The Health 202: Here's why rural independent pharmacies are closing their doors

Some pharmacists and experts are in part blaming pharmacy benefit managers, which negotiate drug prices between insurers and drug companies, for opaque practices that leave these smaller pharmacies struggling to cover their costs.   

The Trump administration and lawmakers have targeted pharmacy benefit managers. When President Trump announced his blueprint to reduce drug costs in May, he decried PBMs as a “dishonest, double-dealing” middleman driving up drug prices.

But there’s one part of the PBM practice that has not attracted much attention from either the administration or Congress: the reimbursement rates for drugs.

Anthony Reznik, director of government affairs for the Independent Pharmacy Association, said independent pharmacies are often reimbursed less than what they paid for medication. He said independent pharmacies can be at a disadvantage when pharmacy benefit managers, who may also operate a retail pharmacy or own a mail-order drug facility, are the ones setting the pharmacy reimbursement rates.

He criticized PBMs for having “carte blanche in terms of what they can reimburse a pharmacy.”

The impact on rural pharmacies’ profits is tangible. The RUPRI report found that 630 rural communities saw their only pharmacy close its doors from 2003 to 2018. During that same stretch, 302 rural communities lost all but one local pharmacy.

“These communities lose access to a health-care provider that they’ve known and trusted for years — that’s the shame of it,” Reznik said. “And they didn’t lose a health-care provider because the other company provides a better product. It’s because of the anticompetitive practices.”

Michael Swanoski, a senior associate dean at the University of Minnesota College of Pharmacy, said that prescription drug revenue is critical for small pharmacies. “Most of the independent pharmacies, most of what they make comes from reimbursements from medications, whereas for large chains, it’s a very small aspect of where their revenue is coming from,” he said. “They have retail sales to keep them afloat, and prescriptions just get customers in the door so they can spend money on other things.”

Mark Merritt, president of the Pharmaceutical Care Management Association, the lobbying organization for PBMs, said that while independent pharmacies play an important role in the health-care system, the industry has rightly shifted to benefit the patient.

“Look, every small business would like to make more money; we don’t blame them for that,” he said. “But our job is to make sure patients pay less, not more, for prescription drugs.”

Merritt said competition that allows patients to find a cheaper alternative to the “one down the street that’s costing more money” is beneficial for consumers. “The key thing to focus on is what’s good for patients,” he said. “I think the health care and prescription drug business can sometimes be overcomplicated when it’s really very simple. Like any other marketplace, there are sellers and buyers. The drugstores selling drugs want to charge as much as they can … and we represent the consumers and buyers who want to pay as little as possible and want to negotiate the lowest rates possible, and that’s our jobs.”

And PBMs aren’t the only source of financial concern for rural pharmacies.

RUPRI Center Director Keith Mueller said in an interview that the report indicates a steady decrease of rural pharmacies and a sharp decline between 2007 and 2009 following the implementation of Medicare Part D. He said the shift in how pharmacies were paid under the program that covers prescription drugs for seniors caused a “market disruption.” Seniors who previously paid cash for their prescriptions were instead using insurance. While that meant beneficiaries could better afford medication, it meant pharmacies that previously set their own prices were now paid less than the out-of-pocket drug cost.

Mueller, one of the report's authors, said previous research from the RUPRI Center found Medicare payments have been a consistent financial concern for pharmacists since the program was implemented. But he said in recent years, those concerns have been surpassed by other issues, such as the revenue impact of low-cost generic drugs and contract terms with pharmacy benefit managers.

“They’re the kinds of issues that if you’re at the scale of a CVS, it’s not the dealbreaker, but it is for a local independent pharmacy,” Mueller said.

Merritt called the report an “outlier,” and noted that according to the National Community Pharmacists Association, the number of independent pharmacies is relatively steady.

The NCPA released a digest last October that estimated number of independent community pharmacists was at 22,041, down from the previous year's total of 22,160.

But Swanoski, the pharmacy expert, said the decline highlighted in the brief is still drastic for those communities where closures are occurring.

“For the people living in those communities, it’s significant,” Swanoski said. “You might think nationwide, 1,000 pharmacies [closing] — is that really a big deal? But for the people living there, it is. That’s people living in 1,000 different communities that no longer have health care in a convenient manner.”

PROGRAMING NOTE: The Health 202 will be on a hiatus starting tomorrow and through next week. We’ll see you back here on Tuesday, Sept. 4.

AHH: The Democratic Republic of Congo approved four additional experimental treatments for Ebola as it looks to contain the latest outbreak of the disease.

So far, the previous experimental vaccine that was manufactured by U.S.-based Merck has been given to more than 1,600 health workers and people who are contacts of Ebola patients. The new experimental treatments are “Remdesivir, made by Israel’s Gilead Sciences; ZMapp, an intravenous treatment made by San Diego’s Mapp Pharmaceutical; Japanese drug Favipiravir; and one referred to as Regn3450 – 3471 – 3479,” Reuters report.

 “Health authorities last week started administering the U.S.-developed mAb114 treatment to Ebola patients, the first time such a treatment had been used against an active outbreak,” per Reuters. “The health ministry said in a daily bulletin late on Tuesday that the 10 patients who received mAb114 since Aug. 11 have experienced a ‘positive evolution.’”

