Bogus Study Released by Prescription Drug Middlemen
Is Designed to Hide Excessive Profits at Expense of Consumer

Alexandria, Va. - May 08, 2007 The Pharmaceutical Care Management Association (PCMA) has released a dubious study designed to undermine efforts to address anticompetitive business practices by the nation’s giant pharmacy benefit managers (PBMs). H.R.971, the Community Pharmacy Fairness Act of 2007, would level the competitive playing field by allowing independent pharmacies to negotiate collectively with the PBMs. This revenue-neutral legislation, which currently has 124 congressional cosponsors, would increase accountability of these drug middlemen, the largely unregulated corporations that administer the prescription drug benefit portion of health insurance plans for employers and unions, including the Medicare Part D program.

The study paid for by the prescription middlemen lobby claims that one of the main provisions of H.R.971, which allows independent community pharmacists to join together in negotiating lower prescription drug prices, would increase health care costs. In response, National Community Pharmacists Association (NCPA) Executive Vice President and CEO Bruce Roberts, RPh, issued the following statement:

“Pharmacy benefit managers are continuing to post record profits while many independent community pharmacists are being driven out of business due to anticompetitive PBM business practices. The nation’s giant PBMs are the subject of a slew of investigations and prosecutions for deceptive business practices, but oppose state and federal efforts to reform their business practices and bring transparency to the PBM industry. The statistics cited in the self-serving, self-funded report are particularly questionable in light of the fact that PBMs keep their business operations, upon which the conclusions are based, a closely guarded secret. In fact, the giant PBMs make much of their profits by taking kickbacks from drug companies and through interest earned by delaying reimbursements owed to community pharmacies.

“The report’s figures are nothing more than an attempt by PBMs to put Congress and the public on notice that they intend to hold American taxpayers hostage if attempts are made to reform the PBMs’ anticompetitive business practices.

“All this is a result of the inordinate control PBMs have on the drug distribution system, and the inability of independent pharmacies to negotiate collectively with those PBMs. For example, the large PBMs offer consumers a 90-day supply of medications if they switch to the PBM’s own mail order vendor—a clear conflict of interest— but contracts offered to independent pharmacies generally prohibit them from offering a similar 90-day supply at retail. Moreover, the PBMs receive rebates from drug manufacturers when they switch consumers to more-expensive brand-name drugs provided through their mail order division.

“Because independents are not allowed to collectively negotiate for better contract terms that would benefit consumers, the PBMs are able to offer pharmacies “take it or leave it” contracts. In small, underserved communities that rely on their local independent pharmacy, this puts the pharmacist in a no-win situation of accepting contracts that threaten to put them out of business.

“NCPA strongly supports H.R.971, the Community Pharmacy Fairness Act of 2007. It would create a narrow exemption to current antitrust law that would allow community pharmacists to negotiate contracts with Medicare Part D plans and giant PBMs. This could limit the shrinking and shifting drug formularies that often confound patients. The bill also could reduce insurance plan red tape, and reduce the switching of patients to medications that may not be better for them therapeutically, but that earn higher brand-name drug rebates for the PBM.”

The National Community Pharmacists Association, founded in 1898, represents the nation’s community pharmacists, including the owners of more than 24,000 pharmacies. The nation’s independent pharmacies, independent pharmacy franchises, and independent chains dispense nearly half of the nation's retail prescription medicines.