Anti-competitive behavior from CVS Health and insurance companies

[farmadiazepine]

Hello,

My pharmacy has been experiencing a lot of issues with medications we have been dispensing for years. A lot of medications are jumping into the "specialty" category like Avonex, Neupogen, etc.

Fine, I have no problem with that. Today, a baby's Neupogen was not covered anymore after 6 months of being covered, and has to go to specialty pharmacy. I want to send the script to our friend down the street who is a URAC accredited specialty pharmacy. The friend spent almost $100,000 to get the accreditation. The insurance company says that the Neupogen could not be filled at his pharmacy. They said that the only specialty pharmacy the member was allowed to go to is CVS/Caremark specialty pharmacy. There was only 1 in-network specialty pharmacy, and that was CVS/Caremark.

Is this anti-competitive? Something for me to send an e-mail to the FTC about?

What do you all think?

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[BenJammin]

Have the patient write a letter to the state attorney general. No one will listen to you due to the conflict of interest. When I become governor of Texas (in my dreams), insurance companies will not be allowed to dictate what pharmacy their patients must use.

 

[PharFromNormal]

Contracted speciality network with the health plan and PBM. Same arguement could be made on preferred/limited/restricted networks. Same argument could be made against HMOs...

 

[ChalupaBatman86]

Hello,

My pharmacy has been experiencing a lot of issues with medications we have been dispensing for years. A lot of medications are jumping into the "specialty" category like Avonex, Neupogen, etc.

Fine, I have no problem with that. Today, a baby's Neupogen was not covered anymore after 6 months of being covered, and has to go to specialty pharmacy. I want to send the script to our friend down the street who is a URAC accredited specialty pharmacy. The friend spent almost $100,000 to get the accreditation. The insurance company says that the Neupogen could not be filled at his pharmacy. They said that the only specialty pharmacy the member was allowed to go to is CVS/Caremark specialty pharmacy. There was only 1 in-network specialty pharmacy, and that was CVS/Caremark.

Is this anti-competitive? Something for me to send an e-mail to the FTC about?

What do you all think?

Most plans have a limited network of somewhere between 1 and 3 specialty pharmacies their members can use. URAC accreditation has nothing to do with it. That accreditation might be helpful in an RFP where you are competing for a contract against other specialty pharmacies but does not open up any networks for you.

 

[Aznfarmerboi]

Hello,

My pharmacy has been experiencing a lot of issues with medications we have been dispensing for years. A lot of medications are jumping into the "specialty" category like Avonex, Neupogen, etc.

Fine, I have no problem with that. Today, a baby's Neupogen was not covered anymore after 6 months of being covered, and has to go to specialty pharmacy. I want to send the script to our friend down the street who is a URAC accredited specialty pharmacy. The friend spent almost $100,000 to get the accreditation. The insurance company says that the Neupogen could not be filled at his pharmacy. They said that the only specialty pharmacy the member was allowed to go to is CVS/Caremark specialty pharmacy. There was only 1 in-network specialty pharmacy, and that was CVS/Caremark.

Is this anti-competitive? Something for me to send an e-mail to the FTC about?

What do you all think?

It depends on how you look at it.

We are not allowed to fill any specialty drugs on the retail level either. The script is automatically transferred to specialty... We can not even order the drug if we chose to.

So I guess it is not anti-competitive because it is very similar to mail order.

 

[Dred Pirate]

god I hate retail pharmacy - these types of things would tick me off. I can dispense whatever the heck I want - I walk to the shelf, if we have it, great, if we don't, I email our buyer and say get it. It works.

 

[BF7]

Azfarmboi,

What makes you think that mandatory mail order isn't anti competitive?
Further , do you also believe that an intermediary ( PBM) who also serves as a competitor should be able to 1) dictate what you can charge for a medication 2) dictate how much you charge a patient for that medication( copay) and 3) contact their competitors patients utilizing information derived directly from their competitors for the sole purpose of padding their own bottom line and gaining market share.


In WHAT OTHER INDUSTRY IS THIS EVEN ALLOWED??

single payer can't come fast enough in my opinion... CANADA does pharmacy the RIGHT WAY.

