- Joined
- Sep 25, 2009
- Messages
- 229
- Reaction score
- 69
You work for CVS? Just curious.
CVS buys Target pharmacies!
- Thread starter BMBiology
- Start date
You work for CVS? Just curious.
- Joined
- Jul 26, 2008
- Messages
- 366
- Reaction score
- 85
Absolutely zero payroll information has been made available yet. So unless they are privy to other information then your friend is incorrect.
- Joined
- Jan 18, 2014
- Messages
- 4,097
- Reaction score
- 4,061
ya - I have no idea - but they seemed pretty confident
owlegrad
Uncontrollable Sarcasm Machine
Staff member
Administrator
Volunteer Staff
Lifetime Donor
15+ Year Member
- Joined
- Mar 19, 2009
- Messages
- 25,313
- Reaction score
- 11,927
When CVS bought Ekards the pharmacist kept their seniority.
- Joined
- Apr 18, 2011
- Messages
- 220
- Reaction score
- 98
But wasn't that 10+ years ago? Hopefully that holds true for now, but it seems CVS has changed a lot since then.
- Joined
- Jun 16, 2015
- Messages
- 3
- Reaction score
- 0
That is not correct. Everyone is keeping their benefits and base pay.
- Joined
- Jun 16, 2015
- Messages
- 3
- Reaction score
- 0
My hope is that CVS will run these pharmacies like a special division..kind of like Walgreens and Duane Reade. Even if not these locations most likely will still have a different feel than a stand alone CVS. The foot traffic wouldn't change too much unless people are specifically going to the CVS inside the Target. And because they're in a Target they have many options than to just wait around for their prescriptions so it would most likely be a bit more relaxed. Tech hours may be decreased but it shouldn't be to the point of not being able to get things done, especially with the lower volumes. I believe the biggest question is whether some of the locations would be shut down after a few years. Some of these Target locations are VERY slow.
- Joined
- Feb 26, 2003
- Messages
- 8,860
- Reaction score
- 3,420
Unfortunately CVS likes to micromanage so don't expect CVS to leave you guys alone. Expect metrics and longer hours. Expect cut in tech hours. Obviously the pharmacy is not going to close for lunch. At least you guys will be getting a better computer system and Target clientele is still better. Right now it is all speculation. Just rumors. Management is going to keep things close to their chest while they tell you guys nothing will change. You should get a general idea as to what to expect within the next 6 months. Once they start to replace Target middle management then you know changes are coming and they will be fast.
- Joined
- Jun 16, 2015
- Messages
- 3
- Reaction score
- 0
The pharmacy system is actually pretty good. It's not the old PDX that you're probably thinking of. I have no idea what the CVS system is like but if it's from back when I did rotations in school in '06 then it's definitely a step down from the Target system. Did it change since then?
And it's true everything is up in the air right now, neither good nor bad. If it's anything like Walgreens though, I believe it would be manageable, especially with the location being inside another store. Target is chill compared to Walgreens but Walgreens wasn't terrible overall. I have worked there also. Obviously this depended on your particular store. Some pretty hectic days for sure but overall it was OK if you're good at dealing with people.
- Joined
- Sep 25, 2009
- Messages
- 229
- Reaction score
- 69
This ^
- Joined
- Dec 27, 2013
- Messages
- 712
- Reaction score
- 478
Nope, consultant. Now that I addressed your question will you answer mine?
- Joined
- Jul 21, 2014
- Messages
- 406
- Reaction score
- 175
Wrong on so many counts.. first of all, PBMS set the price that a pharmacy can charge for filling a medication ( IE the contracted rate). Pharmacies DO NOT set prices when a third party (PBM) is involved.
A narrow network PBM contract requires pharmacies to " pay to play" like the humana -Walmart Med D plan where Walmart pays the Pbm a fee for the pleasure of filling an Rx. Aetna, envision Rx have adopted the DIR fee model to also have pharmacies " pay tonpkay" in their preferred networks.
Additionally, having a lesser copay or ZERO COPAY in preferred networks increases the likelihood of a patient to pick up their medication and this DRIVES UP drug costs FOR AN employer/ client.
- Joined
- Jul 21, 2014
- Messages
- 406
- Reaction score
- 175
The large organizations ( particularly CVS/Caremark)are currently engaged in anti-competitive practices from data mining their competition, to restricting access to patient lives, to having copay incentives for a patient to utilize a pharmacy that they own, to syphoning off the high dollar margin specialty meds. They are taking our profession and making pharmacists Indentured servants while at the same time consolidating their competition through those practices. The anti-trust exemption of the insurance industries need to be amended immediately.
