Pharmacists Urge Transparency, Payment Updates as Congress Examines Generic Price Spikes

Press Release

ALEXANDRIA, Va. — Patients and independent community pharmacists are negatively impacted by spiking costs for some generic prescription drugs and Congress should enact bipartisan legislation to increase transparency and ensure reimbursement rates paid to pharmacies reflect actual market costs, the National Community Pharmacists Association (NCPA) said today regarding a hearing of the Senate Special Committee on Aging. The panel’s hearing is entitled “Sudden Spikes in Off-Patent Drugs: Perspectives from the Front Lines.”

“Generic price spikes are negatively impacting patients, pharmacists and health care payers alike,” said NCPA CEO B. Douglas Hoey, RPh, MBA. “Importantly, the associated slow and low price adjustment on generic medications is wreaking havoc on the ability of small business pharmacies to remain viable and continue to provide critical medications and related care to patients. We commend Congress for conducting this hearing and urge lawmakers to take additional steps for increased transparency and adequate pharmacy reimbursement.”

NCPA urges policymakers to consider the following key facts surrounding generic drug price spikes:

According to a 2015 survey of independent community pharmacists, the prevalence of these generic price spikes has not abated since a previous pharmacist survey was conducted in 2013, and has actually gotten progressively worse. Community pharmacists have reported instances of generic drugs that had spiked by as much as 600 percent, 1,000 percent, and even 2,000 percent in some cases.

Many pharmacist responders to both the 2013 and 2015 NCPA surveys reported instances in which Medicare Part D beneficiaries, due to drastic prices swings, were either refusing to refill their medications or were planning to take less than the prescribed dose of their medication in an attempt to “stretch” their remaining supply and in order to avoid having to go into the donut hole. Ultimately, everyone pays for these cost increases or price spikes—either now or later in higher future premiums.

In this era of instant communication, it is indefensible for pharmacy benefit management (PBM) corporations to wait weeks or even months before updating their pharmacy payment benchmarks in the wake of these price spikes—without reimbursing pharmacies retroactively. Pharmacists’ appeals to PBMs are consistently denied or ignored and this situation is untenable. The continued slow and low price adjustments are especially troubling in light of the fact that PBM corporations have “teams of people to examine and review MAC lists,” according to the testimony of a PBM executive at a Nov. 17 hearing of the House Judiciary Committee Subcommittee on Regulatory Reform, Commercial and Antitrust Law.

In recognition of this problem, the Centers for Medicare and Medicaid Services (CMS) will consider Maximum Allowable Cost (MAC), a drug pricing standard, and require PBMs to update these prices on a frequent basis in the Medicare Part D program beginning in Plan Year 2016. CMS has stated in formal rulemaking that MAC pricing transparency and frequent updating is needed in order to ensure costs submitted by PBMs to CMS are accurate up front and don’t have to be adjusted later on, disrupting operation of the Part D program. CMS also requires this transparency to ensure data on Medicare Plan Finder is accurate. However, this CMS rule does not address any of the other federal health care programs. To that end, NCPA strongly urges support for H.R. 244, a bipartisan bill that would require the same timely updates to MAC pricing in the Federal Employees Health Benefit Program and the military’s TRICARE program.

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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.