Valley Pharmacy Persevering Despite Being Fleeced by PBMs

Originally Appeared in the LaFayette Sun on May 22nd, 2024

Earlier this month the 2024 Alabama legislative session came to a close without HB 238 also known as the FAIR Meds Act making it to the House floor for a vote despite it having been passed unanimously by the House Insurance Committee on March 6th.  Heavy pressure from lobbyists representing powerful downtown Birmingham based corporate special interests such as Blue Cross Blue Shield of Alabama, Alabama Power, Regions Bank as well as the Business Council of Alabama and the Association of County Commissions of Alabama resulted in the legislation stalling out without being voted on.  Instead, a legislative study group has been formed which includes pharmacies, insurers, PBMs and drug manufacturers who will continue to discuss the complex matter and consider possible legislation going forward while the legislature is out of session.

During the nearly year-long interim before the legislature meets again in 2025, independent pharmacies will continue to fill prescriptions for private insurance at a loss due to low reimbursement rates being set by Pharmacy Benefit Managers which come in at less than cost for pharmacies.  Three-hundred independent pharmacies in Alabama have gone out of business in the past six years and without legislative relief this trend is expected to escalate while this fleecing by PBMs continues unabated.  Valley Pharmacy recently celebrated its 50th anniversary and co-owner Craig Moore shared his keen insights on the dire situation with the LaFayette Sun during an exclusive interview.

Asked to explain who are the key players in these circumstances known as Pharmacy Benefit Managers, or PBMs for short, Moore remarked;

“PBMs are middlemen in the healthcare system who manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, and large employers.”

Commenting on the impact that PBMs have had on the business he co-owns with his wife Angela,  Moore stated;

“They have been around in some form or fashion during the duration of our store ownership.  Their role has changed from that of a claims processor to that of a claims processor who acts as a mob boss that comes around and ‘shakes you down’.  The impact on our business is that it has created a loss on most of the Brand prescriptions (probably 99%) that we fill.   Our profit margins are razor thin and we have little room for error.  In order to stay viable, we had to expand our offerings by adding clinical services i.e. immunizations, wellness screenings, diabetes education and Durable Medical Equipment.”  

Remarking on what the future may hold for independent pharmacies, Moore noted;

“Alabama has approximately 500 independent pharmacies that are operational.  Approximately 300 independent pharmacies have closed in the last six years.  Unless we have some form of legislation the days of the independent pharmacy will be driven from the healthcare marketplace.” 

Providing further detail on HB 238, Moore explained;

“The problem began when major chain pharmacies were allowed to become VERTICALLY INTEGRATED.  I will use CVS as my example.  CVS acquired CAREMARK in 2007.  Caremark was a PBM that basically processed claims.  Prior to that CVS purchased Silverscripts in 2006,  So now you have a pharmacy chain that owns an insurance company and a PBM.  Silverscripts was and is one of the largest Medicare Part D Prescription Drug Plans.  So to make everything a little less complex, CVS steers individuals to CVS pharmacies by lessening the benefit if they go anywhere other than CVS and by increasing the price to the patient.  On the backside, they reimburse themselves more while reimbursing the independent less. The way that this is achieved is by offering a 'take it or leave it contract'. They fleece the government by inflating the prices to the Medicare Part D system.  They also fleece the system by requiring that name brand drugs be dispensed rather than lower cost generics.  THE PBM establishes the formularies so the manufacturers pay the PBM's rebates in order to have their Brands on the list.  Guess who keeps the rebates.  You got it, the PBM."

Moore went on to continue;

“They also use a technique called clawbacks.  An example of a clawback is to charge the patient a co-payment at the point of sale.  Say for example that the co-pay is $50.  The pharmacy collects the co-pay and the PBM cuts the pharmacy's payment check by a certain amount.  Let's say in this case they cut our payment by $48 so we receive a net $2 when they pay us.  So the patient thinks the pharmacy is collecting the money when the insurance company is getting the money.  The last example that I will give is the use of DIR fees.  DIR fees are imposed based upon a patient adherence.  Each year they inform us what the fee will be.  For example the fee can be between 9 and 15 %.  If we can get the patient to take the medicine as prescribed and on a timely basis, we get a grade.  Our pharmacy normally grades out in the high 90 percentile.  What that means is that they will only take away 9% from us.  The lower the score, the higher the penalty.  We spend a lot of time calling people asking them to come pick up their medicine.  The average citizen could never comprehend all of this.  The next tactic is to say to throw out Bernie Sanders or AOC and the Democrats as being behind wanting to change.  That was one of the tactics that was used on Alabamians when HB 238 got out of committee this year.”  

Further expanding on his thoughts, Moore remarked;

“It is a sad commentary but we don't have a lot of independent thinkers anymore.  We tend to believe whatever Fox News or CNN tells us, whichever way you lean.  Now to your question,  I would tell the patient that first the bill allows them to go wherever they want to go rather than be made to go where they were told to go. Second, the bill forces a level playing field when it comes to price reimbursed whether at a chain or an independent.  Third, at the moment, I cannot tell a patient whether it would be cheaper to pay cash or use insurance.  We are under gag orders.  If the patient asks, we can tell them.  The reason is the PBM is getting a large portion of the co-pay.  In most cases the meds are pennies on the dollar.  Fourth, It requires that fees and rebates be disclosed so that you can see where the money is coming from and where it is going.”

Sharing a special message for his customers and the community at large, Moore noted;

“The bill is not a tax, the bill will preserve a free market and promote competition.  When the independents are gone, full service pharmacies will be gone as well.  All we want is for the same rules to be applied to everyone whether chain or independent.  That includes fairness in reimbursement.  We want a level playing field and that's what HB 238 will do.”