PCMA: NCPA Study Shows Higher Profits, Salaries For Independent Drugstores - 'Collective Bargaining' Legislation Unnecessary

Main Category: Pharmacy / Pharmacist
Article Date: 15 Oct 2008 - 6:00 PDT

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The Pharmaceutical Care Management Association (PCMA) released the following statement on the 2008 NCPA Digest that confirms special collective bargaining legislation for independent pharmacies is unnecessary:

"The independent drugstore lobby's new research shows that independent pharmacies are 'adjusting to new market conditions' and are 'successful in sustaining their viability.' The increased profits and salaries at independent drugstores show that their business model is strong. This further highlights that we don't need to create new 'collective bargaining' legislation that would empower independent drugstores to charge higher prices to consumers and payors.

"Recently, the Congressional Budget Office (CBO) found that HR 971 would increase federal costs by $640 million over ten years and that increased drug costs to private health plans, employers, and consumers would result in 'reductions in the scope or generosity of health insurance benefits, such as increased deductibles or higher copayments.' CBO's analysis also contends that cost increases resulting from the legislation would be passed along to workers, reducing 'both their taxable compensation and other fringe benefits.'

"Furthermore, during testimony on HR 971 before the House Judiciary Committee Antitrust Task Force, the Federal Trade Commission (FTC) stated: 'Giving heath care providers ... a license to engage in price fixing and boycotts in order to extract higher payments from third-party payers would be a costly step backward, not forward, on the path to a better health care system.'"

Bargaining Tools Already Available to Independent Drugstores

Independent pharmacies currently enjoy numerous bargaining tools to gain market power in government and commercial programs, including:

-- Independent pharmacies often participate in joint purchasing groups that allow them to lower costs and compete more effectively.

-- Both Medicare and private insurers require geographic pharmacy network access standards for their enrollees that already provide pharmacies - particularly rural pharmacies - extensive negotiating power with PBMs.

-- All health care providers, including pharmacies, can form joint ventures with other pharmacies to provide quality and clinical services and negotiate the fees for those services.

The Pharmaceutical Care Management Association (PCMA) is the national association representing America's pharmacy benefit managers (PBMs), which administer prescription drug plans for more than 210 million Americans with health coverage provided through Fortune 500 employers, health insurance plans, labor unions, and Medicare Part D. http://pcmanet.org