- Joined
- Jul 21, 2014
- Messages
- 406
- Reaction score
- 175
https://www.ftc.gov/news-events/pre...sons-safeway-sell-168-stores-condition-merger
So why doesn't CVS have to sell off brick and mortar to consummate this deal if grocery stores do?
So why doesn't CVS have to sell off brick and mortar to consummate this deal if grocery stores do?
- Joined
- Jul 21, 2014
- Messages
- 406
- Reaction score
- 175
http://access-rx.org/
CVS Acquires Target Pharmacies: An “Evolving Duopoly”
Jun 16, 2015 04:59 pm
Following last months acquisition of Omnicare, in a deal valued at $12.7 billion, CVS Health announced Monday that it will be acquiring Target’s pharmacy and clinic business for an estimated $1.9 billion. The 1,600 stores acquired from Target in the deal will be branded CVS Pharmacy, marking the first use of the “store within a store” model by CVS.
The deal will make CVS Health the largest retail pharmacy chain in the United States with an estimated 9,200 stores. Walgreens will now have the second largest retail pharmacy footprint with 8,200 stores.
News of this acquisition should be concerning to pharmacy owners, beneficiaries, and the Medicare Part D program as a whole.
An “Evolving Duopoly”
In their 2013 report titled Pharmacies and Drug Stores in the U.S., IBISWorld described the state of the industry as follows:
The industry is primarily an evolving duopoly, with major players Walgreens and CVS dominating the industry. This trend is expected to continue, and these two companies are the primary beneficiaries of ongoing consolidation. The top three industry players (i.e. Walgreens, CVS and Rite Aid) generate more than half of total industry revenue. As these major players grow in size, it becomes more difficult for potential entrants and independents to compete with the resources and brand recognition of these companies.
Today’s announcement represents a further evolution of this growing duopoly as CVS Health will now control a 23% share of U.S. retail pharmacy revenue (according to non-mail order pharmacy revenues in 2014).
“Lack of Scale” and an Inability to Compete
Rite Aid, which accounts for 8.3% of retail pharmacy revenues and operates 4,600 stores, has expressed their concerns about the impact this duopoly will have on their business. In their 2014 10-K filing1, Rite Aid discusses their position in the retail pharmacy market:
We face intense competition with local, regional and national companies, including other drugstore chains, independently owned drugstores, supermarkets, mass merchandisers, dollar stores and internet pharmacies. Competition from discount stores has significantly increased during the past few years. Some of our competitors have or may merge with or acquire pharmaceutical services companies, pharmacy benefit managers, mail order facilities or enter into strategic partnership alliances with wholesalers, which may further increase competition. We may not be able to effectively compete against them because our existing or potential competitors may have financial and other resources that are superior to ours. In addition, certain of our competitors entered into the pharmacy benefit management industry before us, and there is no assurance that we will successfully compete with entities with more established pharmacy benefit management businesses. Further, we may be at a competitive disadvantage because we are more highly leveraged than our competitors. The ability of our stores to achieve profitability depends on their ability to achieve a critical mass of loyal, repeat customers. We cannot assure you that we will be able to continue to effectively compete in our markets or increase our sales volume in response to further increased competition.
A retailer with 4,600 pharmacy locations expressing concern about its ability to compete in the retail pharmacy market is a red flag. However, these concerns are not isolated to Rite Aid and appear to have motivated Target.
The New York Times writes that “on a conference call with analysts, Brian Cornell, Target’s chief executive officer, said that while the CVS deal would reduce the retailer’s sales by more than $4 billion annually, it would also significantly reduce its costs, which were high because of the retailer’s lack of scale in the pharmacy business.”
In the same article, the New York Times also points out that “Target’s pharmacies earned favorable marks from consumers, performing above the average for mass merchandisers in a 2014 J. D. Power study of customer satisfaction with pharmacies. CVS, by contrast, scored below average for chain drugstores.”
After Target, Who Will Be Next?
Back in March of this year, Stefano Pessina, CEO of Walgreens Boots Alliance, spoke of Walgreens’ pharmacy-related merger and acquisition strategy and said “the next big one will probably be in the U.S. because it is such a big market. It is a fascinating market. It is similar to what we had in Europe 20 years ago because the intervention of the government changes all the rules.”
These comments, along with the pattern of market consolidation we have seen in recent months and years, have fueled numerous suggestions that Walgreens will acquire Rite Aid2 (and, to a lesser extent, Express Scripts3).
We do not seek to speculate on the merger and acquisition strategy of CVS and Walgreens. However, we can say that the acquisition of Rite Aid, its $18.3 billion of pharmacy revenue last year, and its 4,600 stores, would increase Walgreens market share to nearly 31% of 2014 retail pharmacy revenue and roughly 12,800 stores. Of even greater significance, such a move would give over 51% market share to two firms.
