Walmart Wrestles With Reality of Preferred Networks

BF7

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http://access-rx.org/2015/09/02/walmart-wrestles-with-preferred-networks/

"As Reuters recently put it, “the world’s largest retailer has a drug problem.”

Last week, Adam Fein posted a great analysis of Walmart’s problem, which has seen their pharmacy profit margins shrink. Fein diagnoses the causes as follows:

Walmart didn’t provide many details about what caused the margin reduction, but I believe two factors played a key role: (1) lower margins from newly insured consumers (compared with cash-pay consumers), and (2) Walmart’s aggressive participation in preferred networks.

Fein expanded on these points in a Washington Post article. On the topic of preferred pharmacy networks, Fein said that “those extra store visits may not be as profitable as hoped” for Walmart.

To provide some context for Walmart’s problem, as well as some distinctions between how preferred pharmacy networks work in theory versus in reality, let’s take a look at Walmart’s own arguments in favor of them."


On the other side of this issue is the fact that PBMs are also interested in maximizing profits. They accomplish this by minimizing the reimbursements they offer to pharmacies and increasing their gross profit margin, or spread, a practice detailed in a Fortune Magazine article we discussed in a previous post. In the article, author Katherine Eban explains:

"The PBMs’ biggest profits no longer lie in maximizing rebates on brand-name drugs or shifting patients to higher-cost medication. Instead, they come from maximizing spreads on generics.

PBMs do this in a variety of ways, according to experts. Generic prices are typically set through lists of maximum allowable cost (MAC), which the PBMs establish. The PBMs may use multiple MAC lists to maximize spread, giving one set of prices to pharmacies and another to clients."


With PBMs granted almost universal oversight regarding how preferred pharmacy networks are constructed in Medicare Part D, preferred networks are yet another tool at the PBMs disposal for maximizing their profits
 

awval999

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Walmart can take a loss (or more than likely a smaller net profit) on their pharmacy sales to drive customers in the front door. THAT is why they participate in those lower reimbursement plans. It all goes in the same piggy bank. Whether its pharmacy, general merchandise, grocery, or gas.
 

Digsbe

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And the ones screwed over on everything is the patients. Higher profits won't equate with lower premiums. Patients get screwed, pharmacies get screwed, insurance PBMs win. Hopefully more states enact pricing legislation and transparency for insurance companies. One major problem with US medical care is a for profit insurance model being the payer.
 
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BMBiology

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And the ones screwed over on everything is the patients. Higher profits won't equate with lower premiums. Patients get screwed, pharmacies get screwed, insurance PBMs win. Hopefully more states enact pricing legislation and transparency for insurance companies. One major problem with US medical care is a for profit insurance model being the payer.
I don't see how the patient is getting screwed over. The Lipitor that Walmart dispenses is the same Lipitor Walgreens dispenses. Walmart just makes less money while Express Scripts makes more money. If anything, the patient may pay less for his insurance, assuming the PBMs pass on part of the saving to the patients' employer by keeping cost down.

Of course the independents hate the PBMs because they are not paying them less and less. That is just business. It is a zero sum game. If someone makes more money then somebody else is making less. This is how it works, not just in pharmacy but everywhere else.

I hate this debate: independents vs PBMs. If you already know how the game is being played and you still get into this business then it is your fault.
 
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BMBiology

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Oh and just because I don't always support our independent pharmacies does not I don't support our profession. I am just telling you how business is being conducted. The big guy always screw over the little guy.

At the end of the day, it is not about the patient or our profession. It is about making money...a lot of money. Greed is not exclusive to just the PBMs. Remember New England Compounding Center?
 
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Why don't you just do everyone a service and refrain from posting in your cowardly, anti-American fashion regarding the BUSINESS of my profession.

You've made it plainly obvious that you support anti competitive duopolies and have no regard for pharmacists being treated solely as fireable employees in increasingly harsh work environments instead of independent business owners and health care professionals.

With cohorts like you, who needs enemies?
 
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Walmart can take a loss (or more than likely a smaller net profit) on their pharmacy sales to drive customers in the front door. THAT is why they participate in those lower reimbursement plans. It all goes in the same piggy bank. Whether its pharmacy, general merchandise, grocery, or gas.
You obviously didn't read the article nor have an understanding why this made news.


I'll summarize it for you:
Walmarts " pie" just got smaller, stock holders aren't happy and PBMs are to blame.

So what's that mean for Walmart pharmacists? Poorer working conditions and less auxiliary help.... FOR NOW.

