Ohio Pharmacists Seek Legislative Relief from Abuses by Drug Plan Middlemen

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Alexandria, Va. Jan. 24, 2014 - Ohio jobs, revenue and pharmacies are under attack by obscure, yet powerful, pharmaceutical corporate middlemen and the state's independent community pharmacists say the best hope for relief is enacting legislation during the 2014 legislative session, the National Community Pharmacists Association (NCPA) said today.

"Across the Buckeye State 549 independent community pharmacies serve patients, employ 5,435 people and contribute greatly to local and state tax revenue," said NCPA CEO B. Douglas Hoey, RPh, MBA. "The viability of these small businesses is being undermined by the practices of billion-dollar companies known as pharmacy benefit managers (PBMs), hired by most health plans to administer prescription drug benefits. For Ohioans, their communities and the future of these pharmacies, we encourage lawmakers to swiftly enact common-sense reforms to achieve a more balanced business relationship between PBMs and community pharmacies."

Hoey singled out three trends that are particularly in need of legislation and further oversight.

  • First, in order to care for Ohio patients covered by a given health plan, community pharmacists must sign take-it-or-leave-it contracts from Fortune 500 PBMs. PBMs use the authority imposed by these contracts to determine how they will reimburse pharmacies, especially for generic drugs, which account for nearly 80 percent of drugs dispensed. Thus, these small business providers are "flying blind" in terms of taking into account the operating costs of their prescription drug inventory.

  • Second, a pharmacy's acquisition cost for scores of generic drugs are skyrocketing by as much as 600%, 1,000% or more, but the PBMs continue to reimburse community pharmacies at an outdated, lower price. Pharmacists report repeatedly being faced with loses of $40, $60, $100 or more per prescription as the PBM waits several months before updating its reimbursement rates—and never retroactively. Ohio economic revenue is thus decreased for the benefit of out-of-state PBMs.

  • Third, by reimbursing pharmacies at low rates and charging health plans at much higher rates—a practice known as "spread pricing"—the PBMs generate enormous profits while increasing insurance costs for employers, government agencies and consumers. The largest PBM generates approximately $100 billion in annual revenue and its CEO received over $100 million in compensation over five years, Forbes.com calculated. Legislation increasing transparency in pharmacy benefit management could reduce the cost of PBM spread pricing and keep more health care dollars within Ohio.

A recent Fortune magazine article documented inflated costs and other problems arising from the lack of transparency into drug benefit managers.

"NCPA is proud to support the work of the Ohio Pharmacists Association and all Ohio pharmacists in this effort," Hoey added.


The National Community Pharmacists Association (NCPA®) represents the interests of America's community pharmacists, including the owners of more than 23,000 independent community pharmacies. Together they represent an $88.7 billion health care marketplace, dispense nearly 40% of all retail prescriptions, and employ more than 300,000 individuals, including over 62,000 pharmacists. To learn more, go to www.ncpanet.org, visit facebook.com/commpharmacy, or follow NCPA on Twitter @Commpharmacy.

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