 

[BF7]

Sorry to hijack your thread farmdiazepine but here's an overview of the Canadian model:

From a Pharmacy owner in Canada:

Pharmacy Wages vary from region to region. In places like Toronto, they can dip as low at $35/hr (reasons to be explained later). In Windsor, it's 45-50/hr. If you're out East, closer to $60/hr. Prescription Profits (In Ontario) breakdown differently if you're a government prescription OR a private (or cash Rx). For these purposes, we'll treat cash and private the same.In Ontario, government prescription are administered by the Ontario Drug Benefit. This of this as the same as Medicaid. Covers the elderly, disabled, welfare. Ontario Drug benefit will pay the pharmacy as such - Drug Cost (as listed in the ODB formulary) + 8% drug mark-up + $8.62 dispensing fee (covers counseling, packaging, interaction screening, etc). Now, the price listed in the ODB formulary for brand name drug is usually 3.5-5.5% lower than what we can buy at. That's because the ODB price DOES NOT INCLUDE wholesaler (McKesson) mark-up. So, with brand name drugs, after a prompt payment discount of 2%, you end up make a mark-up of 6.5-5.5% + 8.62 fee.

example:
Brand name drug = ODB list price = $100. Our cost $104. Prompt payment discount of $2.00. Our cost $102. We get reimbursed $100 +8 markup plus 8.62 fee = 116.82. About a $14-15 profit. Depending on which buying group you're with, you can actually get the entire wholesaler mark-up discounted back to you. The same reimbursement scheme applies to generic drugs, except there's NO WHOLESALER mark-up on generic drugs. So, we make our full 8% mark-up on generics.

If the patient has private insurance (through work), it's a little different. You, the pharmacy, set the dispensing fee and drug mark-up. They pay the total WHOLSESALER price. Most private insurances will contract for the following: wholesaler drug price + 10% plus your posted dispensing fee.
In my case, my fee is $11.99. So, for that $104 brand name drug (for which I actually pay $102 after prompt payment), I get $10.4 mark-up and $11.99 dispensing fee for a total profit of $21.39. Patient's will have a co-pay which can vary from $0 to 20% of total drug cost. As you can see, private (non government prescriptions are much more profitable). Another source of revenue is generic molecules. Previously, these were usually priced at about 75% of the brand cost, but then the pharmacy would get huge rebates (up to 70% of the drug cost). This has changed over the last 5 years. In Ontario, most generics are priced at 25% of the listed brand price. So, if brand name Lipitor cost $200 for 100 tabs, the generic is priced at a max of $50. Pharmacies still get a rebate on these generics, but the total dollars have shrunk. For examplerescription for Pantoprazole 40 mg qd x 100 days (ODB). Cost = $50. Add 8% mark-up = $54. Add fee = 8.62. Total = $62.62 = 12.62 profit. But then you get a rebate a month later for your generic purchases for 50% back. So, tack on another $25 profit and total profit on generic panto is $37.62. Not bad. So, private coverage prescriptions are more profitable than government prescriptions due to 2-3% more mark-up and higher fees. Generic Rx's are generally more profitable than brand Rx's.

Another note - we can fill prescriptions weekly or bi-weekly for compliance packaging. When we do that, we get the same $8.62 (or 11.99) fee each time we fill. So, many pharmacies get into the nursing home pharmacy business or retirement home pharmacy business. The actual drug cost portion of these weekly or bi-weekly Rx's is low, but it generates a tremendous amount of fees. Since our brand name drug costs are MUCH lower here than in the US (about 1/3 the price), but our generics are sometimes more expensive and more profitable, a decent community pharmacy is filling 45 000- 50 000 prescription per year, generating 2-2.5 million in sales. Gross profits, when generic rebates are included, float around the 30-35% range. Net profit is in the 8-12% range (not including owners salary). RIght now in Ontario, since the profitability of generic molecules is still good, many pharmacies are waiving a portion of the ODB co-pay (patients pay either $2.00 or 6.11 for government prescriptions, depending on their income). This is does draw business to some pharmacies, but is short-sighted, because payers and government see that there is fat to cut and may gut our reimbursement again. I'll send information on clinical billings a little later."


CANADA >>>> USA

 

[zelman]

Sorry to hijack your thread farmdiazepine but here's an overview of the Canadian model:

From a Pharmacy owner in Canada:

Pharmacy Wages vary from region to region. In places like Toronto, they can dip as low at $35/hr (reasons to be explained later). In Windsor, it's 45-50/hr. If you're out East, closer to $60/hr. Prescription Profits (In Ontario) breakdown differently if you're a government prescription OR a private (or cash Rx). For these purposes, we'll treat cash and private the same.In Ontario, government prescription are administered by the Ontario Drug Benefit. This of this as the same as Medicaid. Covers the elderly, disabled, welfare. Ontario Drug benefit will pay the pharmacy as such - Drug Cost (as listed in the ODB formulary) + 8% drug mark-up + $8.62 dispensing fee (covers counseling, packaging, interaction screening, etc). Now, the price listed in the ODB formulary for brand name drug is usually 3.5-5.5% lower than what we can buy at. That's because the ODB price DOES NOT INCLUDE wholesaler (McKesson) mark-up. So, with brand name drugs, after a prompt payment discount of 2%, you end up make a mark-up of 6.5-5.5% + 8.62 fee.

example:
Brand name drug = ODB list price = $100. Our cost $104. Prompt payment discount of $2.00. Our cost $102. We get reimbursed $100 +8 markup plus 8.62 fee = 116.82. About a $14-15 profit. Depending on which buying group you're with, you can actually get the entire wholesaler mark-up discounted back to you. The same reimbursement scheme applies to generic drugs, except there's NO WHOLESALER mark-up on generic drugs. So, we make our full 8% mark-up on generics.