The outbreak is still growing. The total number of deaths is now at 59, with 75 confirmed cases since last month following six new cases and four deaths, according to Congo’s health ministry.

OOF: Scott Lloyd, the director of the Office of Refugee Resettlement, reportedly drove his pregnant college girlfriend to get an abortion and later compared the death of his unborn child to the Holocaust. 

Lloyd was in news this spring for his attempt to stop an immigrant girl living in a government shelter from terminating her pregnancy. His agency houses migrant children who cross the border alone and has also been in the headlines because it has also taken in the children separated from their parents. 

Mother Jones reported yesterday that Lloyd wrote a long essay in law school describing his anguish over being party to his then-girlfriend's abortion.  He wrote that he tried to talk her out of it, but ultimately drove her and even paid for the procedure. In the essay, given to Mother Jones by a former Lloyd classmate, Lloyd wrote, "my first child is dead, and no woman, man, Supreme Court, or government—NOBODY—has the right to tell me that she doesn’t belong here.” 

Later in the essay he described permitting abortions to Hitler's genocide. "The Jews who died in the Holocaust had a chance to laugh, play, sing, dance, learn, and love each other," he wrote. "The victims of abortion do not, simply because people have decided this is the way it should be, not through any proper discernment of their humanity. Neither type of murder is more or less tragic, but don’t fool yourself into thinking that they are not both tragedies, and they are not both murder."

OUCH: The Justice Department is set to bar two doctors in Ohio from writing prescriptions and has arrested a major seller of drugs on the dark web, our Post colleague Katie Zezima reports, part of the administration’s efforts to prosecute drug cases amid efforts to combat the ongoing opioid crisis.

 “Federal prosecutors allege that Matthew and Holly Roberts of San Antonio were two of the biggest drug dealers on the dark web, completing nearly 3,000 verified transactions on various underground marketplaces between 2011 and 2018 — including the largest number of verified fentanyl transactions on the dark web,” Katie reports. “Sessions also filed temporary restraining orders against two Ohio doctors who were found to overprescribe drugs, the first such federal action against medical professionals."

Katie added: “Authorities said Gerber received $175,000 from Insys Therapeutics, whose founder was charged last year with conspiracy to distribute fentanyl. Prosecutors said the payments to Gerber violated laws against kickbacks. Garber also allegedly treated an undercover agent, who was able to receive powerful prescription drugs including Xanax and OxyContin with just a cursory physical examination. Authorities said the moves against Michael Tricaso of Akron and Gregory J. Gerber of Sandusky will prohibit them from writing prescriptions.”

“These injunctions – a temporary restraining order - will stop immediately these doctors from prescribing—without waiting for a criminal prosecution,” Sessions said. “Today’s announcements are a warning to every trafficker, every crooked doctor or pharmacist, and every drug company, every chairman and foreign national and company that puts greed before the lives and health of the American people: this Justice Department will use civil and criminal penalties alike, and we will find you, put you in jail, or make you pay.”

— The Campaign for Sustainable Rx Pricing (CSRxP) along with more than a dozen health care groups will send a letter today to the Food and Drug Administration Commissioner Scott Gottlieb calling for specific guidance regarding competition in the biologic marketplace.

“We appreciate the Food and Drug Administration’s (FDA) recent actions regarding biosimilars – specifically the FDA’s Biosimilars Action Plan,” reads the letter, which was shared with The Health 202. “As you know, one of the most important ways the FDA can help increase marketplace competition is by finalizing its guidance, 'Considerations in Demonstrating Interchangeability With a Reference Product' regarding the process a biosimilar manufacturer must follow to obtain an interchangeable designation."

“In the small molecule market, the ability to substitute more affordable, but equally effective, generics for brand drugs has been extremely successful in reducing drug costs,” the letter continues. “However, keeping the current interchangeability guidance in draft form creates significant uncertainty in the biologics market that could discourage similar levels of substitution for the highest cost products.”

The letter calls for finalizing the guidance as a way to expand access to affordable biologic drugs, which CSRxP says accounts for “over 40 percent of prescription drug spending.”

— Sen. Ron Wyden (D-Ore.)  and Rep. Frank Pallone Jr. (D-N.J.)  sent a letter yesterday to Health and Human Services Secretary Alex Azar urging him to halt approval of waivers from states asking to add work requirements to their Medicaid programs. 

The lawmakers, who are each ranking Democrats on committees with jurisdiction over Medicaid, wrote that placing conditions on Medicaid is “ideologically driven” and conflicts with the intent of the program. 

“Most of those who can work, are working, but will fall through the cracks and lose their coverage due to harsh and inflexible implementation of ideologically-driven policies,” they wrote. 

Although a federal judge shut down Kentucky's implementation of such requirements, the Trump administration is pressing forward with approving waivers. 

— The state of Delaware has finalized its rate hikes for Obamacare exchanges for 2019, and has approved Highmark Blue Cross Blue Shield to increase rates by 3 percent, down from the nearly 6 percent increase initially requested, the Delaware News Journal’s Meredith Newman reports.

