Florida Pharmacy Association Report Outlines Concerns About PBM, MCO Manipulations

Editor's Note: This article was updated 3:32 pm February 6, 2020 with additional information.

A new report from the Florida Pharmacy Association and American Pharmacy Cooperative, Inc, alleges that pharmacy benefit managers (PBMs) in the state are favoring their own affiliated pharmacies in the Florida Medicaid program, both by driving customers to those pharmacies and by reimbursing them at higher rates.¹

"This report reinforces the need for Congress to reform Medicaid managed care," said National Community Pharmacists Association CEO B. Douglas Hoey, RPh, MBA, in a statement.²

Although the cost-of-dispensing (COD) incurred by pharmacists in Florida is $10.24 per claim, according to the state's COD analysis, this required pharmacy reimbursement methodology does not apply to Medicaid managed care organizations (MCOs) that contract with PBMs. The report's analysis of Florida's top 7 MCOs found that pharmacies were paid a weighted average of $2.72 per claim in 2018—significantly lower than the $10.24 COD and down from $7.70 in 2014.¹

The authors noted, however, that not all pharmacies seem to be experiencing this pressure equally. In 2018, the state's 5 largest specialty pharmacies collected 28% of the available profits paid to all providers in Florida Medicaid managed care, despite dispensing just 0.4% of all managed care claims.¹

Based on these findings, the authors wrote, "MCOs and PBMs appear to be using their control in managed care to incrementally shift dollars to their affiliated companies."¹

Generic and Branded Drug Spend Analysis

The authors said PBMs set generic prices differently for different pharmacies, which can create a significant advantage for pharmacies affiliated with the PBM. For example, they noted the displacement of Walgreens pharmacies by CVS pharmacies in both Staywell/Wellcare and Sunshine/Centene MCOs during the period when CVS Caremark was providing PBM services to those organizations.¹

Furthermore, the report said payments for generic drugs vary greatly across MCOs and between PBMs within the same MCO. As an example, the authors noted that in 2018, Sunshine/Centene (managed partly by CVS Caremark) reported the cost of generic aripiprazole (Abilify, Otsuka America Pharmaceutical) to be $11.18, $0.53, and $0.24 at CVS, Small Pharmacies, and Public, respectively.¹

Finally, the authors said MCOs and PBMs frequently require generic specialty drugs to be dispensed at their affiliated pharmacies, and the reported payments to these pharmacies then far exceed their COD.¹

When it comes to branded drugs, the authors said similar manipulations occur. They noted that claims dispensed at affiliated or specialty pharmacies are being reported with a weighted average margin over acquisition cost of up to $200 per claim within Florida's MCOs. The integration of payers, PBMs, and affiliated pharmacies therefore locks out market competition, the authors said, which could bring savings to Florida Medicaid.¹

"These hidden mechanisms can create incentives in the supply chain to dispense certain drugs over others, which is tantamount to serving some patients over others," the authors said.¹

In a response to the accusations, a representative from the Pharmaceutical Care Management Association (PCMA), a national trade association that represents PBMs, said the group behind the report is seeking higher profits at the expense of patients, who they said would pay more for prescriptions.

"In fact, there are over 32% more independent pharmacies open today in Florida than 10 years ago," the statement from PCMA said.³

CVS Health also responded to the report in an email to Pharmacy Times. In a prepared statement, the national company cited lowering member costs as a key priority for the business, and that CVS Health never forces customers to utilize a CVS Pharmacy.⁴

"Every day, PBMs work with employers, managed care organizations, and commercial health plans throughout Florida to reduce prescription drug costs for our members and improve their health," the statement said.⁴ "Our members have access to a broad and diverse pharmacy network beyond CVS, including independent pharmacies. Members can receive access to their medications throughout our network of 68,000 pharmacies, including independent and mail-order pharmacies."

According to CVS Health, it suppoorts independent pharmacies, and data from the National Community Pharmacists Association indicates that the number of independent pharmacies in the state increased from 2011 to 2018. "Florida’s independent pharmacies are valuable members of our network and in the aggregate, CVS Caremark reimburses them at a higher rate than chains, including CVS Pharmacy," the company continued.⁴

Overall Drug Spend and Reimbursement Trends

The report concluded with several key trends for Florida Medicaid's pharmacy profitability, based on their previous analyses of the various players and their roles, including ever-rising prices and lower reimbursements; however, PCMA disputed this claim.

"In Florida, PBMs will save consumers and health care programs more than $43 billion over 10 years, and have helped the state Medicaid program save $2.3 billion," the statement from PCMA noted.³

According to the report, overall margins offered by Florida's top 6 MCOs to the state's pharmacy providers have materially declined from $7.43 in 2014 to a low of $3.45 per claim in 2019. This decline, they said, is partially attributable to increased mergers in the state. Specifically, recent mergers among the largest MCOs in the state within Florida Medicaid could risk worsening the financial picture for small pharmacies.¹

"The market is being rigged by the PBMs against community pharmacies and their patients," Hoey said in a statement.²

Although the report is concerning, Hoey added that independent pharmacies are still vital to patient care.

"Despite that, surveys of pharmacies repeatedly demonstrate that independently owned pharmacies lead the pack in pleasing consumers," he said.²

REFERENCES

• Sunshine in the Black Box of Pharmacy Benefits Management: Florida Medicaid Pharmacy Claims Analysis. National Community Pharmacists Association, January 30, 2020. ncpa.co/pdf/florida-3aa-medicaid-pharmacy-analysis.pdf. Accessed February 4, 2020.
• NCPA: Fla. Report a Searing Indictment of PBM Greed in Medicaid [news release]. National Community Pharmacists Association, January 30, 2020. https://www.ncpanet.org/newsroom/news-releases/2020/01/30/ncpa-fla.-report-a-searing-indictment-of-pbm-greed-in-medicaid-neighborhood-pharmacies-urge-accountability-action-to-rein-in-pbms. Accessed February 4, 2020.
• RE: Seeking Statement on NCPA Florida Report [email]. February 4, 2020.
• CVS Health Statement on Florida story. [email] February 6, 2020