Implications for Part D Plans
The CVS and Target deal does not specifically impact Medicare Part D, but the general pattern of vertical (and in this case horizontal) integration certainly does. Without eliminating barriers to entry for, or providing guarantees to protect, small-business pharmacies, the economic theory supporting preferred pharmacy networks quickly erodes. As we’ll discuss, the longer CMS waits to support small business protections in Part D, the harder it will be to undue the damage.
The Economics of Preferred Networks
In a widely cited study from 2013 titled Selective Contracting in Prescription Drugs: The Benefits of Pharmacy Networks by Joanna Shepherd, the author outlines the economic theory behind preferred pharmacy networks. The paper specifically addresses “any willing pharmacy” legislation at the federal and state level, and concludes that such efforts restrict the ability of plan sponsors to negotiate discounts that “guarantee” greater volume to a narrow segment of pharmacies.
The author concludes that:
When drug plans have the ability to exclude pharmacies from their network and steer patients elsewhere, pharmacies compete aggressively for selective contracts by offering price discounts for filling prescriptions. In general, more exclusive networks produce greater competition because they promise to channel more patients to network pharmacies. As a result, more exclusive networks generate even steeper price discounts.
Let’s accept that as true and then consider analysis by the Congressional Budget Office (CBO) in their 2014 report titled Examining the Number of Competitors and the Cost of Medicare Part D. One aspect of Part D competition examined by CBO was “Interactions with Plan Size”, or how the number of beneficiaries enrolled in a plan affects how aggressively the plan will pursue lower costs.
CBO found the following:
We observe that as a plan becomes larger, it becomes less sensitive to competition (among plans that do not primarily serve low-income beneficiaries). One additional plan sponsor in an 18-firm market is associated with a bid 0.06 percent lower ($0.05 for a plan that bid $85) for a plan sponsor enrolling 5 percent of the regional beneficiary pool, all else being equal. Conversely, the bid of a plan enrolling only 0.25 percent of the regional beneficiary pool is 0.6 percent lower ($0.56 for a plan that bid $85), all else being equal.
In their conclusion, CBO goes on to estimate that “the loss of four plan sponsors, as occurred between 2007 and 2010, is estimated to have cost the government between $27 million and $68 million each year.” But what about the plan sponsors lost since 2010 (when Part D offered 1,576 plans)? This year Part D offers 1,001 stand-alone prescription drug plans, which is down from 1,875 in 2008 and the lowest number ever offered. While the prevalence of preferred pharmacy networks and the market consolidation trend have grown, the bidding environment has become less competitive.
Cost Increases: Do Beneficiaries Respond?
Let’s consider one final variable: the rate at which beneficiaries switch plans.
In the study Selective Contracting in Prescription Drugs: The Benefits of Pharmacy Networks, which we discussed above, the author examines the issue of “convenient access” via data provided to her by Express Scripts. She concludes the following:
Express Scripts’ customers that choose more exclusive network options pay less for the prescription drug costs of their covered individuals. Moreover, concerns about access to care are largely unfounded: far more individuals covered under Express Scripts’ networks have convenient access to network pharmacies than would be required under governmental standards. This result demonstrates how the intense competition among PBMs for sophisticated clients ensures that PBMs will offer the accessibility that consumers want in their pharmacy networks.
But does this really happen? For the most part, no.
In a 2013 report titled To Switch or Not to Switch: Are Medicare Beneficiaries Switching Drug Plans to Save Money? the Henry J. Kaiser Family Foundation found that 7 out of 10 Medicare beneficiaries enrolled in Part D from 2006 to 2010 did not voluntarily switch plans in any of the four enrollment periods, even though those who switched plans often lowered their out-of-pocket costs as a result. Most beneficiaries whose premiums increased $10 or more per month did not change plans.
The Big Picture
The implications of the market consolidation taking place in the U.S. retail pharmacy industry are enormous. But they are especially pronounced in Part D. Let’s consider the big picture.
CVS Acquires Target Pharmacies: An “Evolving Duopoly”
Jun 16, 2015 04:59 pm
Following last months acquisition of Omnicare, in a deal valued at $12.7 billion, CVS Health announced Monday that it will be acquiring Target’s pharmacy and clinic business for an estimated $1.9 billion. The 1,600 stores acquired from Target in the deal will be branded CVS Pharmacy, marking the first use of the “store within a store” model by CVS.
The deal will make CVS Health the largest retail pharmacy chain in the United States with an estimated 9,200 stores. Walgreens will now have the second largest retail pharmacy footprint with 8,200 stores.
News of this acquisition should be concerning to pharmacy owners, beneficiaries, and the Medicare Part D program as a whole.