If the trend continues its going to mean lesser salaries.
 
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BMBiology

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Why don't you just do everyone a service and refrain from posting in your cowardly, anti-American fashion regarding the BUSINESS of my profession.

You've made it plainly obvious that you support anti competitive duopolies and have no regard for pharmacists being treated solely as fireable employees in increasingly harsh work environments instead of independent business owners and health care professionals.

With cohorts like you, who needs enemies?
If it is so obvious as you claim then why haven't the court ruled in your favor?
 
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If it is so obvious as you claim then why haven't the court ruled in your favor?
Google the McCarran-Ferguson Act. Plus these PBMs ( your employer) have been conducting their exploitation in the shadows with near ZERO oversight.


But change is a comin' as attention is finally being given by Congress regarding these abusive & anti-competitive practices.


Rep. Collins calls for PBM abuse hearings...
http://access-rx.org/2015/09/14/rep-collins-calls-for-pbm-abuse-hearing/
 
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BMBiology

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Google the McCarran-Ferguson Act. Plus these PBMs ( your employer) have been conducting their exploitation in the shadows with near ZERO oversight.


But change is a comin' as attention is finally being given by Congress regarding these abusive & anti-competitive practices.


Rep. Collins calls for PBM abuse hearings...
http://access-rx.org/2015/09/14/rep-collins-calls-for-pbm-abuse-hearing/
So what if some rep called a hearing? This is nothing new. I have been hearing the same crap since I was a student.

So again, why haven't the courts ruled in your favor? I never like the PBMs and how they do business. But unlike you, I understand the difference between legal vs illegal.

Tell me something. Did you file a complaint to the government when you were working for a PBM (before they gave the ax)? Or did you just put head down and collect your biweekly paycheck?
 
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Guess I am anti-american as well, being with BMB isn't bad company though.
If you're for anti-competitive duopolies exerting pressure and creating artificial markets all with the intent of fattening their bottom line while prostituting the profession of pharmacy then yeah, you're anti- free markets /anti-American.
 
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So what if some rep called a hearing? This is nothing new. I have been hearing the same crap since I was a student.

So again, why haven't the courts ruled in your favor? I never like the PBMs and how they do business. But unlike you, I understand the difference between legal vs illegal.

Tell me something. Did you file a complaint to the government when you were working for a PBM (before they gave the ax)? Or did you just put head down and collect your biweekly paycheck?

Here you go. Just a few cases moving forward

http://www.aprx.org/templates/aprx/Assets/cvs-lawsuit-news-release---2-12-13.pdf

http://drugtopics.modernmedicine.com/drug-topics/news/independent-pharmacies-sue-pbm-catamaran-alleging-illegal-conduct?page=full


http://drugtopics.modernmedicine.com/drug-topics/news/kmart-suing-catamaran-shortchanging-its-pharmacies?page=full
 
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BF7

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Seriously with this?

Why do you feel that repeatedly supporting anti-competitive duopolies that create artificial marketplaces to the detriment of small business is anything but Anti-American? Go on....
 

Corpseman

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Why do you feel that repeatedly supporting anti-competitive duopolies that create artificial marketplaces to the detriment of small business is anything but Anti-American? Go on....
Where is this duopoly?

Because restricting companies from making the most money they can by being business savvy is sooo American.
 

MountainPharmD

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Walmart can take a loss (or more than likely a smaller net profit) on their pharmacy sales to drive customers in the front door. THAT is why they participate in those lower reimbursement plans. It all goes in the same piggy bank. Whether its pharmacy, general merchandise, grocery, or gas.
As evidenced by comments at their shareholder meeting Wal-Mart expects to make a profit on prescription drugs. They are suffering the same problem the rest of us are. A smaller net profit to be in a preferred network is one thing. Breaking even or more and more common, losing money to be in a preferred network, is a whole different thing.
 
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BMBiology

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I don't know why people go into this business and then b*tch about it. Where in the world are small businesses treated "fairly" nowadays? Do you see a bookstore on every corner? How about mom and pop's coffee shops?

You are not entitled to my support because you decided to go on your own. You know the risk. You know how the game is played so deal with it.
 
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BF7

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Where is this duopoly?

Because restricting companies from making the most money they can by being business savvy is sooo American.

http://dcantitrustlaw.com/assets/content/documents/testimony/PA Testimony_David Balto-FINAL.pdf


http://www.latimes.com/business/la-fi-lazarus-20150213-column.html

"No other country has pharmacy benefit managers, and for good reason," said David Balto, a Washington antitrust lawyer and former policy director for the Federal Trade Commission. "They add complexity and obscurity to a highly concentrated market, which is a recipe for higher prices for consumers."
 
