Medicaid reimbursements, mail-order prescriptions, big box store competition hammers small town pharmacies, forcing closures across the state –
By Patricia Beech –
Blake’s Pharmacy in Manchester has recently joined the ranks of small Ohio pharmacies being forced into premature closure by the state’s Medicaid reimbursement policy.
Bob Blake, the founder of Blake’s Pharmacy in West Union, Peebles, and Manchester, says Medicaid isn’t paying small pharmacies enough to cover the cost of drugs used to fill customer prescriptions.
“They’ve just made it impossible to keep going when prescriptions are the main source of income for the store,” he said, adding that even big box stores face the same problem.
“It isn’t quite as severe for them because they’re supplemented by other product sales, but it still affects them even if the impact isn’t quite as bad.”
The Ohio Pharmacists Association (OPA), which honored Blake with a Lifetime Achievement Award earlier this year, has noted that its members have reported receiving “erratic generic drug reimbursements from Ohio’s Medicaid managed care organization (MCO) pharmacy benefit managers (PBMs)”.
According to the OPA, “pharmacists have reported deep, unsustainable drops in gross margins on medications dispensed to Medicaid MCO patients, and in certain time frames throughout the year, reimbursements for a majority of generic medications actually fell well below the pharmacy’s cost to acquire the drugs”.
For stores, like Blake’s, that primarily serve Medicaid customers, the result of the cuts in Medicaid reimbursements has been devastating.
Over a two-year period Ohio has lost more than 150 community pharmacies – the sharpest decline ever recorded, according to the OPA.
“It’s really a tragedy,” says Blake. “There are a lot of people in Manchester who can’t get out of town to get their medication. They’ll have to rely on the kindness of neighbors or family members to pick up their prescriptions.”
One of the main culprits in the gouging of small pharmacy reimbursements is the giant pharmaceutical company, CVS, which exists as both a pharmacy (which dispenses drugs) and a pharmacy benefits manager (which reimburses other pharmacists for dispensing drugs).
The American Prospect magazine in January 2018 reported that, “near the end of October, right around when CVS/Aetna negotiations were first disclosed, independent pharmacists began to notice significant cuts to reimbursement rates for prescription drugs on plans managed by CVS Caremark, the nation’s second-largest pharmacy benefit manager (PBM)”.
A PBM negotiates costs with drug companies on behalf of health plan providers who then pay back pharmacies when patients use their drug benefit to purchase the medications.
However, a pharmacist may not know until the sale is made what the reimbursement amount is for a particular prescription.
Doug Hoey, president of the National Community Pharmacists Association, told the Capitol Forum that “PBMs are constantly squeezing on reimbursement” and noted “one pharmacy went from earning $41.63 for selling Metronidazole—an antibiotic used to treat bacterial infections—to losing $72.27 per sale of the treatment.”
At the same time that CVS Caremark was slashing reimbursement rates, its acquisitions department was sending letters to independent pharmacists like Blake, inquiring about buying their stores.
“CVS controls the biggest part of the market in Ohio,” Blake says. “And now, they want to buy drug stores to reimburse themselves – they’re taking more than their fair share of the pie.”
Blake and other small pharmacy operators can do little but wait for help from the Ohio statehouse – which has been very slow in coming.
“The state legislature is addressing the problem, but the wheels of government move very slowly,” he says. “I think they will eventually work it out, but it takes a while to get there – unfortunately, it’ll be too late for many of us.”
Blake says CVS and managed care plans are also cutting into small pharmacy profits by “leaning on the people to get their prescriptions by mail”.
“A post office box can’t tell you how to take your medication,” he says. “When the pharmacist is removed from the equation, who does the customer go to with questions?”
At the same time big box stores are crushing the competition and the profits of small rural markets, which Blake says results in higher prices for prescriptions.
“If you go to an area where there isn’t much business competition, the larger stores will jack up the pricing – it’s not just one of them, it’s all of them. “They all have that mindset – I suppose we can blame that on progress, but sometimes I think progress isn’t always the best thing to happen.”
While all prescription sales ended Tuesday at the Manchester pharmacy, Blake and his staff are preparing for a “Close Out” sale beginning Wednesday, Aug. 1. He says the store will remain open until all the remaining merchandise is sold.
“It’s been a great ride, but sometimes it’s hard to compete with bigger stores that have a lot people working for them. It’s hard for a one-person operation to keep up,” he says, then defiantly adds, “It’s still America – so we got a shot at it anyway.”