In what might be considered a perfect storm, escalating prescription prices are also causing revenue problems for pharmacies, says Stephen Giroux, RPh, owner of seven pharmacies in western New York. “When prices go up, payers—be they health plans or employers or PBMs on behalf of their clients—want a cut,” the NCPA past president explains. “And where do they turn to cut first? The easiest target is our reimbursement.”
Giroux recalls the controversy involving the 500% price hike for EpiPen that transpired between 2009 and 2016. Mylan’s CEO Heather Bresch testified before the House Oversight and Government Reform Committee in 2016 that Mylan made about $100 profit off each EpiPen two-pack, which had a list price of $608. Giroux ran an analysis at the time and found that his gross profit from EpiPen transactions ranged from losing $5 to making up to $12.
“Think about any industry in the world making a $12 gross margin on a $608 cost item,” he marvels. “That’s a miniscule gross margin, to say nothing of the fact that our cost to dispense with rent, heat, light, and salaries is obviously far greater than that.”
Generic drugs are another area of concern for pharmacists, says Hoey, but for a different reason. As a group, their cost is in decline, but he wonders how long that will last. “Generic Lipitor, generic Zocor, lisinopril, metformin— fantastic drugs, centerpieces of therapy for many disease states—are so inexpensive. We think that generic prices will skyrocket, which we’ve seen previously,” he says.
Zero reimbursements for many generics is common, says Giroux. He recently filled five prescriptions for one patient: omeprazole, lisinopril, metformin, amlodipine, and pravastatin. The total paid for the first four prescriptions was $6.83 in copays and nothing from insurance; the fifth prescription cost the patient nothing out of pocket and insurance paid $7.48. Great for the patient, not so much for his business.
“It’s very typical of what we do every day all day long—not a good long-term scenario,” says Giroux, who adds that 20% of the prescriptions his stores fill yield less than $5 total reimbursement. “Because of some generic price spikes in recent years, we were oftentimes underwater substantially.”
DIR fees add fuel to the fi re of declining reimbursements. A recent NCPA survey reveals that an overwhelming majority of independent community pharmacists say retroactive DIR fees undermine patients’ access to prescriptions and hinder their own ability to manage their businesses. Eighty-four percent of respondents say they never know what their final reimbursement will be at the point of sale; 77% report that it could take up to a year before they had that information. “When you see dwindling reimbursements and unnecessary retroactive fees and all sorts of things that are putting pressure on the business side, it’s hard to keep the doors open and continue to provide services to our patients,” Wilson says.
Revenue Boosting Options
Wilson is exploring alternative revenue streams—including chronic care management—and efficiency improvements. “It’s tougher than ever on the financial side. We’re really trying to focus on finding ways to continue to provide a high level of care to our patients,” says Wilson.