Pharmacists Still Tackling Drug Rates

Pharmacists Still Tackling Drug Rates
Attorney General Leslie Rutledge is at the center of a lawsuit. (Daniel Moody)

The Arkansas Pharmacists Association said it will be surveying its members in the coming weeks to determine if the reimbursement rates for generic medications paid by pharmacy benefit managers have improved since a new law went into effect in July.

“There’s lots of evidence that there’s still these lower reimbursements happening, but anecdotally, they are less than they were this time last year,” Scott Pace, executive vice president and CEO of the APA, told Arkansas Business last week.

The association asked its pharmacy owners in 2015 about the rates. Owners reported that during the previous year 11 percent of generic prescriptions processed by pharmacy benefit managers were money-losers because they were paid less than it cost them to buy the drugs from wholesalers.

“Sometimes those were a penny below costs and most of the time the pharmacy did nothing about those, but we’ve had reports of some claims being $200 and $300 below cost,” Pace said.

The pharmacists and the PBMs, naturally, don’t see eye-to-eye on this issue.

Health plans contract the PBMs to handle their prescription drug benefits and to help keep a lid on the costs, according to the Pharmaceutical Care Management Association of Washington, the national association that represents the PBMs. In August, it sued Arkansas Attorney General Leslie Rutledge in federal court in Little Rock to challenge the constitutionality of the law.

PBMs work for payers like insurance companies to set the prices that pharmacists are paid for prescription medications. The PCMA said PBMs are able to control costs through a “maximum allowable cost” methodology and list. The MAC list, which is created by the PBM, shows the highest amount a plan will pay for generic drugs. The PBMs use the lists to set reimbursement rates for pharmacies filling prescriptions for the generic drugs, the lawsuit said. PBMs also use MAC lists to guarantee pricing terms to their customers, the health plans and self-insured employers,” the lawsuit said.

But Pace complained that pharmacists are effectively held hostage by the PBMs because more than 90 percent of prescriptions are paid for by a third party, and they all use some form of PBMs as the claims processor.

“If pharmacies turn down a contract, then they lose access to the patients that are affiliated with those,” he said. “So it would be the equivalent of telling you as a residential customer of Entergy that you’ve got the ability to decline Entergy’s service, but in the alternative you don’t have energy.”

Pharmacists turned to the Arkansas General Assembly for help with reimbursement rates that didn’t cover wholesale drug costs.


In April, legislators passed Act 900, which made several changes to the law, including requiring a PBM to provide an administrative appeal procedure for pharmacies that claim they lost money on generic drugs.

“Generic drug pricing is completely controlled by the PBMs with the pharmacy having zero idea of how much they will be paid until they process a claim,” the APA’s news release in August said.

Act 900 went into effect on July 22. The PCMA sued three weeks later.

By then Attorney General Rutledge had sent a letter to many PBMs that said her office interpreted Act 900 to mean “‘that it is a deceptive trade practice for a PBM to reimburse a pharmacist in an amount below the acquisition cost,’ even if that pharmacist had not yet appealed a reimbursement,” the PCMA lawsuit said.

Pace told Arkansas Business that Act 900 only requires that PBMs cover the pharmacists’ costs on generic medications. “So there wasn’t any incentive to do anything but for the pharmacy to still buy the least expensive product,” he said.

The PCMA asked for an injunction to prevent the law from being enforced, but Chief U.S. District Judge Brian Miller denied the request in November. He also denied Rutledge’s request to dismiss the lawsuit.

A jury trial is set for the week of Dec. 5.