National LTC Pharmacy Group Urges CMS to Prohibit PBM Pharmacy Fees — Not Reform Them

DATE: January 23, 2018

SCPC Also Says Conceptual “Point of Sale” Policy Solution Not Effective for LTC Pharmacies, LTC Patients as Dually-Eligible Beneficiaries Constitute High Percentage of Patient Population; CMS Authorized to Act under Medicare Part D

Washington, DC — In submitting comments to the Centers for Medicare & Medicaid Services (CMS) regarding the Medicare Parts C and D Proposed Rule and related request for information (RFI), the Senior Care Pharmacy Coalition (SCPC) thanks the agency for addressing pharmacy price concessions and PBMs’ “abusive misuse” of pharmacy fees but says these fees should be wholly eliminated – not redirected or reformed as CMS proposes.

The following are key excerpts of the SCPC comments in regard to PBM “Pharmacy Fees:”

“PBMs increasingly have extracted “pharmacy payment adjustments” and other concessions from pharmacies, and particularly independent LTC pharmacies, through anti-competitive market manipulation without justification or benefit to Part D beneficiaries or the Medicare program. The agency is correct – and the evidence is overwhelming — that so-called “pharmacy incentive payments” have “grown faster than any other category of DIR received by sponsors and PBMs,” and that because the amounts exceed “bid” calculations they do not help beneficiaries or the program, but instead are being misused by PBMs to contribute to plan profits.

We note, however, that while CMS identifies these fees as “price concessions,” they are not price concessions at all. Unlike drug manufacturers, pharmacies have no product “prices” to concede. Instead, these fees represent an unjustified abuse of market power through which PBMs, and the PDPs they represent, extract sums from pharmacies with no leverage for no purpose other than to enrich PBMs at the expense of pharmacies. Given the absence of any free market-based justification, these fees should not be redirected, but should be prohibited outright. 

The agency’s conceptual “point of sale” (POS) policy solution unfortunately would not be effective for LTC pharmacy and the beneficiaries they serve. As the agency knows, a very large percentage of LTC residents are “dual eligible” for both Medicare and Medicaid (the “duals”). Duals do not pay for their medications at all. They do not pay Part D premiums, co-pays or deductibles and are exempt from the “donut hole” and other coverage levels of the Part D program. For these beneficiaries, “passing through” pharmacy fee DIR at the POS makes no sense since it is not possible for their out-of-pocket costs to be lower than $0.00. Thus, while we appreciate the agency’s creative proposed POS options, none make sense or will achieve the agency’s policy goals for LTC residents or LTC pharmacies.

Instead, CMS should prohibit the pharmacy fees outright. SCPC respectfully submits that, while this approach may be appropriate for rebates PBMs negotiate with manufacturers, the same is not true of pharmacy fees. Therefore, SCPC’s comments focus on the justification for CMS eliminating pharmacy fees altogether, which is a solution to the underlying problem more consistent with the intent of the Part D program and the free market principles on which the program is based. In this context, we urge the agency to consider all unjustified fees PDPs/PBMs impose on LTC pharmacies, not only post-point-of-sale fees.

For full text of SCPC comments to CMS, CLICK HERE.

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The SCPC is the national association for independent LTC pharmacies. Our member pharmacies provide care and services to patients in LTC facilities across the country occupying approximately 675,000 beds. Visit seniorcarepharmacies.org  to learn more.