An “Evolving Duopoly”
In their 2013 report titled Pharmacies and Drug Stores in the U.S., IBISWorld described the state of the industry as follows:
The industry is primarily an evolving duopoly, with major players Walgreens and CVS dominating the industry. This trend is expected to continue, and these two companies are the primary beneficiaries of ongoing consolidation. The top three industry players (i.e. Walgreens, CVS and Rite Aid) generate more than half of total industry revenue. As these major players grow in size, it becomes more difficult for potential entrants and independents to compete with the resources and brand recognition of these companies.
Today’s announcement represents a further evolution of this growing duopoly as CVS Health will now control a 23% share of U.S. retail pharmacy revenue (according to non-mail order pharmacy revenues in 2014).
“Lack of Scale” and an Inability to Compete
Rite Aid, which accounts for 8.3% of retail pharmacy revenues and operates 4,600 stores, has expressed their concerns about the impact this duopoly will have on their business. In their 2014 10-K filing1, Rite Aid discusses their position in the retail pharmacy market:
We face intense competition with local, regional and national companies, including other drugstore chains, independently owned drugstores, supermarkets, mass merchandisers, dollar stores and internet pharmacies. Competition from discount stores has significantly increased during the past few years. Some of our competitors have or may merge with or acquire pharmaceutical services companies, pharmacy benefit managers, mail order facilities or enter into strategic partnership alliances with wholesalers, which may further increase competition. We may not be able to effectively compete against them because our existing or potential competitors may have financial and other resources that are superior to ours. In addition, certain of our competitors entered into the pharmacy benefit management industry before us, and there is no assurance that we will successfully compete with entities with more established pharmacy benefit management businesses. Further, we may be at a competitive disadvantage because we are more highly leveraged than our competitors. The ability of our stores to achieve profitability depends on their ability to achieve a critical mass of loyal, repeat customers. We cannot assure you that we will be able to continue to effectively compete in our markets or increase our sales volume in response to further increased competition.
A retailer with 4,600 pharmacy locations expressing concern about its ability to compete in the retail pharmacy market is a red flag. However, these concerns are not isolated to Rite Aid and appear to have motivated Target.
The New York Times writes that “on a conference call with analysts, Brian Cornell, Target’s chief executive officer, said that while the CVS deal would reduce the retailer’s sales by more than $4 billion annually, it would also significantly reduce its costs, which were high because of the retailer’s lack of scale in the pharmacy business.”
In the same article, the New York Times also points out that “Target’s pharmacies earned favorable marks from consumers, performing above the average for mass merchandisers in a 2014 J. D. Power study of customer satisfaction with pharmacies. CVS, by contrast, scored below average for chain drugstores.”
After Target, Who Will Be Next?
Back in March of this year, Stefano Pessina, CEO of Walgreens Boots Alliance, spoke of Walgreens’ pharmacy-related merger and acquisition strategy and said “the next big one will probably be in the U.S. because it is such a big market. It is a fascinating market. It is similar to what we had in Europe 20 years ago because the intervention of the government changes all the rules.”
These comments, along with the pattern of market consolidation we have seen in recent months and years, have fueled numerous suggestions that Walgreens will acquire Rite Aid2 (and, to a lesser extent, Express Scripts3).
We do not seek to speculate on the merger and acquisition strategy of CVS and Walgreens. However, we can say that the acquisition of Rite Aid, its $18.3 billion of pharmacy revenue last year, and its 4,600 stores, would increase Walgreens market share to nearly 31% of 2014 retail pharmacy revenue and roughly 12,800 stores. Of even greater significance, such a move would give over 51% market share to two firms.
Implications for Part D Plans
The CVS and Target deal does not specifically impact Medicare Part D, but the general pattern of vertical (and in this case horizontal) integration certainly does. Without eliminating barriers to entry for, or providing guarantees to protect, small-business pharmacies, the economic theory supporting preferred pharmacy networks quickly erodes. As we’ll discuss, the longer CMS waits to support small business protections in Part D, the harder it will be to undue the damage.
The Economics of Preferred Networks
In a widely cited study from 2013 titled Selective Contracting in Prescription Drugs: The Benefits of Pharmacy Networks by Joanna Shepherd, the author outlines the economic theory behind preferred pharmacy networks. The paper specifically addresses “any willing pharmacy” legislation at the federal and state level, and concludes that such efforts restrict the ability of plan sponsors to negotiate discounts that “guarantee” greater volume to a narrow segment of pharmacies.
The author concludes that:
When drug plans have the ability to exclude pharmacies from their network and steer patients elsewhere, pharmacies compete aggressively for selective contracts by offering price discounts for filling prescriptions. In general, more exclusive networks produce greater competition because they promise to channel more patients to network pharmacies. As a result, more exclusive networks generate even steeper price discounts.
