Iowa is losing pharmacies. Lawmakers, pharmacists and policy experts say benefit managers to blame

Pharmacies across Iowa have been closing at an alarming rate over the past decade, in part because insurance payments don’t cover drug costs.

Nearly 100 pharmacies in the state have closed since 2008, according to a study by a Drake University professor. In recent research.

Independent pharmacies were hit the hardest, with 87 stores closing between 2008 and 2022, a decline of 38%. According to the study, the number of local pharmacies has decreased by 19%, with 72 stores closing.

A survey last month of Iowa Pharmacy Association members found that 40% of responding pharmacies expected to close within the next 12 months.

“This means more than 133,000 patients across the state no longer have access to their medications,” said Seth Brown, communications director for the Iowa Pharmacy Association.

Pharmacists, lawmakers, policy experts and patient advocates say the blame lies primarily with pharmacy benefit managers.

Pharmacy benefit managers (PBMs) are third-party companies that act as intermediaries between insurance companies and pharmaceutical companies. The multibillion-dollar company plays a huge role in negotiating drug prices and reimbursement for pharmacies, but it operates with little transparency or oversight, lawmakers, pharmacists and patient advocacy groups say. .

PBMs determine which pharmacies are included in a prescription drug plan’s network and how much those pharmacies will pay for their services. PBMs also regulate which drugs are covered by a particular plan, set copays, negotiate rebates with drug companies, and process prescription drug claims for a fee to insurance companies. will be fulfilled.

Three of the companies, CVS Caremark, Express Scripts, and Optum Rx, together control about 80% of the market.

“Many of these problems stem from PBM practices and really need to be reined in,” Brown says.

What is Congress doing to address this problem?

This week, Iowa Republican U.S. Rep. Mariannette Miller-Meeks and her colleagues submitted a bipartisan proposal it is Engage in initiatives implemented by pharmacy benefit managers That drives up the cost of prescription drugs.

The bill would use a flat-rate escape to compensate PBMs, instead of pegging payments at a percentage of drug costs.

This is the latest in a series of PBM-related proposals passed by the House and Senate this year as Congress seeks to reduce costs and improve pricing transparency for patients.

Lawmakers on both sides of the aisle are investigating how industry intermediaries have manipulated a complex and opaque drug pricing system to drive up health care costs at the expense of patients and pharmacies.

“Pharmacy benefit managers (PBMs) have too much influence over the prices patients pay at the pharmacy counter,” Miller-Meeks said in a statement. ” drug law Puts downward pressure on prescription drug prices and premiums by removing the incentive for PBMs to raise the list price of drugs. Additionally, the law protects independent pharmacies and the right of patients to choose the pharmacy of their choice without pressure from PBMs. ”

A bipartisan bill introduced by Miller-Meeks introduces a delinking policy that would allow PBMs to only charge a flat fee for drug placement, rather than continuing to charge a percentage of the drug. .

Brown, of the Iowa Pharmacy Association, said this will prevent PBMs from using complex and confusing contracts that drive up prices.

Pharmaceutical rebate payments frequently serve as a bargaining tool to encourage the use of expensive brand-name drugs. Manufacturers gain prominent positions on payers’ drug lists to increase market share, and as a result, PBMs and health insurers are less likely to sell branded drugs even when lower-priced generic equivalents are available. Receive lower cost.

Miller-Meeks’ bill would also prohibit “risk mitigation pricing,” also known as spread pricing, in which PBMs charge insurers more for drugs than they pay pharmacies.

Retail pharmacies in a PBM’s network fill health plan members’ prescriptions with drugs purchased from wholesalers or manufacturers. When a plan participant fills a prescription at a pharmacy, the pharmacy checks with her PBM to determine coverage. After the pharmacy fills the prescription, the PBM reimburses the pharmacy for the contractually agreed upon fee, less any co-pays collected by the pharmacy. The PBM then bills the health plan separately at a rate negotiated between the PBM and the health plan.

PBMs argue that this pricing model provides predictability for plan sponsors and reduces drug costs by providing fixed prices and guaranteed discounts on drugs dispensed by pharmacies.

If the negotiated price paid to a network pharmacy is lower than the price a health plan pays for a prescription drug, the PBM keeps the difference, or “spread,” as profit. If the net price is higher than the price paid by the client, the PBM must assume the risk and pay the difference.