If the patient has private insurance (through work), it's a little different. You, the pharmacy, set the dispensing fee and drug mark-up. They pay the total WHOLSESALER price. Most private insurances will contract for the following: wholesaler drug price + 10% plus your posted dispensing fee.
In my case, my fee is $11.99. So, for that $104 brand name drug (for which I actually pay $102 after prompt payment), I get $10.4 mark-up and $11.99 dispensing fee for a total profit of $21.39. Patient's will have a co-pay which can vary from $0 to 20% of total drug cost. As you can see, private (non government prescriptions are much more profitable). Another source of revenue is generic molecules. Previously, these were usually priced at about 75% of the brand cost, but then the pharmacy would get huge rebates (up to 70% of the drug cost). This has changed over the last 5 years. In Ontario, most generics are priced at 25% of the listed brand price. So, if brand name Lipitor cost $200 for 100 tabs, the generic is priced at a max of $50. Pharmacies still get a rebate on these generics, but the total dollars have shrunk. For examplerescription for Pantoprazole 40 mg qd x 100 days (ODB). Cost = $50. Add 8% mark-up = $54. Add fee = 8.62. Total = $62.62 = 12.62 profit. But then you get a rebate a month later for your generic purchases for 50% back. So, tack on another $25 profit and total profit on generic panto is $37.62. Not bad. So, private coverage prescriptions are more profitable than government prescriptions due to 2-3% more mark-up and higher fees. Generic Rx's are generally more profitable than brand Rx's.

Another note - we can fill prescriptions weekly or bi-weekly for compliance packaging. When we do that, we get the same $8.62 (or 11.99) fee each time we fill. So, many pharmacies get into the nursing home pharmacy business or retirement home pharmacy business. The actual drug cost portion of these weekly or bi-weekly Rx's is low, but it generates a tremendous amount of fees. Since our brand name drug costs are MUCH lower here than in the US (about 1/3 the price), but our generics are sometimes more expensive and more profitable, a decent community pharmacy is filling 45 000- 50 000 prescription per year, generating 2-2.5 million in sales. Gross profits, when generic rebates are included, float around the 30-35% range. Net profit is in the 8-12% range (not including owners salary). RIght now in Ontario, since the profitability of generic molecules is still good, many pharmacies are waiving a portion of the ODB co-pay (patients pay either $2.00 or 6.11 for government prescriptions, depending on their income). This is does draw business to some pharmacies, but is short-sighted, because payers and government see that there is fat to cut and may gut our reimbursement again. I'll send information on clinical billings a little later."


CANADA >>>> USA

This would be great, but the supply chain origin in Canada isn't the same as here. As I've posted in other threads, the USA cannot just adopt another country's pharmaceutical business model without destroying the world's drug supply. If drug companies can't make a profit in the USA, there will be no incentive for research and development. Brand name drugs are sold outside the US to governments themselves. If Germany and Pfizer can't agree on a price for Lipitor, then nobody in Germany can buy Lipitor. Pfizer comes way down on price to get razor thin margins on high volume of sales because it's better than zero. They rely on the United States to provide them with an actual markup. PBM's can't afford to just pay the inflated costs, so they set up rebate deals. And the wholesale cost to every pharmacy in the USA is different (because the government isn't pricing them here), so they can't do things "fairly" based on that, so they pick the most optimistic pricing model they can.

 

[BF7]

This would be great, but the supply chain origin in Canada isn't the same as here. As I've posted in other threads, the USA cannot just adopt another country's pharmaceutical business model without destroying the world's drug supply. If drug companies can't make a profit in the USA, there will be no incentive for research and development. Brand name drugs are sold outside the US to governments themselves. If Germany and Pfizer can't agree on a price for Lipitor, then nobody in Germany can buy Lipitor. Pfizer comes way down on price to get razor thin margins on high volume of sales because it's better than zero. They rely on the United States to provide them with an actual markup. PBM's can't afford to just pay the inflated costs, so they set up rebate deals. And the wholesale cost to every pharmacy in the USA is different (because the government isn't pricing them here), so they can't do things "fairly" based on that, so they pick the most optimistic pricing model they can.

