NCPA supports bill to allow independent pharmacies to collectively negotiate PBM contracts

March 15, 2013

 

The National Community Pharmacists Association (NCPA) endorses H.R. 1188, legislation that would allow independent community pharmacies to collectively negotiate the terms and conditions of insurance contracts from pharmacy benefit managers (PBMs), according to a prepared statement.

U.S. Reps. Tom Marino (R-Pa.) and Judy Chu (D-Calif.) introduced the bill on March 14. It has been referred to the House Judiciary Committee for further action. The text for the bill has not been posted yet.

“H.R. 1188 makes the contracting process more even-handed by allowing independent community pharmacies to join together to negotiate contracting terms similar to when large publicly traded chain pharmacies like Walgreens with its 7,000 stores are able to negotiate,” said NCPA CEO B. Douglas Hoey, RPh, MBA, in a press release.

“It must be noted, however, that even Walgreens went through an extended and contentious contracting fight with a PBM that almost saw their relationship end permanently. If Walgreens, despite its clear leverage, found the contract terms so unpalatable that it would risk being excluded from a large PBM’s pharmacy network, just imagine what the owner of one or two independent community pharmacies experiences,” Hoey said. “That’s why this bill’s passage is critical.”

Rep. Marino introduced similar legislation, H.R. 1946, “Preserving our Hometown Independent Pharmacies Act of 2011,” but it was not enacted.

Richard Feinstein, director of the Bureau of Competition at the Federal Trade Commission, testified against H.R. 1946 last March, based on the fact that there are antitrust laws that already allow pharmacies to work together through joint buying programs to obtain volume discounts and allow pharmacy collaboration for delivering new products and services to consumers.

“In short, the antitrust exemption contained in H.R. 1946 would result in higher prices for prescription drugs,” Feinstein said in his statement on March 29, 2012, before the Subcommittee of the Intellectual Property, Competition, and the Internet.

NCPA believes that the new legislation, H.R. 1188, is necessary because of a new report by the Government Accountability Office (GAO) concerning pharmacy services administrative organizations (PSAOs). “GAO reports that interviewed PSAOs said ‘reimbursements rates to pharmacies have decreased over time’ and that ‘PSAO’s ability to negotiate reimbursement rates has also decreased over time.’ In addition, the GAO report found that PSAOs had ‘little success’ in modifying PBM contract terms through negotiations,” NCPA said in the release.