Let’s accept that as true and then consider analysis by the Congressional Budget Office (CBO) in their 2014 report titled Examining the Number of Competitors and the Cost of Medicare Part D. One aspect of Part D competition examined by CBO was “Interactions with Plan Size”, or how the number of beneficiaries enrolled in a plan affects how aggressively the plan will pursue lower costs.
CBO found the following:
We observe that as a plan becomes larger, it becomes less sensitive to competition (among plans that do not primarily serve low-income beneficiaries). One additional plan sponsor in an 18-firm market is associated with a bid 0.06 percent lower ($0.05 for a plan that bid $85) for a plan sponsor enrolling 5 percent of the regional beneficiary pool, all else being equal. Conversely, the bid of a plan enrolling only 0.25 percent of the regional beneficiary pool is 0.6 percent lower ($0.56 for a plan that bid $85), all else being equal.
In their conclusion, CBO goes on to estimate that “the loss of four plan sponsors, as occurred between 2007 and 2010, is estimated to have cost the government between $27 million and $68 million each year.” But what about the plan sponsors lost since 2010 (when Part D offered 1,576 plans)? This year Part D offers 1,001 stand-alone prescription drug plans, which is down from 1,875 in 2008 and the lowest number ever offered. While the prevalence of preferred pharmacy networks and the market consolidation trend have grown, the bidding environment has become less competitive.
Cost Increases: Do Beneficiaries Respond?
Let’s consider one final variable: the rate at which beneficiaries switch plans.
In the study Selective Contracting in Prescription Drugs: The Benefits of Pharmacy Networks, which we discussed above, the author examines the issue of “convenient access” via data provided to her by Express Scripts. She concludes the following:
Express Scripts’ customers that choose more exclusive network options pay less for the prescription drug costs of their covered individuals. Moreover, concerns about access to care are largely unfounded: far more individuals covered under Express Scripts’ networks have convenient access to network pharmacies than would be required under governmental standards. This result demonstrates how the intense competition among PBMs for sophisticated clients ensures that PBMs will offer the accessibility that consumers want in their pharmacy networks.
But does this really happen? For the most part, no.
In a 2013 report titled To Switch or Not to Switch: Are Medicare Beneficiaries Switching Drug Plans to Save Money? the Henry J. Kaiser Family Foundation found that 7 out of 10 Medicare beneficiaries enrolled in Part D from 2006 to 2010 did not voluntarily switch plans in any of the four enrollment periods, even though those who switched plans often lowered their out-of-pocket costs as a result. Most beneficiaries whose premiums increased $10 or more per month did not change plans.
The Big Picture
The implications of the market consolidation taking place in the U.S. retail pharmacy industry are enormous. But they are especially pronounced in Part D. Let’s consider the big picture.
- With CVS and Walgreens now operating nearly 17,400 U.S. pharmacies, these two firms are one acquisition away from eclipsing the number of stores operated by all independent, small business pharmacies. Small businesses are typically guaranteed 23% of federal contracts or 36% of contract revenue, but CMS has chosen not to apply these requirements to Part D.
- As more and more plans and plan sponsors disappear from Part D, those with the greatest share of beneficiaries bid less aggressively, increasing costs to the federal government.
- With so few beneficiaries responding to cost increases and changing plans, the consequences of an insufficiently aggressive bid are reduced.
- The economics of Part D require new plan sponsors interested in entering the market to bid lower than large, existing plans.
- As the market share of CVS and Walgreens grow, there are fewer and fewer pharmacy chains that can participate in new plans to create pharmacy networks with great access for beneficiaries.
- New Part D beneficiaries have fewer choices as a result of the above (not to mention the bandwagon effect enjoyed by the largest plans).
- Joined
- Sep 25, 2009
- Messages
- 229
- Reaction score
- 69
What is your question? Nothing you have said is in any way based in reality. When you say "Competition keeps pharmacies from charging outrageous prices not pbms", then I realize you truly don't understand how retail pharmacy works. The PBM's reign supreme over every retail pharmacy in America. And if you happen to own your own PBM, then you're able to squeeze out most of the competition.
What exactly is your question?
Oh I didn't know this debate was just a round about way to bash pbms. As per the thread if it wasn't for pbms a pharmacy could get away with charging anything it wants or would competition prevent that from happening? Yes narrow networks creates winners and losers but the discussion was about cost. Who can do it the cheapest. And your last point??? So higher copays are good because people can't afford it and then they don't pick up their meds...I'll leave that alone. Someone said that independent pharmacy will rise from the ashes from all this and I believe that and hope to participate if it happens before I get old.
