Pa’s Medicaid program is paying more than it needs to for prescription drugs. This is why | Opinion

By Greg Drew

I write as president of a cooperative company comprised of independent community pharmacies, typical of the community pharmacies throughout our commonwealth.

For more than a century, independent, community pharmacists have served generations of families all across Pennsylvania, providing their patients with the best in pharmacy care. Pharmacists and their staff care deeply for our local communities and take tremendous pride in the service they provide each and every day.

Today, we find our pharmacies are under threat due to a variety of factors that require state legislative action to remedy, sooner rather than later. Otherwise, they could be forced to close their doors when they are required to provide care and medications to their patients often at less than the cost incurred to do so.

Pennsylvania’s Medicaid program is paying significantly more than it should for prescription drugs, due to the growing influence of pharmacy benefit managers (PBMs). PBMs are a third-party administrator (middleman) of prescription drug programs. Here in Pennsylvania, they also handle the commonwealth’s Medicaid plans.

The PBMs have grown into huge for-profit companies that grow their revenue by lowering reimbursement to pharmacies and then taking credit for reducing health care costs, without disclosing that it is on the backs of community pharmacies and the payers that they serve, and often picking the pockets of the patients they are supposed to be helping.

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The concept behind using third-party PBMs is that their negotiating power would save Pennsylvania and other entities millions — if not billions — of dollars in prescription drug costs.

This theory has been proven to be ill-conceived, and the savings have never materialized in Pennsylvania. In fact, it has had the opposite effect of increasing the total drug expenditure within the commonwealth.

A recent report from Pennsylvania Auditor General Eugene DePasquale found that PBMs are keeping hundreds of millions of dollars through what is called “spread pricing.”

In this scenario, the PBMs bill health plans a much higher price than they pay the pharmacies, resulting in the commonwealth compensating PBMs by millions of dollars more than they should.

This irresponsibly causes community pharmacies to take losses on the prescriptions they fill for this hard-to-manage population. Unfortunately, Pennsylvania doesn’t require PBMs to report spread pricing, leaving state lawmakers and families in the dark.

It doesn’t get any better for community pharmacies or their patients. Under current Pennsylvania law, PBMs are not being held accountable for providing appropriate Medicaid reimbursement rates to community pharmacies.

Often, reimbursement rates are below the cost that pharmacies must pay to purchase the medications. Additionally, professional dispensing fees are as low as 10 cents and are trending toward no dispensing fee in the near future, which is unsustainable.

Does it make sense to reimburse pharmacies less for the medications they provide than what they pay to acquire the drugs, and then place a value on the professional and clinical services they provide that is less than a piece of candy on the pharmacy counter? I think not.

It’s time for a transparent process that holds PBMs accountable. I implore everyone to support community pharmacies before they are forced to close their doors forever and leave us with little or no choice in health care.

I can’t imagine the day that patients are unable to walk into their local pharmacy and speak about their medication and health care problems with the pharmacists they know and trust. And I hope I never have to.

Greg Drew, president of Value Drug Company of Altoona, is a member of a new coalition, Your PA Community Pharmacies (YPACP).