Analysis Blows Lid Off $8.5 Billion PBM Scam, Says Community Pharmacy

NCPA CEO says new report should shock policymakers, inspire reforms

Alexandria, Va., Feb. 12, 2020 (GLOBE NEWSWIRE) -- A new report by one of the country’s top pharmacy industry analysts shows how giant corporate middlemen are using “obscure” fees to scoop up billions in additional profits at the expense of patients and their neighborhood pharmacies, said the National Community Pharmacists Association today.

“It should be shocking to state and federal lawmakers and regulators that pharmacy benefit manager corporations are using a government loophole to squeeze billions of dollars in fees from pharmacies, that those fees are driving up the cost of prescription drugs for patients, and that the sickest people in the country are subsidizing insurance premiums,” said B. Douglas Hoey, pharmacist, MBA, NCPA CEO.

The analysis, released yesterday by XIL Consulting, who advises some of the top players in the industry, concludes that pharmacy benefit managers are making enormous profits on so-called direct and indirect remuneration fees. PBMs impose the fees on pharmacies on a per-prescription basis. They’re assessed after – sometimes months after - the point of sale.

“DIR pharmacy fees overall have skyrocketed by 1,600% in the last five years, totaling $8.5B since 2013,” says the report. According to the firm, “a loophole in the program allows health plans and PBMs to pocket an excessive amount of pharmacy DIR fees rather than offset prescription costs for seniors.”

The report points out that in 2017, for example, PBMs used the fees to squeeze more than $4 billion out of pharmacies. That practice, according to a recent NCPA survey, is the main reason 58 percent of local pharmacists are not sure they can survive the next two years.

“These companies were formed to manage the cost of prescriptions,” said Hoey, “but the prescription costs have skyrocketed along with PBM profits. Once upon a time, Medicare Part D was hailed as a godsend but now the middlemen have figured out how to game the system and the results are fewer pharmacy choices and higher prescription costs.”

The report notes that under Medicare Part D, fees and discounts are supposed to be passed on to seniors. “But that isn’t happening. While seniors are bypassed for DIR pharmacy discounts, at the same time, they are struggling to afford their prescriptions,” says the report.

XIL Consulting is run by Susan Lang, a former top executive with Express Scripts, one of the largest PBMs.

“XIL Consulting has an insider’s perspective, which is why this report is so incriminating to the PBMs,” said Hoey. “The big PBMs are exploiting loopholes in the law to keep billions of dollars in fees that should be going to bring down costs for the sickest seniors. Every member of Congress and the administration should read this report. They have the power to get PBMs under control.”

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