The three dominant health insurance-owned pharmacy benefit managers declare “mission accomplished,” but the actual result is a discombobulated health benefit. Seniors deserve better. Taxpayers deserve better.

Part D represents 36% of the average independent pharmacy’s business. When the Centers for Medicare and Medicaid Services (CMS) in January released its long-awaited proposed rule that would rein in pharmacy direct and indirect remuneration fees, it acknowledged that these fees have gone up over 107,400% since 2010. That’s obviously unsustainable for small-business pharmacies and for patients. The agency recognized what the National Community Pharmacists Association and our members have known for a while — the wheels were coming off.

We worked hard over the years to build bipartisan support among policy makers for swiftly reforming pharmacy DIR fees and grow our group of allies across industries who understand exactly how these fees shake down seniors and local community pharmacies. We appreciate that the Biden administration, unlike others before it, moved to increase transparency so our members can soon have a clear line of sight for what their lowest reimbursement would be. But delaying implementation of these provisions until 2024 and giving PBMs and their insurer-partners/owners another year to manipulate the system and continue charging higher costs to seniors … well, it wasn’t a lemon, but it was a missed ­opportunity.

There were a few other areas of this final rule that also left some room for improvement. Despite NCPA’s urging, for example, CMS did not implement standardized pharmacy performance measures or address metrics. Yes, the rule defines pharmacy “price concession” for the first time, but that new definition does not mandate exactly how sponsors contract with, incentivize or pay pharmacies in their network. While sponsors remain free to offer performance-based payment arrangements, CMS encourages them to be fair, equitable and value-based arrangements.

“Fair” and “equitable” aren’t words small-business pharmacy owners typically associate with PBMs and their insurer-partners/owners — especially in the siloed Part D benefit that offers little incentive for PBMs to use prescription drugs, arguably the Ferrari of health care vehicles, to lower overall health care costs and improve patient outcomes. So NCPA will be staying vigilant and active in the pursuit of development of a set of pharmacy performance measures that actually are standardized, transparent and fair. The Pharmacy Quality Alliance is working to build consensus across pharmacies, plans, PBMs and other stakeholders. NCPA was involved with the formation of PQA as a response to the launch of Part D and has been involved with the organization since then. It is vital in bringing the right people around a common table to craft solutions for measuring quality in pharmacies and in Part D. We will be at that table, representing the interests of independently owned pharmacies.

While CMS’ rule discussed reasonable pharmacy reimbursement, it didn’t address the amount ultimately paid to the pharmacy or the timing of payments and adjustments. NCPA had requested safeguards to guarantee that pharmacies participating in Medicare Part D receive a reasonable rate of reimbursement. CMS agreed to consider these suggestions for future rule making, referencing the Medicare law that prohibits it from instituting a price structure for the reimbursement of Part D drugs. As we keep pushing for reasonable reimbursement policies, NCPA will also engage with the National Council for Prescription Drug Programs and other groups involved with standards development processes. We’d also encourage NCPA members to remain in frequent, active dialogue with their contracting representatives as the industry prepares for the implementation of these provisions in contract year 2024.

NCPA advocated tirelessly, and for many years, for Medicare Part D pharmacy DIR fee reform. Some things may still need some balancing and some tinkering, but the rule is a huge step forward in providing greater transparency of pharmacy reimbursement and improved predictability of per-claim revenue. We’re grateful to all of our allies — fellow pharmacy organizations, legislators and other government officials, patient and additional stakeholder groups and, of course, NCPA member pharmacists — who did so much (sometimes tedious) work to help get this past the checkered flag. It’s a tremendous and hard-fought achievement that only happened due to a lot of sweat and never taking our foot off the gas.

After years of NCPA engaging with the Federal Trade Commission about the one-sided relationship health insurer-owned PBMs have with consumers and pharmacies, it is revving up and in June unanimously voted to investigate the six largest of them. This follows President Biden’s executive order from last summer, directing federal regulators to look into the impact of corporate consolidations that have resulted in oligopolies in several industries, including PBMs in health care. Since that time, NCPA and our members have kept up the pressure with additional pro-patient, pro-community pharmacy advocacy to drive home to the FTC and others the tangible consequences of take-it-or-leave-it PBM contracts and patient steering, the problems with PBM-owned and -affiliated pharmacies that decide the reimbursement of their competitors, and other tactics.

I want to underscore the impact that grassroots can have on an issue. NCPA has been laying out its concerns about PBM business practices to the FTC, legislators, media and others. That made a big difference in the evolving realization that PBMs contribute to higher prescription drug prices. Importantly, when the FTC asked for public comments about unfair contracts or the impact of PBM practices on patients, the response from community pharmacies, patients and other groups really revved up the FTC’s interest. The agency received over 24,000 comments — an astonishing response to let the FTC know they had hit a nerve. If there was ever a doubt if taking action makes a difference, use this as the pace car.

This FTC’s 6(b) study is akin to subpoena power. Unlike a vehicle inspection, however, its probe may take a while — perhaps as long as two years. This is something that NCPA has been urging the FTC to do for some time, however, and we’re very pleased with the ­announcement.

There is momentum on our side. The pro-independent pharmacy coalition we’ve built is with us. Sens. Maria Cantwell (D., Wash.) and Charles Grassley (R., Iowa) recently introduced bipartisan, NCPA-endorsed legislation that empowers the FTC and state officials to increase drug pricing transparency and hold PBMs accountable for unfair and deceptive practices that drive up the costs of prescription drugs at the expense of consumers. The PBM Transparency Act (S. 4293) passed out of the Senate Committee on Commerce in June. We hope the full Senate will swiftly consider and advance it.

Day to day, it can feel like the littler things — changing your oil, rotating the tires, sending your thoughts to policy makers when NCPA or others ask you to, inviting them for a pharmacy visit — may be unnecessary or something you can delay. The FTC digging deeper into PBM practices says otherwise. We are where we are today with CMS, with the FTC, with Congress, and in the states because enough pharmacists and patients kept sharing their stories and concerns. The consistent, repetitive advocacy is making it so these policy makers can no longer look away or put off doing this work.

There is still a long way to go until pharmacy is in a position to see the checkered flag. But progress toward NCPA’s top priority of changing the pharmacy payment model has been made this past year. Pharmacy still needs Medicare reform and to be paid fairly for patient care services and dispensing services. But the results are accelerating. We will keep on trucking.

Douglas Hoey is chief executive officer of the National Community Pharmacists Association.


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