- Joined
- Dec 27, 2013
- Messages
- 712
- Reaction score
- 478
I actually think Bubba said that... Not me. My question is what can the industry do as a whole to drive down cost of healthcare. You seem to continue to bash various techniques that many big players in our industry utilize to compete with their relative peers but offer no real alternative.
Today the challenge in almost all of healthcare is ultimately payors (and patients) can only pick two of three: Low cost, high quality, open access.
What's your solution to providing all three?
- Joined
- Dec 27, 2013
- Messages
- 712
- Reaction score
- 478
Drug costs alone yes. Actuarial healthcare costs actually show positive ROI on medication adherence. I won't waste time arguing the benefits of medication adherence. Yes I will proactively agree some waste is introduced from zero copay but the benefits on the macro level outweigh the risks for the right populations. Also lets talk about those fat Medicare performance bonuses clients can get from having their patients pick up there meds all the time. Those definitely outweigh the drug costs.
I was taking issue with your following statement: "A PBM is the entity that keeps pharmacies from charging outrageous prices for cheap medications. "
- Joined
- Jul 21, 2014
- Messages
- 406
- Reaction score
- 175
PBMs create an artificial marketplace that is causing the loss of jobs opportunities for pharmacists by limiting access to patient lives and creating reimbursement levels that are below market AQ for many independents and especially when you include a cost to dispense of roughly $11/ Rx.
Medicare "performance"--it's a coup for manufacturers and PBMs to further pad their bottom lines.
http://www.thethrivingpharmacist.com/2015/05/12/examining-medicare-part-d-transparency/
"Generic Drug Profit and Spread
The pharmacy data represented above appears to agree with the CMS data well. While the pharmacy data set size is only a small fraction of the CMS data set size, each drug is represented by more than 500 claims, with most drugs represented by more than 1000 claims. The average pharmacy profit for these 10 drugs during 2013 was just over $6.50, and this appears to be in line with anecdotal reports of prescription profit during 2013. It is interesting to note that if the estimate of pharmacy reimbursement is reasonably close to the average across the United States, the PBM is taking roughly half as much as the pharmacy makes for each prescription. Keep in mind that the PBM does not need to maintain drug inventory, and has almost no patient care expenses to cover. The average estimate of more than $3.50 per generic prescription being paid to the PBM begs the question “what value is being received for the money being paid to the PBM?”
"BRAND DRUG PROFIT AND SPREAD
Unlike the generic data, there are some obvious difficulties with the Brand Name data set. The amount of reimbursement exceeded the total adjudicated amount for one drug. This problem is likely attributed to how certain brand name drugs are priced. Crestor and Januvia, for example, cost pharmacies about the same amount per tablet regardless of the strength being dispensed. Other drugs, like Abilify, increase in cost with an increase in strength. Given the small sample size for many of the brand name drugs represented here, it comes as no surprise that Abilify does not match the CMS data well. This is likely explained by the pharmacy data representing a higher proportion of the higher strengths of Abilify (20 and 30 mg strengths) than the aggregate CMS data. Conversely, despite having only 87 and 80 claims each, Crestor and Januvia do match, likely because the cost per tablet is independent of strength. Because of this discrepancy, Abilify was omitted from average and total calculations in the table. Additionally, the pharmacy data did not include any prescriptions for Revlimid in the data period, so Revlimid was also excluded from average and total calculations.
It is important to note that with the exception of Adair, the small sample size for pharmacy claims could skew results. Based on the dispensing profile of the pharmacy, the most likely skew would be toward the dispensing of a 30 day supply. Such a bias would result in an overestimation of profit for the pharmacy (with 30 day fills generally being accompanied by a higher dispensing fee and lower discount on Average Wholesale Price (AWP). A overestimated pharmacy profit would tend to underestimate the spread (PBM profit) for the drug.
The average pharmacy profit for the 8 brand-name drugs (omitting Abilify and Revlimid) was close to $26 in 2013. By comparison, the PBM profit (spread) was estimated to be $39 per prescription (about $14 MORE than the pharmacy makes)."
Attachments
- Joined
- Jul 21, 2014
- Messages
- 406
- Reaction score
- 175
And the acquisition of 1660 Target pharmacies is a DIRECT RESULT OF DECREASING DRUG PROFIT MARGINS brought about by PBMs creating artificial markets that benefit THEIR OWN BOTTOM LINE and in this case led to the largest conglomerate of a PBM/ Dispensing Pharmacy gobbling up a significant sized retail competitor.. You simply can't see the forest for the trees
And having contributed to that digression I offer this. Target pharmacists will be fine. Cvs has ZERO incentive to go full kpi nazi. The CEOs just started a new relationship and neither one is going to rock the boat. Cvs will assume for the first few years that their buying power and leverage in the PBM game will provide plenty of improvemets to keep shareholders happy. This isn't a buy out but a marriage. And cvs doesn't want to come in and upset employees and customers that creates problems for the target CEO.
