NCPA President Testifies at Congressional Hearing on PBM Corporations

ALEXANDRIA, Va. (Nov. 17, 2015) —

Bradley J. Arthur, RPh, National Community Pharmacist Association

(NCPA) president and co-owner of BlackRock Pharmacy

and Brighton-Eggert Pharmacy

in Buffalo, NY, testified

today before a hearing of the

House Judiciary Committee

Subcommittee on Regulatory Reform, Commercial and Antitrust Law

. He described seven different areas where the power of pharmacy benefit management (PBM) corporations has an undue influence on patients, health plan sponsors and pharmacies — which will only grow with the proliferation of mergers.

“On a more personal level, small community pharmacies like mine are faced on a daily basis with the impact of PBMs’ disproportionate market power,” said Arthur. “I can tell you that as a small business owner and health care provider, the current situation and overall business climate that exists in which market power is increasingly concentrated in an ever-shrinking number of corporations — makes me apprehensive about what is around the bend.”

Arthur’s testimony focused on how the largely unregulated PBM corporations are allowed to dominate the pharmacy landscape and included the following points:

• The concentrated PBM marketplace has three corporations (Express Scripts, CVS Health, and OptumRx) covering approximately 78 percent of patients who have their benefits managed by PBMs;
• When it comes to large-scale prescription drug plans, such as those provided through the federal government, the three largest PBM corporations are currently the only practicable option, so choice is severely limited;
• Small community pharmacies lack leverage and are saddled with “take it or leave it” contracts with PBM corporations that include onerous terms that can threaten their financial viability;
• The criteria PBMs use to determine multi-source generic drug MAC (or “maximum allowable cost”) reimbursements are unknown, which means that for approximately 86 percent of the prescriptions dispensed by small community pharmacies, pharmacists are unable to make informed business decisions on fundamental matters such as expected cash flow and drug inventory;
• The acquisition costs for generic prescription drugs for pharmacies are subject to dramatic prices spikes, yet PBM corporations lag in updating MAC reimbursement paid to pharmacies, triggering huge, unsustainable losses on these prescription;
• PBM corporations have inherent conflicts of interest through their ownership of mail order and specialty pharmacies, often incentivizing or requiring patients to use such pharmacies when many patients prefer to use a community pharmacy; and
• While there are industry-wide regulations for commercial health insurers, PBM corporations have largely escaped federal regulations, which is why there are common-sense reforms in the U.S. House of Representatives that can create a more level playing field.

Arthur concluded his testimony by saying, “I urge you to support H.R. 244

, a bipartisan bill that would require the same timely updates to MAC pricing lists in the Federal Health Benefit Program and the military’s TRICARE program that will be required in Medicare Part D in 2016. In addition, I urge you to support h.r. 793,

a bipartisan bill that would allow any pharmacy located in a health care shortage or medically underserved area to participate in any preferred pharmacy network if they are willing to meet comparable terms and conditions.”

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The National Community Pharmacists Association (NCPA®) represents the interests of America's community pharmacists, including the owners of more than 22,000 independent community pharmacies. Together they represent an $81.4 billion health care marketplace and employ more than 314,000 individuals on a full or part-time basis. To learn more, go to www.ncpanet.org, visit facebook.com/commpharmacy, or follow NCPA on Twitter @Commpharmacy.