The monster in the closet

David Smith

When you were a child were you ever afraid of the monster in the closet? You know, the one that would come out at night and eat you alive? Of course we all know there is no such thing. But, you need to know there truly is a “monster in the closet” coming between your pharmacist and you. That monster is very real and quite possibly will “eat up” all local pharmacies and force you to go the pharmacy that owns that monster.

To start at the beginning, let me explain in simple terms what goes on when you get a prescription filled. There are companies called pharmacy benefit managers, or PBMs for short, which act as intermediaries (a middle man) on every prescription you fill. Originally these PBMs were only intended to process claims from the pharmacy to the insurance company for payment. However, over the course of the past 20 years they have grown into something entirely different. They still connect pharmacies with insurance companies, but they now control which medications you can have, how many doses you can take each day, how many times you can get them filled during the course of a year, and how much you have to pay as a co-pay when you get them filled. All you see is how much you owe. But there is so much more that you don’t see.

Pharmacy owners are required to sign contracts with these PBMs in order to process prescriptions through the PBM for payment. This is where the monster peeks out of the closet. These contracts are non-negotiable, “take it or leave it” contracts in which the pharmacy literally has no bargaining power. We are not allowed to band together in a geographic area to try to negotiate a better deal – that would be considered price fixing and we would all go to jail. Over the course of time, the contracts have gotten worse and worse with payments to pharmacies getting lower and lower. You pay more for a soft drink from a vending machine than your pharmacy is being paid for a life-saving medication.

On the other end of the transaction sits the insurance company. Arkansas Blue Cross Blue Shield (ABCBS), the largest insurance company in the state, is a good example. After telling the pharmacy what they are going to get paid, the PBM then sends a bill to Arkansas Blue Cross Blue Shield for the prescription. This bill is dramatically different from what they paid the pharmacy. The difference between what the PBM paid the pharmacy and what they billed the insurance company is called the spread. Spreads of $30, $40, $50 and even hundreds of dollars are common. The monster gobbles up all of that money – a lot of it Arkansas taxpayer money – and sends it straight to Woonsocket, Rhode Island, where it continues to feather its nest. Can you begin to see just how ugly this monster is?

On January 31, I attended a legislative insurance oversight committee meeting at the state capitol along with about 300 of my fellow pharmacists, pharmacy students, and pharmacy educators from across the state. The legislative committee members demanded an accounting from Caremark about their arrangement with Arkansas Blue Cross Blue Shield. The Caremark representative had no answers for these questions, but he assured the committee members that there was a “firewall” between Caremark the PBM and CVS the pharmacy. He further asserted that all pharmacies were being treated equally and had the same reimbursement. Several Arkansas pharmacies have documents in their possession to prove that is simply not true.

CVS Pharmacies are being paid a much higher amount on prescriptions than the local pharmacy, often times hundreds of dollars more.

At the beginning of the year, Arkansas Blue Cross Blue Shield allowed Caremark, the PBM on their plans, to lower payments to Arkansas pharmacies to less than what the pharmacies paid for the drugs. Let me say that again. They pay pharmacies less than what the pharmacies paid for the drugs. Now, you don’t have to be a genius to figure out what that leads to. I’m sure you’ve seen the Blue Cross commercials on television using their catchy motto admonishing Arkansans to “live fearless.” Because Blue Cross has partnered with this monster in the closet, my patients and I now live in fear. No business, including your local pharmacy, can stay in business by collecting less than it pays for its products. Let’s get even more specific. Would you like to know who owns Caremark, the PBM for Blue Cross Blue Shield and many other insurance companies across the United States? The answer is CVS Pharmacy.

The simple fact is this is a poorly disguised attempt to drive local pharmacies out of business and to drive all the prescriptions to their own pharmacies. If this is allowed to continue, the end result will be the closing of your local pharmacy. When there is nothing left but “the company store,” what do you think will happen to prescription drug prices?

The citizens of Conway and surrounding towns are blessed to have several wonderful pharmacies from which to choose. Local pharmacists, both owner pharmacists and staff pharmacists alike, are decent, hard-working, patient-care oriented people who have dedicated themselves to the good health of their patients. We are literally in a fight for survival in order to continue to provide care for our patients and jobs for our staff members who live and shop local, and pay taxes for the upkeep of our schools and city services, and depend on their jobs as much as you depend on yours.

Currently, this monster answers to no one. Caremark (and other PBMs like Express Scripts, OptumRx, etc.) are unregulated, multi-billion dollar corporations who literally have no oversight. There is no agency either on a state or national level that can control them. They exist in a plane above the system and are literally draining every dollar they can from the system. They have hired every lobbyist available and are spending millions of dollars to keep their machine running. They threaten providers with removal from their program if we so much as tell our patients that we are losing money on prescriptions. Just last week they sent a fax to pharmacies stating that we were not allowed to talk to “any government official” about the financial terms of our contract without their approval. On top of that, a few weeks ago they sent many of us pharmacy owners a letter offering to buy our pharmacy! Can you begin to see the size of the monster’s teeth? This is not a child’s nightmare. This is reality.

What can you do, better yet, what should you do? Call, text, email – whichever way you choose – your senator and representative and beg them to enact legislation to require these PBMs to answer to the State Insurance Commission. They have heard it from us, but they need to hear it from you – now! We have a very narrow window of time before it is too late. #BehindTheRxCurtain

David Smith is the owner and chief pharmacist at Smith Family Pharmacy where he works with his wife Shirley and staff. He graduated from the UAMS College of Pharmacy in 1974 and has been taking care of people in the Conway and surrounding areas for more than 43 years. He loves spending time with family and is No1POP to 5 wonderful grandchildren. David can be reached by email at david@ smithfamilypharmacy.com