- Joined
- Apr 2, 2008
- Messages
- 4,191
- Reaction score
- 2,522
LOL... You are kidding me, right? CVS can do whatever the hell they want... those Target pharmacists are now CVS'. CVS owns them period. It's stupid to think CVS not going to rock the boat and cut til there is no meat left when Target pharmacies not making money in the first place. A big change is happening to these Target pharmacies.
- Joined
- Aug 15, 2004
- Messages
- 4,576
- Reaction score
- 339
Totally called it 3 years ago! I also called Safeway who sold to the private equity group that owns Albertson's. I'm a genius.
- Joined
- Aug 15, 2004
- Messages
- 4,576
- Reaction score
- 339
Next prediction...Walgreens will merge with a PBM likely Express Scripts/Medco.
- Joined
- Jul 21, 2014
- Messages
- 406
- Reaction score
- 175
It'll be really interesting to see how this business model works; did Target willingly also sell away 40% GP OTC meds as well? If not, the profitability of the CVS owned RX department will be SEVERELY limited if it's evaluated on it's performance alone (without the PBM component factored in and with NO OTC SALES)
- Joined
- Aug 15, 2004
- Messages
- 4,576
- Reaction score
- 339
The PBM scam has got to end soon. All that's needed is one disgruntled employee whistle blower from Caremark or Express Scripts to go Edward Snowden and it's game over. CVS will fall hard if it loses the ability to manipulate the market via Caremark.
Last edited:
- Joined
- Mar 11, 2009
- Messages
- 368
- Reaction score
- 45
"And having contributed to that digression I offer this. Target pharmacists will be fine. Cvs has ZERO incentive to go full kpi nazi. The CEOs just started a new relationship and neither one is going to rock the boat. Cvs will assume for the first few years that their buying power and leverage in the PBM game will provide plenty of improvemets to keep shareholders happy. This isn't a buy out but a marriage. And cvs doesn't want to come in and upset employees and customers that creates problems for the target CEO."
"LOL... You are kidding me, right? CVS can do whatever the hell they want... those Target pharmacists are now CVS'. CVS owns them period. It's stupid to think CVS not going to rock the boat and cut til there is no meat left when Target pharmacies not making money in the first place. A big change is happening to these Target pharmacies."
Bubba98, you have no idea how intense CVS can be. I guarantee you the middle management and up are already sharpening their machettes. It will be a blood bath at Target. The CVS guys would eat their own babies if they were being scored on it. Wait there is a metric they haven't thought of yet, ....yet.
"LOL... You are kidding me, right? CVS can do whatever the hell they want... those Target pharmacists are now CVS'. CVS owns them period. It's stupid to think CVS not going to rock the boat and cut til there is no meat left when Target pharmacies not making money in the first place. A big change is happening to these Target pharmacies."
Bubba98, you have no idea how intense CVS can be. I guarantee you the middle management and up are already sharpening their machettes. It will be a blood bath at Target. The CVS guys would eat their own babies if they were being scored on it. Wait there is a metric they haven't thought of yet, ....yet.
- Joined
- Dec 27, 2013
- Messages
- 712
- Reaction score
- 478
There actually are PBMs that have patient care costs. Medicare D requires mandatory elements that must be provided at no cost to eligible beneficiaries *cough MTM*. But that's just one example.
Again, you still avoid the question I have asked yet you continue to preach a negative agenda rather then add anything productive.
- Joined
- Aug 15, 2004
- Messages
- 4,576
- Reaction score
- 339
Most State Medicaid programs have zero co-pays. I haven't seen a single study that shows zero co-pays have led to greater health outcomes in Medicaid recipients. Using your logic this must be the healthiest group of patients out there since zero co-pays automatically mean people will pick up their meds and take them properly.
Fat Medicare performance bonuses?!?! Where did you get this from?
- Joined
- Jul 21, 2014
- Messages
- 406
- Reaction score
- 175
He's a "consultant"--If we had questions on drug-drug interactions and clinical outcomes his input would be worthwhile. He's outside of his depth on this issue.
- Joined
- Dec 27, 2013
- Messages
- 712
- Reaction score
- 478
If you read my comments I said SOME populations. Never said Medicaid. And I also never said anything about patients consuming their medications.
Health plan sponsors are the ones benefitting here. PBMs and community pharmacy are all downstream from yes fat Medicare bonuses. Hitting (or missing) a 5% bonus for large Medicare plans have big enough impact for Wall Street to notice. Take a look at stock activity for the big Medicare players during the times the CMS call letters are released. Change in rates or bonus calculations by CMS has impact.
