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In mid-December, more than half a million Louisianans were notified that as of Jan.1, 2012, they could no longer get prescriptions filled at Walgreens without paying full cost up front.
The change resulted from Walgreen’s refusal to accept contract terms from pharmacy benefits manager Express Scripts. A pharmacy benefits manager is the middleman between the insurance company and the pharmacy.
The effect was that many people started moving their prescriptions from Walgreens to other pharmacies, contributing to a 7.6 percent slide in Walgreens earnings.
With a Federal Trade Commission decision reported April 2 clearing the way for the $29.1 billion merger of Express Scripts Inc. and Medco Health Solutions Inc. – two of the nation’s largest pharmacy benefit managers – many more people with insurance may soon receive similar letters.
That’s because Express Scripts, now the largest pharmacy benefits manager in the country, has stated it plans to start examining contracts with drug manufacturers and drug stores, with Walgreens “high on the list of first review,” as reported in the Chicago Tribune.
“Walgreens has drawn a line in the sand,” said Robert Rock of Haydel’s Drug Stores in Houma. “I applaud them for doing that. They said, ‘we need to do this to survive’… The insurance companies tell you what they’re going to pay, and if you can’t get below that cost, you lose money. I’ve actually had to turn down prescriptions that we lose money on. That’s what happened (at Walgreens) – they refused to lose money on prescriptions they were filling.”
The relationship between pharmacies and pharmacy benefit managers is always challenging, according to Dean Pellegrin, pharmacist at Broadmoor Drugs. Without notice, the pharmacy benefit managers often don’t pay the contracted rate for filling prescriptions.
“They fight us all the time,” he said. “They don’t want to pay” the contracted rate for filling prescriptions, he said. For example, the pharmacy benefit manager will pay drug stores only $9.75 on a drug to be reimbursed for $10; then the drug stores must call in an attempt to obtain the rest of the payment due. The underpayment may sound small, but when it occurs repeatedly, it adds up to substantial dollars for the pharmacy, Pellegrin said.
Lisa Prestenbach, pharmacist at D&M Pharmacy in Thibodaux, said she’s had to hire someone to make those phone calls and submit the documentation needed for payment review; she also works with her wholesaler to obtain those payments she’s been shorted.
Pharmacy benefit managers also will stop covering more-expensive, newer and more effective prescription drugs that are easier for patients to take (such as fewer doses and side effects). The patient has to choose whether to pay the full cost of the drug or ask the doctor to change the prescription to an older drug, that doesn’t have all the benefits of the newer drugs – but is less costly and, therefore, covered, Pellegrin said.
“It’s never to their (pharmacy benefit managers’) detriment,” he said. “It’s always to their benefit.”
For the pharmacy benefit managers’ profitability, their executives are well paid. Express Scripts’ Chief Executive Office George Paz is sixth on Forbes’ list of highest-paid CEOs, with a compensation package worth $51.5 million.
Express Scripts patients are being urged to switch to mail-order services, which can be slower and less convenient for customers. The National Community Pharmacies Association has cited the potential customer safety risks when medications sit in mailboxes for days in the heat and wasteful as prescriptions are overfilled, patients’ prescriptions change shortly after 90-day supplies are filled, automatic shipments are not stopped in a timely manner and other operational problems.
Pellegrin said mail-order customers come in, somewhat sheepishly and embarrassed, when they have not yet received a shipment and need a few pills to tide them over.
“They get the meat,” he said. “I get the crumbs.”
While local independent pharmacies report having picked up customers with the Walgreens-Express Scripts disagreement, pharmacists are unsure of how long those customers may remain.
“People were coming over in droves,” Pellegrin said, especially since Broadmoor Drugs is very close to a Walgreens. “It’s good to pick up customers but if they (Express Scripts) don’t treat us right, we’re not going to want to deal with Express Scripts either,” Pellegrin said.
But with the recent acquisition of Medco by Express Scripts, it may not be that simple since one less pharmacy benefit manager will soon be operating. Express Scripts has stated that nothing will change yet for Medco customers or pharmacies – that patients can still use their Express Scripts and Medco phone numbers and will still have access to the “same medications, pharmacies and clinical experts as before,” according to Express Scripts and Medco’s web sites.
For pharmacies, Express Scripts has stated there are no changes at this time. Pharmacies should still use their existing contacts and claims submission procedures. No decision has been made yet on the payment schedules, although they are under review.
“What is basically does,” Rock said, “it takes away a basic freedom – the freedom of choice. It shows how the insurance companies dictate the way it is.”
Broadmoor Drugs Pharmacists wait on customers this week.
