Tuesday, September 18, 2007

Pharmacists React to Drug Channels

Last week’s posts on UT’s pharmacy reimbursement study generated an unprecedented number of thoughtful comments from pharmacists. The comments are listed below the two original posts:

Here are some highlights.

Tom Connelly took issue with my comment about how independents have been financially hurt because cash pay customers now have access to a comprehensive drug benefit. I responded that the shift from cash-to-third party payment has been a double-edge sword for pharmacy. The loss of cash pay (which has 0 days DSO) is traded off against the increased script volume b/c more people have access to drugs.

I doubt that NCPA would directly claim to oppose Part D, but that is indeed the implication. Ironically, Monday's Washington Post published Small-Town Pharmacists Closing Doors, in which pharmacist Dave Redden complains that the Part D benefit was good for consumers, but not for his business.

Joe argues that pharmacists should be paid within 5 business days. Unfortunately, eliminating “float” would undermine profit models throughout the pharmacy supply chain. For example, the wholesalers’ economic model would collapse if they accepted 30 days terms from pharmacies, even though NCPA criticizes wholesalers for requiring 14 day payment terms.

Right now, pharmacy customers pay wholesalers about two weeks before the wholesaler has to pay the supplier (drug manufacturer). Wholesalers earn interest income on the “float,” which can be meaningful given the large dollar amounts involved. Hmmm, I wonder if wholesalers could be the next target of pharmacy’s wrath?

PBMGuru suggested that pharmacies have a reconciliation problem, not a reimbursement problem. He cites an example of a small mail order pharmacy that had underinvested in technology resources to manage claims. He also cites payment problems related to “failure of the pharmacy to keep their tax ID current, failure of the pharmacy to keep their Medicare Provider Number current, or mismanagement by the NCPDP (once).”

Finally, one owner of an independent pharmacy is especially bitter about chain pharmacies, essentially accusing chains of treating pharmacy as a commodity and of professional malpractice (“…an error due to an overworked pharmacist mislabeling or giving the wrong medicine.”)

All in all, a fascinating and thought-provoking series of comments about an alleged dark side to the Medicare Part D benefit.


Did anyone else notice that Monday's Pink Sheet reported on the CVS-Prasco lawsuit, which is the story that I broke almost two weeks ago? Ed Silverman at Pharmalot also did some nice coverage of my story (and added a cool graphic, too.)

1 comment:

  1. There is nothing wrong with being paid once a month by a PBM. What is wrong is all the other things they do. For example, one PBM started charging 99 cents for every claim that was processed without an MD's NPI #. That is just ridiculous. What's the matter, the MD's DEA # or license # is not enough to identify the prescriber? (maybe they need more info to identify the prescriber when they sell his prescribing patterns to the drug companies). Another example is when PBM's do not update their drug pricing in a timely fashion. When a drug goes up, the PBM is capable of knowing right away. Ambien CR just went up over 30 dollars a bottle. I have only seen one PBM so far correct their pricing. It's lot's of these small things that are driving done the independent pharmacy. Truth be told, if the PBM's were reimbursing us at the same level they were reimbursing the chains, none of these things would be real issues. And at the rate that the chains keep merging, you would think that the PBM's would want to keep the small stores strong and alive. What will happen when all the little stores are gone and it is just the chains? At that point the chains will be telling the PBM's what they want.