Pharmacists Report Soaring Generic Drug Purchasing Prices

Alexandria, Va. Dec. 9, 2013 - Pharmacy acquisition costs for scores of generic drugs have spiked by as much as 600%, 1,000% or more in 2013, a problem that is harming patient care and pharmacists, according to a survey of more than 1,000 community pharmacists conducted by the National Community Pharmacists Association (NCPA).

"Once generic drugs become available, lower costs typically follow and community pharmacists are leading the way to maximize the savings for patients and health plans from the proper use of generics," said B. Douglas Hoey, RPh, MBA. "However, pharmacy acquisition costs for more and more generic drugs are rising in rapid, breathtaking fashion. This is having a negative impact on a number of patients, particularly Medicare beneficiaries. Meanwhile, reimbursement from pharmacy benefit managers (PBMs) is not keeping up, leaving pharmacists out in the cold and putting patient access to pharmacist care on unsustainable footing."

Patients paying more; some going without medicine

These situations often involve patients covered through Medicare and Medicaid, according to the survey. Pharmacists report patients declining their medication due to increased co-pays. The combination of higher co-pays and larger charges to drug plans are also pushing seniors into Medicare's dreaded coverage gap (or "donut hole") where they must pay far higher out-of-pocket costs.

Pharmacists put in untenable position; urge PBMs to swiftly update reimbursement rates

Seventy-seven percent of pharmacists reported 26 or more instances of a large upswing in a generic drug's acquisition price over the past six months. Nearly all (86 percent) said it took the PBM or other third-party payer between two and six months to update its reimbursement rate (but not retroactively). In addition, 84 percent of pharmacists said the acquisition price spike/lagging reimbursement trend is a "very significant" impact on their ability to remain in business to continue serving patients. In some instances, community pharmacies were faced with having to refrain from filling prescriptions that would have resulted in losses of $40, $60, $100 or more per prescription filled.

"In an era of instant communication, it is indefensible for PBMs to wait weeks or even months before updating their payment benchmarks in the wake these price spikes—without ever reimbursing pharmacies retroactively," Hoey added. "Pharmacists' appeals to PBMs to update payment rates are consistently denied or ignored. This situation is untenable for small business community pharmacies and we urge PBMs to update their reimbursements."

Pharmacists suggested in the survey requiring PBMs to update their reimbursement within a certain timeframe to reflect current market conditions.

Generic drugs most commonly named

The generic drugs most frequently cited in the survey included Benazepril (high blood pressure); Clomipramine (antidepressant); Digoxin (control heart rate); Divalproex (to treat seizures and psychiatric conditions); Doxycycline (antibiotic); Budesonide (asthma); Haloperidol (psychotic disorders); Levothyroxine (hypothyroidism); Methylphenidate (Attention Deficit Hyperactivity Disorder);Morphine (pain); Nystatin/Triamcinolone (fungal skin infections); Pravastatin (high cholesterol; heart disease); and Tizanidine (muscle relaxant). The reasons behind their increasing costs are uncertain.

Are drug middlemen profiteering?

Medicare beneficiaries enter the donut hole when the accumulated costs of both their co-pays and the charges to their drug plan reach a certain threshold. So the combination of rising costs forcing more seniors into the donut hole and PBM reimbursement of community pharmacies at lower, outdated prices raises the possibility that PBMs are enhancing their profits by billing plans at high rates and paying pharmacists at inadequate ones.

"This trend raises a troubling fiscal question for employers, government agencies and other sponsors of health plans," Hoey concluded, citing a recent Fortune magazine article documenting inflated costs and other problems arising from the lack of transparency into drug benefit managers. "Are PBM middlemen taking advantage of these price spikes by reimbursing pharmacies low, charging health plans high and pocketing the difference?"

The findings of the NCPA survey are consistent with a recent wave of news stories in regional media outlets, including Vermont Public Radio and NBC2 in Southwest Florida.