Destroying the worlds drug supply? So these people involved in big Pharma will simply decide to go do something else with their existence because they can no longer use the United states as a bottomless piggy bank?

The United states still has one of the most desirable markets in the world to take part in. A manufacturer isn't going to refuse to participate in our market because they no longer can create their price through the magic of fairy pixie dust...

 

[zelman]

Destroying the worlds drug supply? So these people involved in big Pharma will simply decide to go do something else with their existence because they can no longer use the United states as a bottomless piggy bank?

The United states still has one of the most desirable markets in the world to take part in. A manufacturer isn't going to refuse to participate in our market because they no longer can create their price through the magic of fairy pixie dust...

Probably. Companies do things for profit. You'd probably see Pfizer branded marijuana real quick if their pharma profit was decimated.

 

[zelman]

Destroying the worlds drug supply? So these people involved in big Pharma will simply decide to go do something else with their existence because they can no longer use the United states as a bottomless piggy bank?

The United states still has one of the most desirable markets in the world to take part in. A manufacturer isn't going to refuse to participate in our market because they no longer can create their price through the magic of fairy pixie dust...

And by "Destroying the worlds drug supply" I mean that in addition to stopping R&D, if our price goes down, other countries prices have to go up. There are many countries where that is not an option, and their access to many medications would be cut off.

 

[ExpressMaiL]

Hello,

My pharmacy has been experiencing a lot of issues with medications we have been dispensing for years. A lot of medications are jumping into the "specialty" category like Avonex, Neupogen, etc.

Fine, I have no problem with that. Today, a baby's Neupogen was not covered anymore after 6 months of being covered, and has to go to specialty pharmacy. I want to send the script to our friend down the street who is a URAC accredited specialty pharmacy. The friend spent almost $100,000 to get the accreditation. The insurance company says that the Neupogen could not be filled at his pharmacy. They said that the only specialty pharmacy the member was allowed to go to is CVS/Caremark specialty pharmacy. There was only 1 in-network specialty pharmacy, and that was CVS/Caremark.

Is this anti-competitive? Something for me to send an e-mail to the FTC about?

What do you all think?

This is very common. The processor can direct the patient to one doctor, one specialist, one specific pharmacy. Claim will be denied until processed from a specific pharmacy. That's the way it is.

 

[WVUPharm2007]

With all the money the government would save...they could just develop drugs themselves. Its not like the scientists care who they work for. They make a bunch of do-nothings billions and they do all the work. In fact, they could give the incentives to the scientists themselves for breakthroughs. Then the people actually improving science are the ones being compensated rather than the useless holders of capital.

If government can invent **** like the nuclear warhead, a freaking machine that lands on a comet and beams videos back to Earth from who knows how far away, and he greatest invention since the printing press (the internet)...why not drugs?

Why even involve corporations? They only exist to make a small amount of people money (who, again, don't actually contribute anything to the actual science other than funding.)

 

[PharFromNormal]

Why even involve corporations? They only exist to make a small amount of people money (who, again, don't actually contribute anything to the actual science other than funding.)

I can't tell if this is sarcasm or not... How are you currently funding your retirement? Do you have a 401k? Are you investing? Do you know what is included in your portfolio? Many people make money off of corporations. A small amount of people are heavily invested into specific ones which may generate a bunch of return for them but that also means that they are more at risk with certain ones.

 

[zelman]

I think it was a European organization that landed on the comet.

 

[southpharmindy]

I can't even imagine how much money some of those pharmacies in Canada are making. I'll admit I just briefly looked at that article but wow. They have to be averaging 30-40 dollars per prescription lol

Maybe I'm selfish as well but I really don't care about the rest of the world's drug supply.

 

[WVUPharm2007]

I can't tell if this is sarcasm or not... How are you currently funding your retirement? Do you have a 401k? Are you investing? Do you know what is included in your portfolio? Many people make money off of corporations. A small amount of people are heavily invested into specific ones which may generate a bunch of return for them but that also means that they are more at risk with certain ones.

Well, according to Piketty...not many people make that much money off of corporations...and less and less do as time goes. Things like healthcare and healthcare science probably should be 100% socialized. Its something the entire human race needs.

 

[PharFromNormal]

Well, according to Piketty...not many people make that much money off of corporations...and less and less do as time goes. Things like healthcare and healthcare science probably should be 100% socialized. Its something the entire human race needs.

