OR WAIT null SECS
A study of Oregon pharmacies finds there is significant disparities in reimbursement between the pharmacies, particularly in already disadvantaged communities.
PBMs are reimbursing pharmacies in Oregon at different rates while at times charging Medicare and Medicaid higher prices, according to new report by the Oregon State Pharmacy Association. The study was done in collaboration with the consultant 3 Axis Advisors.
In one example, the state’s Medicaid program paid more than eight times the manufacturer’s asking price for a generic of the multiple sclerosis drug Tecfidera (dimethyl fumerate). If the payment was instead based on the manufacturer’s list price ($350) instead of what PBMs charged Medicaid on average ($2,928), the state could have saved about $1.9 million in 2021 on this one drug alone.
“What we found is that PBMs – these middlemen in the drug supply chain – are essentially free to set the prices of drugs wherever and however they choose and, as a result, our state is rapidly losing small local pharmacies. That’s because these pharmacies aren’t being reimbursed at rates that allow them to keep their doors open, which raises serious questions about what PBMs are up to and why,” Brian Mayo, executive director of the Oregon State Pharmacy Association, said in a press release.
Study researchers obtained reimbursement data between 2019 and 2021 from 86 of Oregon’s estimated 534 retail community pharmacies. A total of 11,997,025 claims were included in the overall study of which 46% (5.5 million) were identified as commercial, 38% (4.6 million) Medicare, and 16% (1.9 million) Medicaid transactions. In Oregon, four PBMs represented more than 70% of total transactions and total revenue within the analyzed pharmacy group data. Specifically, CVS Caremark, MedImpact, OptumRx, and Humana processed about 73% of all transactions and accounted for 76% of revenue within the pharmacy study group.
Among the three different payer types, PBMs operating in each of the segments are setting different incentives for pharmacies. For example, PBM reimbursements for the Oregon Medicaid Coordinated Care Organization program were associated with the lowest margins for pharmacies. Additionally, on a per-100 prescription basis, PBM reimbursement for the majority of claims (75 out of 100) dispensed at a typical retail Oregon pharmacy were insufficient to cover the pharmacy labor and drug costs.
In one example cited in the report, the payments to pharmacies for atorvastatin 40 mg (the generic for Lipitor 40 mg used to treat high cholesterol) varied from a low of $0.30 to a high of $188.10. This difference, the report found, was result of more than 100 different prices of atorvastatin within the Medicare, Medicare and commercial markets.
The study found that he PBM incentives embedded in the current system appear to reward and encourage higher drug prices at pharmacies, resulting in higher out-of-pocket costs for patients who obtain their medications through cost sharing or without insurance coverage at all.
These varying payments also have a significant, real-world impact on pharmacies. In 2022, Bi-Mart, a regional retail chain in Oregon and surrounding states, exited the pharmacy business by citing increased costs and ongoing reimbursement pressures. It sold its pharmacy business to Walgreens.