Alabama pharmacist worries about business future

MORGAN COUNTY, Ala. (WHNT) — A bill approved by the Alabama Senate sets a $10 drug dispensing fee for pharmacists while also seeking to regulate the companies that administer prescription drug plans for health insurance providers.

Alabama’s independent pharmacists have argued that the current reimbursement system for independent pharmacies in the state is driving them out of business.  

SB252, which takes up the dispensing fee proposal for private insurance plans, was approved by the Alabama House Insurance Committee on Wednesday, sending it to the full House for consideration.

Along with the proposed dispensing fee, the bill would include regulations on pharmacy benefit managers, PBMs, which administer prescription drug plans around the U.S. The largest PBMs in the U.S. are CVS Caremark, OptumRx, Express Scripts and Prime Therapeutics, according to the American Medical Association.

The Alabama bill calls for a $10.64 dispensing fee for pharmacists. It also directs that PBMs take 100% of the rebate money they collect from drug makers and pay it to Alabama health insurance providers.

The rebates are money paid by drug makers to PBMs to be included on lists of approved drugs in prescription drug plans administered by PBMs for insurers. Supporters of SB252 said those rebate payments will cover the proposed pharmacist dispensing fees with money still left over for health insurance providers. 

But Alabama business groups have pushed back on the bill. During the House Insurance Committee hearing Wednesday, William Newman, director of governmental affairs for the Business Council of Alabama, spoke against the proposed bill.

“While the bill aims to alleviate burdens on pharmacists in Alabama, we’re concerned its approach could place undue financial burden on Alabama’s businesses,” Newman told the committee. “Outlined in the bill there is a mechanism for pharmacists to be reimbursed for the costs of the drugs they buy, that is the average acquisition costs of the drug, plus a $10.64 dispensing fee for every prescription filled. We believe this will ultimately result in higher health care expenses for businesses across the state.”

Jason Spencer, owner of Quality Discount Drugs in Eva, said the current system is unsustainable. Spencer said independent pharmacists, often in rural areas, provide services to people in their communities that go far beyond just dispensing prescriptions. 

“I think pharmacists are one of the most easily accessible healthcare providers,” Spencer said.  “You don’t have to have an appointment to come talk to a patient about anything that’s going on. So it’s not just medications that we talk about, but we know a lot about disease states as well. We’re able to help patients manage those conditions.”

But Spencer said his ability to continue to operate is in doubt. Spencer and other Alabama pharmacists said PBMs over the past few years have lowered reimbursement payments to pharmacists to the point where payments don’t cover the cost of dispensing a given drug. More than 100 Alabama pharmacies have closed in the past four years, state figures show.   

“In the past, we used to be able to negotiate those contracts, and everybody used to be allowed to be a part of most contracts out there,” Spencer said.

Spencer is part of a contracting group of pharmacy owners.

“And that used to give us some negotiating power,” Spencer said. “Now, it’s just a ‘take it or leave it’ contract, and those contracts are becoming more and more unfavorable.”

Advocates for PBMs said the administrator’s role is to keep drug costs down. Advocates opposing the Alabama bill argue that changes to the existing system would cause prices to go up, as costs would be passed along. PBM supporters also argue that allowing those companies to profit through rebates from drug makers provides an incentive to keep an eye on costs, which benefits business owners who provide their employees’ health insurance.   

PBMs have also come under scrutiny on the state and federal level in recent years. West Virginia passed a measure similar to what Alabama is proposing in 2021. The American Pharmacy Cooperative Inc., which is pushing PBM reform, said West Virginia state figures show insurance premiums have gone down since that measure was enacted. 

The U.S. Federal Trade Commission sued the three largest PBMs last year, owned by UnitedHealth Group, Cigna and CVS Health, claiming the companies artificially raised the price of insulin drugs. The PBMs countersued against those claims.

The FTC also contends in a January report that PBMs work to funnel business to pharmacies they own and pay unaffiliated pharmacies lower rates. Jason Spencer said there is a lot at stake. 

“At least in Alabama, nothing has actually been done that fixes the problem,” Spencer said. “So there’s an urgency to the situation because there is a threat to being able to serve our patients in our communities for the rest of our careers.”