You failed to answer any of my questions. If you are young and investing for the future you are foolish if you don't have stock anywhere in your portfolio. I guess on your rationale, things like food and housing should also be 100% socialized. Electricity, higher education... There are different views on the "needs" of the entire human race.

 

[WVUPharm2007]

You failed to answer any of my questions. If you are young and investing for the future you are foolish if you don't have stock anywhere in your portfolio. I guess on your rationale, things like food and housing should also be 100% socialized. Electricity, higher education... There are different views on the "needs" of the entire human race.

Eventually, it will be. Its inevitable. When AI and automation are doing all of the work, some sort of guaranteed basic income for citizens to cover basic necessities will pretty much be required. That or the US will devolve into some sort of dystopia until there is an American version of the French Revolution. The only jobs left will be owners of capital (which isn't actually a job) and providers of services that require a human. Artists, athletes, and hookers, I suppose. Other than that...nothing. Well, robot technicians, I guess. Unless they take care of themselves. It should be interesting to see what happens when that hits the country hard.
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I didn't answer your questions because they are stupid. I just got to the point. If you actually care...of course I am saving for retirement. Read the investment thread.

 

[PharFromNormal]

I didn't answer your questions because they are stupid. I just got to the point. If you actually care...of course I am saving for retirement. Read the investment thread.

So just to clarify you hold positions in corporations in order to make money for the future while you tell people here that only a few people make money off of them?

 

[WVUPharm2007]

So just to clarify you hold positions in corporations in order to make money for the future while you tell people here that only a few people make money off of them?

We make a little bit. We are in the top 10%. Very lucky to be where we are. Now the top 0.1%...they are the ones that are compensated well. But most people? Nah.

But that's just right now. Assuming nothing changes, that little bit our class (upper middle class) has access to now will dry up. Its inevitable.

 

[farmadiazepine]

We make a little bit. We are in the top 10%. Very lucky to be where we are. Now the top 0.1%...they are the ones that are compensated well. But most people? Nah.

But that's just right now. Assuming nothing changes, that little bit our class (upper middle class) has access to now will dry up. Its inevitable.

Couldn't say it better myself.

 

[PharFromNormal]

We make a little bit. We are in the top 10%. Very lucky to be where we are. Now the top 0.1%...they are the ones that are compensated well. But most people? Nah.

But that's just right now. Assuming nothing changes, that little bit our class (upper middle class) has access to now will dry up. Its inevitable.

Maybe I'm confusing what you are saying here? Are you referring to the heavy investors without actual jobs in the company or the corporate executives that are on the line for the performance of the company? While yes there are a small minority that lucked out because they knew someone, most people in high ranking positions have been in the industry a long ass time and have proven themselves either within a given company or in another one.

Is it a bad thing to reward those with more responsibility, more money? If that wasn't done what smart individual would want to take on more responsibility? Money talks.

 

[WVUPharm2007]

Maybe I'm confusing what you are saying here? Are you referring to the heavy investors without actual jobs in the company or the corporate executives that are on the line for the performance of the company? While yes there are a small minority that lucked out because they knew someone, most people in high ranking positions have been in the industry a long ass time and have proven themselves either within a given company or in another one.

Is it a bad thing to reward those with more responsibility, more money? If that wasn't done what smart individual would want to take on more responsibility? Money talks.

This is actually something of an emerging crisis to be completely honest. We are living in a time of a slow, century long move towards complete automation (i.e. the death of human labor) with unchecked capitalistic inequality. The problem is that those at the top are compensated much more consummate to their contribution. And we are just talking about labor. Then you have the owners of capital who do nothing, but skim much of the fruits of the company/corporation/whatever off of the top.

I look at it this way. People who are conservatives can very easily understand how a hypothetical 90% taxation rate would be crushing to the economy as it would stifle entrepreneurship. Well, those that hold capital and decide what workers are compensated are basically "taxing" their workers approximately this much by not paying them enough money from the profits that are garnered. And this is happening on a national scale. And this decreases aggregate demand and is bad for the world economy. And the more the current paradigm goes unchecked, the worse inequality will be.

This was all mentioned in a watershed economic text written last year by a dude named Thomas Piketty. He developed this equation (r>g) that more or less proved that in Western capitalist societies, left unchecked, the share of income of the investing, wealth class will continue to grow much, much faster than that of labor. And because the vast majority of people have less discretionary money available, it chokes off the economy.

Eventually, there will be a guaranteed basic living check written for every citizen regardless of their wealth or employment status. It ill be the only way the lower classes won't revolt.

They did this in Rome. They called it the dole. I have a feeling it will be making a comeback.

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TL;DR - People have to be paid more because there ain't gonna no more jobs in the future.