The companies argue that this pricing model protects insurers from risk. Whether you negotiate a discount on prescription drugs with a pharmacy that is higher or lower than originally agreed, the customer’s cost remains the same.

However, the Centers for Medicare and Medicaid Services said it is concerned that PBMs’ “use of spread pricing is inflating prescription drug costs for beneficiaries and taxpayers.” Congressional Budget Office 2020 Analysis We estimate that banning the use of spread pricing contracts in Medicaid alone would save $929 million over 10 years.

The proposed bill would also prohibit PBMs from paying affiliated pharmacies more than independent community pharmacies for the same services. It also prohibits patient steering, which occurs when a PBM encourages or requires a patient to use its affiliated pharmacy rather than the pharmacy most convenient for the patient.

PBMs claim they are effectively driving down drug prices and negotiating the best possible prices for their customers.

Grassley pushes for measures to protect access to rural pharmacies

U.S. Sen. Chuck Grassley, R-Iowa, is a driving force in Congress passing and advancing legislation to increase drug price transparency and hold pharmacy benefit managers accountable for practices that drive up prescription drug costs. ing.

The Senate Finance Committee this week adopted Grassley’s amendment, which seeks to preserve rural pharmacies ahead of direct and indirect Medicare clawbacks starting Jan. 1. The amendment would require the Department of Health and Human Services to report to Congress on the impact of policy changes. Medicare Part D.

Mr. Grassley has long advocated for an end to the system that retroactively collects clawback fees from pharmacies, which are derived from the price of prescription drugs and benefit pharmacy owners. This practice creates uncertainty for pharmacies, which must pay fees to PBMs long after the drug transaction is completed. Seniors will also be forced to pay more for prescriptions than they should.

For months, Mr. Grassley has called on CMS to address the cash flow challenges and financial strain hitting rural pharmacies by encouraging interim payment plans between PBMs and pharmacies.

The Grassley amendment calls for developing a workable plan to maintain patient access to local pharmacies, especially rural pharmacies.

Brown said pharmacies play an important role in healthcare infrastructure.

“When pharmacies close in rural communities, other health care workers often quit because they can’t get the drugs they need to do their jobs,” Brown said, adding that this contributes to health deserts. He said he was there.

Iowa pharmacy desert

Mike Deninger is co-owner and pharmacist at Towncrest Pharmacy. The group co-owns eight community pharmacies in Iowa City, Solon, Van Horn, Marengo, Belle Plaine and New Hampton.

“The biggest problem that people don’t understand is that we don’t set the pay in pharmacies,” Denninger said.

Independent pharmacies like his rely on pharmacy benefit managers to help them enroll in various insurance plans, but these companies also determine how much pharmacists receive in reimbursement.

“They’ll pay us what they want to pay us, and that can change at any time,” he said.

The payment amount is often not enough to cover the cost of the drug, so pharmacies incur losses when writing many common brand prescriptions, and they lose money when writing many common brand prescriptions, including medical exams, immunizations, office visits, and long-term care. You will have to rely on other services. Business operation in progress.

Deninger said his business partners recently met with Grassley’s office and CMS to address these issues.

“We have to talk about rural deserts where access to pharmacies is difficult,” he said. “I have a pharmacy in New Hampton, and it’s the only pharmacy in the county,” he said, although his closest pharmacy is often 10 to 15 miles away.

It’s not just rural areas that pharmacies are closing.

Rite Aid, one of the nation’s largest pharmacy chains, filed for bankruptcy last month. CVS and Walgreens are also closing stores nationwide, and pharmacists and pharmacy technicians are walking off the job in protest of so-called staffing shortages and increased work requirements.

“Nationally, pharmacy access is at risk and the pharmacy industry is at a breaking point, where significant issues will arise and difficult decisions will be made,” Denninger said. Ta.

That includes deciding whether to close more stores, discontinue expensive brand-name drugs, or both, creating a “desert for access to certain drugs.”

Denninger said the proposed restrictions on PBMs included in Miller-Meeks’ bill are a “good start.”

“I can’t say that all the problems will be solved, but some of the bigger problems will be solved before more pharmacies are forced to close, assuming the bill is passed and implemented.” .”

CComments: (319) 398-8499; [email protected]