Florida Pharmacies Struggling to Serve Customers, Advocacy Group Says

Sixty-one percent of community drug stores and pharmacies polled in Florida said they would turn away Medicaid customers seeking prescription refills because of inadequate reimbursement.

The survey, released June 1 by Pharmacists United for Truth and Transparency (PUTT), a non-profit advocacy group representing the interests of independent pharmacists and pharmacy owners, surveyed owners of 123 single-store or multi-store pharmacy enterprises in the Sunshine State, 98 percent of which serve Medicaid enrollees. The pharmacists responded that the state’s Medicaid managed care model effectively requires them to sell prescription drugs at a loss.

State governments sign contracts with managed-care organizations (MCOs), which provide medical services through private networks of doctors and hospitals. In exchange, the state government pays MCOs a fixed annual fee for each Medicaid patient.

Out of Network

According to PUTT, nearly two-thirds of 123 polled pharmacies said their business was unable to help customers because they are not within a customer’s Medicaid MCO network, and 43 percent said being out-of-network led to declines in customers’ health.

Ninety-three percent of polled pharmacists reported turning at least one customer away because the prescription would have sold at a loss for the business, and almost one-third of respondents said they had turned away 10 or more patients for that reason.

In the press release, PUTT Executive Director Monique Whitney states MCOs and PBMs are unlawfully ignoring Gov. Ron DeSantis’ March 10 executive order allowing customers to seek early prescription refills.

“This survey shows PBMs (Pharmacy Benefit Managers) and MCOs are not obeying the law, are reducing patient access, and are forcing neighborhood pharmacies to lose money so they can maximize their record-breaking profits during a public health crisis,” Whitney stated. “Because of that, taxpayers, consumers, and the State of Florida’s Medicaid program are being gamed on pharmacy benefits while the neighborhood pharmacies aren’t being paid enough to sustain operations or allowed to join all available networks.”

PUTT claims 61 percent of pharmacists seeking to fill customers’ “pre-fills” reported being denied by PBMs. “Pre-fills” are typically a 90-day supply of medication.

“The drug pricing model in a state-funded health plan needs to be transparent with rigorous oversight,” Whitney stated.

Collision Path Inevitable

Obamacare set neighborhood pharmacy owners and PBMs at odds, says Devon Herrick, a health care economist and policy advisor for The Heartland Institute, which co-publishes Health Care News.

“There is much tension between community pharmacies and pharmacy benefit managers,” Herrick said. “Prior to the Affordable Care Act, state Medicaid drug programs could not receive pharmaceutical rebates unless the state ‘carved out’ drug benefits from managed-care plans and administered the benefits themselves. As a result, most state Medicaid drug benefits were not managed well. After the ACA was passed, more states began to hire managed-care plans to manage both the medical benefits and drug benefits to Medicaid enrollee. This set community pharmacies and PBMs on a collision path.”

Herrick says MCOs and PBMs are designed to reduce the costs paid out to the pharmacy for dispensing prescriptions to customers.

“Under fee-for-service, or ‘carve-out,’ drug benefits, pharmacies are paid a dispensing fee and an ingredient fee,” Herrick said. “The dispensing cost in Florida is $10.24 plus the wholesale average cost for ingredients. By contrast, managed-care plans, and the PBM partners they hire, negotiate dispensing fees that are much lower on average. It varies from plan to plan, but for Medicare Part D, it’s generally between $2 and $3 per prescription plus the ingredient cost. The negotiated ingredient cost is likely a few percentage points below the average wholesale cost.”

Balancing Act Required

Government micromanaging and cronyism are also to blame for the problem affecting health care consumers, Herrick says.

“It’s a market mechanism,” Herrick said. “If the price is set too low, pharmacies drop out. If set too high, state Medicaid programs pay too much. There is also significant lobbying at the state level by community pharmacies who want states to spend more money for Medicaid drugs. When small community pharmacies descend on state capitols, they find a sympathetic ear among state legislators who are happy to turn Medicaid into a jobs program or an economic development program.”

Alternate Explanation for PBMs

Herrick says there could be several explanations for Florida PBMs’ seeming defiance of DeSantis’ March 10 executive order on prescription refills.

“As for why a PBM would decline to fill 90 days’ worth of drugs rather than 30, it could be due to multiple factors,” Herrick said. “PBMs may want to steer enrollees seeking 90-day fills to mail-order pharmacies. They may fear the drugs are getting sold on the illicit market. They may have contractual arrangements with managed-care plans who hire them that stipulate specific conditions when a 90-day prescription can be filled.”

Herrick says PBMs operate in a number of states with different rules that can change.

Jesse Hathaway (think@heartland.org) is a policy advisor for The Heartland Institute.