National LTC Pharmacy Leader Praises Kasich Effort to Bring Transparency to PBM Drug Pricing

DATE: July 7, 2015

Senior Care Pharmacy Coalition (SCPC) Urges More Federal Scrutiny of Secretive, Opaque Pharmacy Benefit Manager (PBM) Pricing Policies

 Washington, DC – Noting the need to step up federal scrutiny of “secretive and opaque” pricing policies currently practiced by the rapidly consolidating pharmacy benefit manager (PBM) industry, the Senior Care Pharmacy Coalition (SCPC) today praised Ohio Governor John Kasich (R-OH) for signing into law a new state effort to help pull back the curtain on PBM drug pricing and reimbursement practices.

“We applaud Governor Kasich for bringing badly-needed reform to secretive and opaque PBM drug pricing and reimbursement practices, and doing so will benefit patients and taxpayers in Ohio,” stated Alan G. Rosenbloom, President and CEO of SCPC. The SCPC represents companies that own and operate independent long-term care (LTC) pharmacies in more than 40 states, including Ohio, and serve over 350,000 patients in skilled nursing facilities (SNFs) and assisted living facilities (ALFs) nationally, every day.

According to an analysis by the Ohio Pharmacists Association (OPA), the Kasich PBM reforms “are intended to rein in dramatic underpayments to pharmacies by insurers and PBMs. Specifically, the bill would require PBMs to update their MAC price lists at a minimum of every seven days; give pharmacies some basic MAC price appeal rights; would require PBMs to supply pharmacies with a current list of the sources used to determine MAC prices; would require drugs appearing on a MAC price list to be commercially available for purchase by pharmacies in Ohio; would require PBMs to disclose any discrepancy in MAC reimbursements to pharmacies versus what is charged to plan sponsors; and would require PBMs to be licensed as third party administrators (TPAs) by the Ohio Department of Insurance.”

PBMs use MAC pricing and other practices under Part D, which is by far the most significant payer for prescription medications in LTC settings like skilled nursing facilities and assisted living facilities. Similar to the situation in Ohio, this pricing methodology and related practices under Part D also result in dramatic underpayments to pharmacies, especially LTC pharmacies – which have more stringent federal regulatory requirements and concomitantly higher costs.

“Independent LTC pharmacies and patients under their care require adequate protection against Medicare Part D pricing policies that afford no recourse to address practices that inappropriately shift dollars from providers to intermediaries such as PBMs in ways that undermine LTC pharmacies’ ability to provide key consultative services to patients,” continued Rosenbloom. “These unwarranted policies and practices threaten quality patient care and negatively affect taxpayers — as they ultimately add unnecessary costs to the Medicare program.”

Rosenbloom emphasized that LTC pharmacies are significantly different from the more commonly recognized retail pharmacies that simply dispense medications to consumers. LTC pharmacists are responsible for consistent care for a vulnerable population with multiple medical conditions in need of multiple medications, several times a day. Such care requires skilled service and uniquely qualified pharmacy specialists, he said. Due to federal regulatory requirements, Rosenbloom noted, LTC pharmacies face higher operating costs than retail pharmacies, and unaccountable MAC pricing practices can contribute to preventing patients from receiving necessary services, which can only be provided in one setting.

Rosenbloom reiterated the SCPC’s praise for H.R. 244, the MAC Transparency Act, introduced by Representatives Doug Collins (R-GA) and Dave Loebsack (D-IA), which would require more transparency from PBMs with respect not only to MAC pricing methodologies, but also with respect to other methodologies and PBM practices as well. The SCPC publicly endorsed the bill previously. Rosenbloom noted, however, “that even greater scrutiny of PBM pricing practices – potentially including limitations on the use of certain pricing and reimbursement methodologies – may well be justified in the future.”

The SCPC also recently urged the federal Centers for Medicare and Medicaid Services (CMS) to evaluate the pricing information that Part D plan sponsors provide not only to ensure that the information is sufficient to validate pricing and reimbursement, but also to evaluate whether the underlying pricing practices unduly threaten the economic viability of independent LTC pharmacies. “If independent LTC pharmacies cannot thrive, network adequacy for Medicare beneficiaries in LTC facilities will be threatened as well, and pricing for skilled nursing facilities and pharmacies could be artificially low while co-payments and other out-of-pocket costs to Medicare Part D beneficiaries could be artificially high,” Rosenbloom concluded. “The bottom line is that legislative and regulatory action reforming MAC pricing will have a positive public policy impact on LTC pharmacies’ ability to improve patient outcomes, reduce rehospitalizations and save Medicare dollars.”

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