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http://us8.campaign-archive2.com/?u=1af93aca3f4b9280f82ffef0b&id=8d8a9bfc89&e=9706de3178

Health Insurance Merger Frenzy: Why DOJ Must Just Say ‘No’
Posted August 18, 2015 by AccessRx America

By: David A. Balto and James Kovacs — Law Offices of David Balto

A vital national goal is controlling health care costs and improving the quality of health care. A simple but crucial principle of our economic system is that competition matters. Where there are more competitors, transparency and choice, consumers prosper through greater competition, lower prices, higher quality and more innovation. Where competition is less than robust, consumers suffer.

In health insurance, there is an unmistakable record, well-documented in years of congressional debate, economic studies and government enforcement actions — health insurance markets are highly concentrated and there is often a lack of transparency and choice. And, research has shown that when competing health insurers merge, consumers suffer through higher premiums.

That is why two current deals — the mergers of Aetna Inc. and Humana Inc., and Anthem Inc. and Cigna Corp., reducing the total number of national health insurers from five to three — must be blocked by the U.S. Department of Justice.1 If these mergers are consummated, employers, unions and health care buying groups will have less choice, and consumers will have fewer options and face higher premiums. Moreover, health care providers — the heart of the health care delivery system — will be faced with reduced reimbursement potentially leading to a reduction in services rendered. As important, the remaining three insurance firms will dictate the terms of innovation vital to correcting the flaws in the health care system and moving to a less costly higher performance health care system. While the DOJ has stated that it will investigate the deals collectively,2 the only real answer is to block both these mergers affecting nearly 100 million beneficiaries and the health care providers that serve them.

The Mergers Will Further Consolidate Already Highly Concentrated Health Insurance Markets
Concentration is the core to competitive analysis. You do not need a Ph.D. in economics to understand that the greater the number of choices in a transparent market, the more consumer sovereignty will result in an optimal market outcome — low prices, high quality and innovation.

By any measure, health insurance markets in the United States are highly concentrated. According to the American Medical Association, using the Horizontal Merger Guidelines’ Herfindahl-Hirschman Index, more commonly known as HHI, 72 percent of health care markets are “highly concentrated” with an HHI above 2,500.3 Mergers within such highly concentrated markets are presumptively illegal and “raise significant antitrust concerns,” including higher prices and a lessening of services.4 The mergers between these four insurance giants would create overlaps in a large number of geographic markets.

These mergers will clearly worsen a competitively unhealthy situation. Analysis by the American Hospital Association demonstrates that the Anthem and Cigna merger alone will reduce competition in 817 metropolitan statistical areas.5 In fact, post-Anthem/Cigna transaction, 600 markets will have significant HHI increases in markets already exceeding the HHI threshold of 2,500.6 Additionally, a combined Aetna and Humana would mean that 180 additional U.S. counties would have at least 75 percent of customers for Medicare Advantage plans in the hands of only one insurer.7 With such highly concentrated markets, there is a heightened presumption that the parties will use their newfound market power to impose competitive advantages.

Concentration is not the sole issue in competitive analysis. The merging parties may suggest that concentration is irrelevant because rival insurers can prevent any competitive harm by entering into markets. They are wrong. Years of DOJ enforcement actions have shown that entry barriers into health insurer markets are substantial.8 Health insurers have tremendous resources, yet the examples of successful entry into metropolitan areas is modest at best. That is why, a former acting assistant attorney general cautioned these arguments should be viewed “with skepticism and will almost never justify an otherwise anti-competitive merger.”9

Substantial Concentration Harms Payors and Consumers
The substantial concentration in health insurance markets has been a poor prescription for competition. Health insurance markets have been characterized by rising premiums and reduced choice and quality, while profits have continued to rise. Indeed, rapidly increasing premiums was one of the reasons Congress imposed an effective cap on insurance profits through medical loss ratio (MLR) regulation.10 The MLR regulation ensures that a large group insurer must spend at least 85 percent and a small group or individual insurer 80 percent of net premiums on medical services and quality improvements. However, the MLR does not act as a “price cap” as insurers still have the ability to make up “lost” profits by increasing premiums on consumers.11

Economic studies demonstrate the close and essential relationship between concentration and harm to consumers. For example, one study found direct evidence “linking private insurance premiums to the market power of insurers.”38 Another study of health insurance premiums on 34 federally facilitated marketplaces found that adding one additional insurer would lower premiums by 5.4 percent, while adding every available insurer would lower rates by 11.1 percent.12

Eliminating competition through these mergers means that consumers will pay more.

