Benefit managers seen as a threat to small drugstores
Published 5:00 am Sunday, July 22, 2012
HACKENSACK, N.J. — In Palisades Park, N.J., Michael and Louis Giannantonio are trying to keep their 57-year-old family-owned drugstore healthy with a recipe their father taught them: friendliness and service.
In Cresskill, N.J., Sree and Satish Vattimilli are hoping home deliveries and consultations and greeting customers by name will immunize their store from the competition.
In Haworth, N.J., Bill and Denise Hayes are counting on a dose of high-tech innovation mixed with an old-fashioned mom-and-pop style of doing business to keep their pharmacy alive.
Independent drugstores fill hundreds of prescriptions a day for ailments such as diabetes, migraines and ear infections. But store owners say they won’t be able to continue doing that unless they find a remedy for the intense pressure they are feeling from a system that squeezes their profits and gives new competitors an unfair advantage.
They’re not so much worried about the proliferation of chain drugstores or the big-box discounters as they are the pharmacy benefit manager companies that were born about 30 years ago to process prescription claims for insurers and have grown into giant corporations that control what drugstores can charge. Sometimes, they even compete with pharmacies through their own mail-order operations.
“We lose patients every day to mail order, specialty pharmacy, restricted networks and other methods that the PBMs use to drive prescriptions to their own businesses,” said Matt Kopacki, owner of Rock Ridge Pharmacy in Glen Rock, N.J. “The system is stacked against the local pharmacy, and in some cases, even against the national chain drugstores.”
“One of the elements of unfairness of these prescription benefit programs is that the same companies who design the programs own the mail-order pharmacies to which patients are directed,” said Daniel Hussar, a professor at the Philadelphia College of Pharmacy and author of “The Pharmacist Activist” newsletter.
Some patients, particularly those using expensive medicines for chronic conditions, are told their only option is to have the drugs delivered by mail. Others are urged to switch to mail order to be eligible for a lower co-payment.
The recent merger of two of the largest pharmacy benefit managers — Express Scripts in St. Louis and Medco in Franklin Lakes, N.J., — and the 2006 merger of the drugstore chain CVS with the pharmacy and benefits manager Caremark have focused attention on the role of these companies. Lawmakers in a number of states, including New Jersey, have proposed legislation to limit or regulate PBMs.
Laurie Clark, a lobbyist for the New Jersey Pharmacists Association and the Garden State Pharmacy Owners, said those groups support a bill introduced by Linda Stender, which among other things would prohibit pharmacy benefit managers from requiring someone to fill their prescription at a specific retail pharmacy or at a mail-order pharmacy.
“It’s one thing if a patient wants to go to mail order,” Clark said, but many patients are told their prescriptions can be filled only by mail order. “They lose access to their local pharmacist,” Clark added. “Having that access is something we feel is very important to health care.”
The National Community Pharmacists Association, a Virginia-based lobbying group, on Wednesday kicked off an attack on the benefit management companies with a website (whorunsmydrugplan.com) and a video intended to mobilize sentiment against them.
Brian Henry, a spokesman for the Express Scripts, noted that PBMs save their clients — the employers and insurers — money on their prescription drug plans.
“We believe we have a very good relationship with pharmacies, with independents and chains and every other type of pharmacy,” Henry said. “We think we offer very fair reimbursement.”
Since 1990, the number of independent drugstores in the United States has declined 28 percent, to 23,064 from 31,879. The number of chain drugstores has increased 11.6 percent in the period, to 20,804 from 18,638.