Highmark is the only insurer in the state’s ACA marketplace. “This was the first time in three years Highmark's request wasn't in the double digits. The insurer asked for a 32.5 and 33.6 percent hike in 2016 and 2017,” Meredith writes.

“Even though I’m pleased that the department was able to approve a rate which is 47 percent less than the proposed rate, I recognize that this increase places an additional burden on thousands of families,” Delaware Insurance Commissioner Trinidad Navarro said in a statement.

— The comment period on Kentucky's  waiver to add work requirements to its Medicaid program closed with more than 11,000 comments. The Trump administration reopened comments on the waiver after a federal judge halted the state from implementing the eligibility parameters until there was more thorough consideration of the repercussions. 

Redoing the comments allowed the federal government to review them and then go back to Kentucky and offer guidance on how to rework its program. 

The Hill's Peter Sullivan shared on Twitter an example of one mother's comment on the waiver:

— A federal appeals court ruled yesterday to uphold a lower court ruling that the state of Alabama cannot ban second-trimester abortions.

The 11th U.S. Circuit Court of Appeals in Atlanta ruling will block the Alabama Unborn Protection from Dismemberment Act, AL.com’s Ivana Hrynkiw reports. It ruled that Supreme Court precedent prevents the state from banning “dilation and evacuation” procedures for abortion, which Ivana reports “is referred to in Alabama law as dismemberment abortion-- and is typically performed between 15 and 18 weeks of pregnancy.”

"In our judicial system, there is only one Supreme Court, and we are not it. As one of the 'inferior Courts,' we follow its decisions,” the court ruled. “Our role is to apply the law the Supreme Court has laid down to the facts the district court found."

The ban had been struck down by a federal judge last year, but the state appealed that ruling, Ivana reports.

— A year after the deluge of Hurricane Harvey hit southwest Texas, 30 percent of people who experienced the storm say their lives are still upended, according to a new Kaiser Family Foundation/Episcopal Health Foundation survey. The survey found 31 percent of the affected residents say the hurricane negatively impacted their mental health, “including that they are having a harder time controlling their temper; feel that their mental health has declined; or are newly taking prescription drugs to address mental-health concerns,” our Post colleague Emily Wax-Thibodeaux reports.

The report found 16 percent of affected residents say they need help finding health care following the storm, while 9 percent said they needed help finding mental health care. Notably, the findings are not much changed from the first survey taken three months after the initial post-storm survey, suggesting such aid has been slow to reach those recovering from the hurricane’s aftermath.

— What do you do when you can’t afford conventional health insurance plans? Some Americans are creating their own patchwork plans, as Bloomberg News’s John Tozzi explains in this piece. Bloomberg spoke with people who are opting for special arrangements, such as figuring out coverage through religious groups and going to physicians who charge patients directly instead of billing for insurance.

“No reliable data exist on how many people are replacing insurance with arrangements like the Bergevins’, but the trend appears to be gaining momentum,” John writes. “The number of people joining so-called health-care sharing ministries — religion-based cost-sharing plans — rose 74 percent from 2014 to 2016, according to the latest Internal Revenue Service data. An alliance for the groups said that more than 1 million people now participate in such programs.”

John notes such primary-care clinics that are opting  to reject insurance are also rising and “have grown to almost 900 from just a handful in the early 2000s, according to the Direct Primary Care Coalition, a trade group for the clinics.”

— New research found a combination of two drugs shrank brain tumors in patients with melanoma, the most serious form of skin cancer. The research found 82 percent of the participants in a study of 94 people at 28 medical centers across the country were still alive after a year, the New York Times’s Denise Grady reports.

“With a median follow-up of 14 months, 57 percent of the patients were helped by the treatment: brain tumors disappeared in 26 percent and shrank in 30 percent,” Denise reports. “In another 2 percent, the tumors remained stable for at least six months.”

“Melanoma is more likely than most cancers to spread to the brain, and once it gets there, fewer than 20 percent of patients survive one year with traditional treatments,” Denise adds. “About 91,270 new cases of melanoma are expected in the United States this year, along with 9,320 deaths from the disease.”

The research looked at the combination of two checkpoint inhibitors, which “enable the patient’s own immune system to fight cancer, a treatment strategy called immunotherapy.”

Study author Dr. Hussein A. Tawbi suggested the drugs should be tested in other patients with different types of cancer that have spread to the brain.

— And here are a few more good reads: 

Air Pollution Is Shortening Your Life. Here’s How Much. (The New York Times )

Mississippi to test limits of Medicaid work requirements (The Hill )

How Federal Housing Policy Excludes Poor People From Legal Pot (Rolling Stone)

Parents worry about their teens’ smartphone habits. But what about their own? (Abby Ohlheiser)

The Trump administration can't decide whether to boost PBMs or rein them in (Stat)

Today

• The Senate Health, Education, Labor and Pensions Committee holds a hearing on “Science and Stewardship at the National Institutes of Health."

For the first time, The Fact Checker is labeling a statement by Trump as a lie: 

White House calls Democrats' attempts to delay Kavanaugh hearing 'pathetic':