Divestitures Cannot Adequately Remedy the Competitive Problems
Often, the antitrust enforcement agencies have remedied anti-competitive mergers though cut and paste divestitures, requiring spinoffs of assets where there are competitive overlaps. Yet, increasingly, economic studies demonstrate limited divestitures are inadequate and the right course is simply to block the merger. An economic survey by Northeastern University professor John Kwoka demonstrates how divestitures often fail to fully restore competition.13 That is a lesson the antitrust enforcers are beginning to learn. Recently, the Federal Trade Commission and the DOJ rejected substantial proposed divestitures in blocking the Comcast-Time Warner Cable14 and Sysco-US Foods mergers.39 They should do the same here.

In the past, the DOJ has relied exclusively on divestitures in health insurance merger matters. Of course, these deals are vastly more substantial than these earlier deals and the competitive overlaps are considerable. In the 2012 Humana/Arcadian transaction, for example, the DOJ noted problematic overlaps for the parties’ Medicare Advantage businesses, requiring divestitures in 45 different counties throughout the United States.15Also in 2012, the DOJ required divestitures of Medicaid managed care plans in Northern Virginia in Wellpoint’s acquisition of Amerigroup.16

However, in each of those cases, the merger involved a large insurance plan combining with a relatively small, niche plan. In contrast, the mergers of Aetna and Humana and Anthem and Cigna involve the combination of some of the largest health insurers in the country affecting tens of millions of beneficiaries in highly concentrated markets throughout the United States.17 A handful of targeted divestitures are unlikely to remedy the megacompetitive problems raised by these mergers.

Moreover, there is readily available evidence that narrowly targeted divestitures within insurance markets do not alleviate a transaction’s overall competitive impact. In 1999, Aetna merged with Prudential, with the DOJ requiring Aetna to divest its health maintenance organization business in Texas.18 Using the aftermath of that merger to estimate the impact of market concentration on premiums, the authors projected that the increase in market concentration over the period 1998-2006 “raised premiums by roughly seven percent from their 1998 baseline.”19 The study’s findings were made more impactful in that the evidence was collected from 139 separate geographic markets.20 A more recent study, relying on data from the 2008 consummated merger involvingUnitedHealth and Sierra Health Services in which the DOJ required divestitures of Medicare Advantage beneficiaries in Las Vegas,21 found that post-merger commercial premiums in Nevada increased by 13.7 percent.22 Taken together, these studies demonstrate that, regardless of utilizing the remedy of divesting certain assets, health insurance consolidation allows large, dominant insurers to drive up the cost of premiums.

The simple lesson may be that the only sensible course is to block the transactions. That was the course taken by the Pennsylvania commissioner of insurance in 2010 when he blocked the merger of Pittsburgh-based Highmark and Philadelphia-based Independence Blue Cross.23 Because of that action, there is the potential for rivalry between the two firms.

Unlikely Efficiencies
As is typical in all merger matters, the parties will rely on efficiencies to attempt to demonstrate pro-competitive benefits of the mergers. But, they face an incredible burden in invoking efficiencies as a defense to these insurance mergers. Under DOJ/FTC merger guidelines, efficiencies must be merger-specific, substantiated and cognizable.24 The parties may make claims of improved service, but, as the Ninth Circuit recently instructed, “better service to patients” is a laudable goal “but the Clayton Act does not excuse mergers that lessen competition or create monopolies simply because the merged entity can improve its operations.”25

Aetna has already noted significant, $1.25 billion, “synergy opportunit[ies]” that will improve “operating efficiency” between Aetna and Humana.26 The firms claim a need to increase scale to lower reimbursement rates to health care providers, thus ensuring cost savings for the entire health care system and for consumers in the form of lower premiums.27 The parties do not explain whether a merger is the only or best means to achieve those efficiencies, nor do they explain how these savings will be passed along to consumers.

There are substantial reasons to doubt those types of claims. While a strong market presence may enable health insurance companies to negotiate lower provider reimbursement, research demonstrates those savings are not passed along to consumers. As some academics have observed, “when insurers merge, there’s almost always an increase in premiums.”28 The only way to assure lower insurance premiums is through competition.29

Creating More Powerful Insurers Will Not Benefit Consumers
Along with increasing prices for consumers in the form of higher premiums, narrowing the market to just three dominant health insurers would also lead to an increase in monopsony power, or the power to reduce reimbursement for health care providers. This has been a concern in past DOJ health insurance mergers and certainly was a concern that animated the DOJ and Federal Communications Commission challenges to the Comcast/Time Warner Cable merger.30 Merging to create a stronger buyer is only beneficial to the extent it leads to lower prices for consumers.

