Utica-area pharmacists rally for transparency with drug costs

UTICA -- Independent pharmacists rallied at Parkway Drugs on Leland Avenue and at nine other locations across the state Wednesday to urge the governor to sign legislation regulating pharmacy benefit managers.

Health plans contract pharmacy benefit management companies to administer their prescription drug plans for members. The benefit managers negotiate prices with drug companies and determine which drugs will be on a health plan's formulary. Pharmacy benefit managers, or PBMs, argue that they help to lower the overall cost of prescription drugs.

"New York's prescription drug distribution program is broken and we're here to fix it," pharmacist Vincent Chiffy, one of the owners of Utica's three Parkway Drugs, said with the owners of two other area independent pharmacies, state Sen. Joseph Griffo, R-Rome, and state Assemblywoman Marianne Buttenschon, D-Marcy, standing behind him.

Chiffy blamed PBMs for the problems.

If signed by Gov. Andrew Cuomo, the bill would bring licensure and regulations for PBM and bring greater transparency to PBM contracts.

It is opposed by the Pharmaceutical Care Management Association, the New York Health Plan Association and the New York State Conference of BlueCross and BlueShield Plans.

"In its current form, the bill eliminates many of the cost-saving tools that pharmacy benefit managers, PBMs, use to reduce prescription drug costs and improve the quality of care for patients," reads a PCMA statement. "In addition to putting consumer safety at risk by removing specialty pharmacy accreditation standards, the legislation limits access to cost-effective drugs in favor of more expensive prescriptions. In fact, the bill would lead to $28 billion in additional prescription drug spending in New York over the next 10 years."

PHARMACY PAIN

Independent pharmacists argued that PBMs drive up drug prices and limit patient choice.

They also said PBMs are driving them out of business by forcing them to accept contracts without negotiation -- paying them below the wholesale cost of a drug, in some cases -- and often paying them less than chain pharmacies, which have more negotiating clout. The three biggest PBMs control 80 percent of prescriptions, Chiffy said.

"It's put a strain on us as far as our reimbursements," said Bob Black, owner of Randall's Pharmacy in New Hartford and Holland Patent Pharmacy. "And it's put a strain on us as far as keeping our employees. And it's put a strain on us as far as paying our bills."

That has made it harder to deliver services to customers, he said. The pharmacies can no longer keep so much medicine in stock or offer deliveries as quickly, meaning customers may have to wait longer to get prescriptions filled, Black said.

Steven Pardi, owner of the Medicine Shoppe Pharmacy in Ilion, described similar pressures.

"The reimbursement we're getting from PBMs very often is below our cost just for the drug," he said. And that doesn't include other expenses such as the cost of the bottle and the label, or staff salaries, Pardi said.

CONTROVERSIAL PRACTICES

The pharmacists highlighted two practices in particular that they argued need more scrutiny and oversight: price spreading and drug rebates.

"We get paid one price; the PBM then charges the insurer or the state or whoever a different price than they pay us," Chiffy said, describing a practice known as price spreading, which he said drives up drug costs. New York made the practice illegal when it comes to Medicaid managed care in April, but it's still used in other types of health plans.

PBMs also negotiate discounts and rebates with drug manufacturers, a practice that they and health plans argue helps to keep drug costs down.

But pharmacists and some others, including some state auditor generals, have questioned whether these rebates actually end up increasing drug prices. And PBMs do not have to disclose how much of the rebate money they keep.

REBUTTAL

PBMs do not unreasonably keep rebate savings, said Greg Lopes, assistant vice president of strategic communications with PCMA. On average, 90 percent or more of rebates to PBMs go back to their clients and lower the cost of care, he said.

"Health plan sponsors have the final say on contract terms with PBMs, and they should be able to choose the contracts that best fit their plan populations' health care needs," Lopes said.

He disputed that the bill, if signed into law, will offer the promised benefits.

"While drugmakers alone have the power to set and raise prices," he said, "PBMs core mission is to reduce prescription drug costs and improve the quality of care for patients, while fairly compensating pharmacies for services they provide."

The health plan association supports the bill's goal of transparency, Senior Vice President Leslie Moran said. But the association isn't sure the bill is the best way to get there, she said. It sets up conflicting contractual obligations for PBMs, she said.

"Who is their chief responsibility -- to consumers, providers or health plans?" Moran asked.

She also pointed out that that the New York State Department of Health and Department of Financial Services have recently been given more oversight responsibility over PBMs.

"Our biggest concern," she added, "is that it really does nothing to get at the real problem that we're talking about which is rising pharmaceutical costs. And that's not on the part of PBMs; that's on the part of the manufacturers' themselves."

Chiffy disagreed.

"Our industry is so upside down," he said. "There's so many hands in it. I think that's why prescription drug costs are so high. Nobody knows what's going on. It's all so secretive. ... It's just so unregulated."

Contact reporter Amy Neff Roth at 315-792-5166 or follow her on Twitter (@OD_Roth).

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