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Legislation To Allow Small Pharmacies To Collaborate On Negotiations With Health Insurers

Armen Hareyan's picture

Independent pharmacists at a House Judiciary Committee Antitrust Task Force hearing on Thursday urged lawmakers to pass legislation (HR 971)that would exempt small pharmacies from antitrust laws and allow themto collaboratively negotiate reimbursements with health insurers andpharmacy benefit managers, CQ HealthBeat reports. According to CQ HealthBeat,the bill comes in response to complaints that low reimbursement ratesand payment delays resulting from the Medicare prescription drugbenefit have forced independent pharmacies to close.

Mike James -- vice president and director of government affairs for the Association of Community Pharmacists Congressional Network,which supports the measure -- at the hearing said PBMs hold "nearmonopolistic power" and the industry "dictates, without negotiation,reimbursement rates and terms of contracts to independent pharmacies."According to James, since the Medicare drug benefit began in 2006,1,152 independent pharmacies have closed. He said pharmacists he talkedto said they closed because of low reimbursements from PBMs.

Somepharmacists claim PBMs intentionally delay payments and offer lowreimbursement to create a higher profit margin -- a claim that PBMsdeny, CQ HealthBeat reports. Robert Dozier, executivedirector of the Mississippi Independent Pharmacists Association, said,"When a PBM approaches a pharmacy, it is a 'take it or leave itcontract,'" adding, "If you don't take it, you can't serve the patientyou've been serving for 20 or 30 years."

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David Wales, deputy director of the Federal Trade Commission Bureau of Competition,said the antitrust waivers would increase costs for employers,consumers and the federal government and "dull competitive pressures"in the marketplace.

Peter Rankin, a principal at the economics and management consulting firm CRA International,testified that current antitrust laws allow pharmacies to negotiatewith PBMs "when such collaboration enhances the efficiency of care topatients" and that such antitrust waivers are ineffective and "legalizecollusive behavior to create market power."

Opponents alsocontend that the bill is unnecessary because pharmacists can reject theterms of a PBM contract if they are not satisfied with it (Carey, CQ HealthBeat,10/18). Rep. Darrell Issa (R-Calif.) said that it is more expensive andinefficient for PBMs to negotiate contracts with each independentpharmacy, but he added that an antitrust exemption is a delicate issuethat is subject to debate.

Rep. Maxine Waters (D-Calif.) saidindependent pharmacies face a problem that needs to be addressed byCongress, but she is unsure if the bill is the right way to address theproblem (Goto, CongressDaily, 10/18).

Reprinted with permission from kaisernetwork.org. Youcan view the entire Kaiser DailyHealth Policy Report, search the archives, and sign up for email deliveryat kaisernetwork.org/email. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, afree service of The Henry J. Kaiser Family Foundation.