Rather than leading to lower premiums, the mergers and any attendant monopsony power will lead to reduced “availability and affordability of health insurance for millions of consumers.”31 As the American Association of Family Practitioners cautions, this power will lead to more restricted networks — that trend “would only be exacerbated if a single insurer held greater influence over any potential market, state, or region — potentially separating patients from their physicians and community hospitals.”32Additionally, there are significant and increasing shortages of primary physicians and rural hospitals,33 and giving insurers monopsony power will only exacerbate those trends.

The parties may try to dress up as David claiming the mergers are necessary to bargain with hospital Goliaths. The DOJ will clearly see through that masquerade. The health insurers are already very powerful and large and have substantial bargaining power against providers. The canard that hospitals have substantial bargaining power is belied by the facts — hospital costs are not increasing substantially.34

Moreover, the insurers would acquire monopsony power against all health care providers, not just hospitals, and reduced reimbursement would clearly harm numerous provider markets leading to greater shortages of health care providers, such as family practitioners and rural hospitals, and less service for patients.

Finally, permitting a merger to enable an insurer to secure greater bargaining power is at best a Faustian bargain — since it would also acquire monopoly power, it would have no need to pass on any decreased reimbursement in lower premiums to consumers.

The DOJ recognizes that simple truth. In the DOJ’s complaint in UnitedHealth’s 2005 acquisition of PacifiCare, the agency noted that the parties’ increased buying power would allow it to lower rates to physicians. “Such lower rates would likely lead to a reduction in the quantity or degradation in the quality of physicians services.”35 The 2012 Aetna/Prudential study made a similar finding noting that post-merger, “insurers were able to exercise market power simultaneously in input and outputs markets.”36 Mergers between Aetna and Humana and Anthem and Cigna would further increase their ability to lower provider reimbursement rates. As previously noted, this monopsony power does not translate into lower premiums, but likely would lower physician reimbursement and could deteriorate health care quality.

Conclusion
These mergers raise profound economic and public health concerns. Strong antitrust enforcement is vital to making these markets work.

As a former Antitrust Division head has explained:

The success of health care reform will depend as much upon healthy competitive markets as it will upon regulatory change. If health care reform is to produce more efficient systems, bring health care costs under control and provide higher-quality health care delivery, then we must vigorously combat anti-competitive mergers and conduct that harm consumers with responsible antitrust enforcement.37

The mergers between Aetna and Humana and Anthem and Cigna will not serve to lower costs or improve care. Instead, they will increase health insurance concentration in already concentrated markets leading to higher premiums, decreased quality of health care services, and less innovation. These mergers should be blocked.
 
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BF7

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Where is this duopoly?

Because restricting companies from making the most money they can by being business savvy is sooo American.

http://access-rx.org/2015/06/16/cvs-acquires-target-pharmacy-business-the-makings-of-a-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)."
 
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I don't know why people go into this business and then b*tch about it. Where in the world are small businesses treated "fairly" nowadays? Do you see a bookstore on every corner? How about mom and pop's coffee shops?

You are not entitled to my support because you decided to go on your own. You know the risk. You know how the game is played so deal with it.

You dolt. Bookstores, coffee shops etc. don't:

1)have their PRICES set by their competitor
2) Nor do they have their customer base limited by their competition through out-of -pocket PRICE INCENTIVES
3) or their potential customer pool limited by their competitors which outright forbids customers from shopping at their bookstores or coffee shops

Each one of those practices would violate FREE trade laws in America.



I get the distinct impression that you're likely a child of some political refugees from the 1970's and that's why this concept of FREE MARKETS is so FOREIGN to you.
 

BMBiology

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If what they are doing is so illegal then why haven't you guys won a court case? Yeah anyone who disagrees with you is anti-capitalism?? If you don't like their contracts then don't take it. Let the free market decide right?

You had no problem working for a PBM for years. Why didn't you say anything then?

I am sorry you are losing money. That is business. While I pity you, I am not surprise you are struggling.

What is your plan B if you don't make it?
 

gwarm01

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Why do you feel that repeatedly supporting anti-competitive duopolies that create artificial marketplaces to the detriment of small business is anything but Anti-American? Go on....
Claiming something is anti-American is just a poor argument for anything. There are plenty of reasons to dislike PBMs without resorting to McCarthy style tactics.
 

