Independent Pharmacists Urge Passage Of Legislation That Would Allow Small Pharmacies To Collaborate On Negotiations With Health Insurers, PBMs, CQ

Main Category: Pharmacy / Pharmacist
Also Included In: Health Insurance / Medical Insurance
Article Date: 22 Oct 2007 - 0:00 PDT

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Independent pharmacists at a House Judiciary Committee Antitrust Task Force hearing on Thursday urged lawmakers to pass legislation (HR 971) that would exempt small pharmacies from antitrust laws and allow them to collaboratively negotiate reimbursements with health insurers and pharmacy benefit managers, CQ HealthBeat reports. According to CQ HealthBeat, the bill comes in response to complaints that low reimbursement rates and payment delays resulting from the Medicare prescription drug benefit have forced independent pharmacies to close.

Mike James -- vice president and director of government affairs for the Association of Community Pharmacists Congressional Network, which supports the measure -- at the hearing said PBMs hold "near monopolistic power" and the industry "dictates, without negotiation, reimbursement rates and terms of contracts to independent pharmacies." According to James, since the Medicare drug benefit began in 2006, 1,152 independent pharmacies have closed. He said pharmacists he talked to said they closed because of low reimbursements from PBMs.

Some pharmacists claim PBMs intentionally delay payments and offer low reimbursement to create a higher profit margin -- a claim that PBMs deny, CQ HealthBeat reports. Robert Dozier, executive director of the Mississippi Independent Pharmacists Association, said, "When a PBM approaches a pharmacy, it is a 'take it or leave it contract,'" adding, "If you don't take it, you can't serve the patient you've been serving for 20 or 30 years."

Opposition
David Wales, deputy director of the Federal Trade Commission Bureau of Competition, said the antitrust waivers would increase costs for employers, consumers and the federal government and "dull competitive pressures" in the marketplace.

Peter Rankin, a principal at the economics and management consulting firm CRA International, testified that current antitrust laws allow pharmacies to negotiate with PBMs "when such collaboration enhances the efficiency of care to patients" and that such antitrust waivers are ineffective and "legalize collusive behavior to create market power."

Opponents also contend that the bill is unnecessary because pharmacists can reject the terms of a PBM contract if they are not satisfied with it (Carey, CQ HealthBeat, 10/18). Rep. Darrell Issa (R-Calif.) said that it is more expensive and inefficient for PBMs to negotiate contracts with each independent pharmacy, but he added that an antitrust exemption is a delicate issue that is subject to debate.

Rep. Maxine Waters (D-Calif.) said independent pharmacies face a problem that needs to be addressed by Congress, but she is unsure if the bill is the right way to address the problem (Goto, CongressDaily, 10/18).

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