In turn those Medicare sponsors pass on risk to the PBMs and for those of you that actually see pharmacy reimbursement contracts you are probably starting to see performance bonuses intertwined into script reimbursement through multiple methods including the DIR which has been mentioned in this thread a few times.
But then again what do I know, I just consult on managed care contracting.
- Joined
- Aug 15, 2004
- Messages
- 4,576
- Reaction score
- 339
I thought consultant was code for unemployed.
- Joined
- Dec 27, 2013
- Messages
- 712
- Reaction score
- 478
Maybe I can clarify - I am a consultant that happens to also be a pharmacist. I am not a "consultant pharmacist." Big difference in what I do.
- Joined
- Aug 15, 2004
- Messages
- 4,576
- Reaction score
- 339
This fat Medicare bonus you speak of is nothing more than another way for the PBMs to pad their bottom-line. PBMs and drug manufacturers are the only entities benefiting from the current arrangement. Pharmacies lose and plan sponsors lose.
- Joined
- Dec 27, 2013
- Messages
- 712
- Reaction score
- 478
You do know there is a difference between a Medicare plan sponsor and a PBM, right? Yes some coxist under the same parent company a la UHC's AARP Medicare plan and their Optum PBM but the money flows from the government to the plan sponsor (UHC) not to Optum.
You are showing you really don't understand how the Medicare performance bonuses work. Phrma rebates and formulary management which I think you are trying to refer to have little bearing on quality incentives.
- Joined
- Feb 26, 2003
- Messages
- 8,860
- Reaction score
- 3,420
Tbe problem is that Target pharmacy is losing money! So CVS is not going to leave them alone. If the pharmacy doesn't make money then CVS will close it down. It doesn't cost them that much money to close down a pharmacy inside of a Target. They just have to move the inventory to another pharmacy and turn off the light.
- Joined
- Feb 26, 2003
- Messages
- 8,860
- Reaction score
- 3,420
CVS is teaming up with Target Express. Coming to an urban near you. CVS will manage the pharmacy while Target will manage the rest of the store.
https://corporate.target.com/article/2014/07/video-targetexpress-store-tour
https://corporate.target.com/article/2014/07/video-targetexpress-store-tour
lol..so true. I hate when these guys throw words like "consultant" around like it's some higher echelon of pharmacy practice.
- Joined
- Nov 27, 2009
- Messages
- 3,723
- Reaction score
- 3,499
I can't find the literature, but I recall reading one study that actually compared outcomes of groups who were randomized to different copayments. I believe the result was that the only disease state where zero-copays did better was hypertension. Does anyone else remember this?
- Joined
- Jun 30, 2013
- Messages
- 11
- Reaction score
- 1
Are you SERIOUS with your interpretation of this?
I'm a student, but I definitely understand what is going on here. You're a ***** if you're really a pharmacist....
The author is linking the publicly available CMS data (claim count, total claim cost, # of unique members, # of distinct doctors) with an INDEPENDENT PHARMACY's data to extrapolate what the author assumes is the spread and pharmacy profit.
For the same drugs and time period reported by Medicare, prescription claims for Part D plans for a midsize independent pharmacy were examined, and the Pharmacy Reimbursement (also known as the adjudicated amount) and cost basis of the drug product were extracted. From these values, the following were calculated:
- Cost/Claim minus Pharmacy Reimbursement = PBM Spread
- Pharmacy Reimbursement minus cost basis = Pharmacy profit
The reason Revlimid is EXCLUDED IS BECAUSE IT'S A LIMITED DISTRIBUTION DRUG. Google that - you'll discover the manufacturer only awards pharmacy networks to specialty pharmacies that are proven to drive adherence and patient support programs.
Did you flunk journal club at school? This is ridiculous you go on a rant but can't understand what's going on.
What is your level of reading comprehension?
Last edited:
- Joined
- Aug 15, 2004
- Messages
- 4,576
- Reaction score
- 339
You do know there is a difference between Medicare Parts A, B, C and D? I'm solely referring to Medicare Part D. The drug benefit or Medicare Part D is separate and distinct from A, the hospital and B, the outpatient benefit. Part D is 100% managed by PBMs. The Part D performance bonuses are determined by the collective performance of individual pharmacies. There is nothing in the regulations that stipulate the PBM has to share the bonus with the participating pharmacies. In fact we are being told we either positively contribute to the PBMs quality measures or we could be dropped.
- Joined
- Jun 30, 2013
- Messages
- 11
- Reaction score
- 1
[QUOTE="Part D is 100% managed by PBMs. [/QUOTE]
False. Some health plans/insurance companies do all this in-house. Some may contract with a PBM for just claims processing.
False. Some health plans/insurance companies do all this in-house. Some may contract with a PBM for just claims processing.