PharFromNormal

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You dolt. Bookstores, coffee shops etc. don't:

1)have their PRICES set by their competitor
2) Nor do they have their customer base limited by their competition through out-of -pocket PRICE INCENTIVES
3) or their potential customer pool limited by their competitors which outright forbids customers from shopping at their bookstores or coffee shops

Each one of those practices would violate FREE trade laws in America.



I get the distinct impression that you're likely a child of some political refugees from the 1970's and that's why this concept of FREE MARKETS is so FOREIGN to you.
I think this is a little off. PBMs and independent pharmacies are in two different marketplaces competing over two different "customers". If I asked you to compare an independent pharmacy to walgreens in your outlined 3 points, I think you'd have a little trouble.

You'd want to compare the market forces of supply chain on indy book stores and coffee shops relative to their chain competitors. I wouldn't be surprised if chains in those industries can likely purchase books from publishers at reduced cost by purchasing a ton, or get cheaper coffee from the suppliers by purchasing in bulk. By passing those savings onto the payer (the customer) you understandly provide a cheaper option for the same product (not necessarily ancillary service/experience). In an economic sense I would view someone who provides revenue for a service or product rendered a "customer" so therefore I oftentimes think non-traditionally that a PBM can be viewed as a customer of the retailing pharmacy not a competitor.
 
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Claiming something is anti-American is just a poor argument for anything. There are plenty of reasons to dislike PBMs without resorting to McCarthy style tactics.
Hardly poor when provided with all of the factual context I gave. If this discussion is above you just be a spectator where you likely belong while the big boys try and keep our profession an ACTUAL PROFESSION.
 
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I think this is a little off. PBMs and independent pharmacies are in two different marketplaces competing over two different "customers". If I asked you to compare an independent pharmacy to walgreens in your outlined 3 points, I think you'd have a little trouble.

You'd want to compare the market forces of supply chain on indy book stores and coffee shops relative to their chain competitors. I wouldn't be surprised if chains in those industries can likely purchase books from publishers at reduced cost by purchasing a ton, or get cheaper coffee from the suppliers by purchasing in bulk. By passing those savings onto the payer (the customer) you understandly provide a cheaper option for the same product (not necessarily ancillary service/experience). In an economic sense I would view someone who provides revenue for a service or product rendered a "customer" so therefore I oftentimes think non-traditionally that a PBM can be viewed as a customer of the retailing pharmacy not a competitor.

And you'd lose all credibility by your last statement. What " customer" dictates ( not negotiates) to the provider of the service the price and who other customers may be? NO CUSTOMERS DO.


Further, this isn't about AQ costs; this is about total reimbursements to the pharmacy which are increasingly coming in at less than $4 due to unregulated and non transparent MAC
Pricing on generics and DIR fees that bill pharmacies 15-30 days after the dispense date that turn what was A profitable RX into a LOSS upon reconciliation.

Oh, and about WAGS; no pharmacy is immune. Not target, Walmart or walgreens.

http://www.trefis.com/stock/wag/articles/254127/walgreen-reports-strong-q414-sales-but-gross-margin-remains-under-pressure/2014-09-05
 
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BF7

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All of you EMPLOYEE pharmacists had better open up your eyes; if owners like me are explaining to you the business fundamentals that are in the process of transforming our profession, you'd better take heed. Because as I demonstrated above, the chain stores are no less immune.

The level of pushback from most of you is embarrassing. You still don't know what you don't know.
 

PharFromNormal

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And you'd lose all credibility by your last statement. What " customer" dictates ( not negotiates) to the provider of the service the price and who other customers may be? NO CUSTOMERS DO.


Further, this isn't about AQ costs; this is about total reimbursements to the pharmacy which are increasingly coming in at less than $4 due to unregulated and non transparent MAC
Pricing on generics and DIR fees that bill pharmacies 15-30 days after the dispense date that turn what was A profitable RX into a LOSS upon reconciliation.

Oh, and about WAGS; no pharmacy is immune. Not target, Walmart or walgreens.

http://www.trefis.com/stock/wag/articles/254127/walgreen-reports-strong-q414-sales-but-gross-margin-remains-under-pressure/2014-09-05
Um... If a customer thinks you are charging them to much they simply won't buy your product. You are not forced to enter their network AGREEMENT.

Also reassess my described customer relationship again. When you enter a dispensing arrangement with a PBM where are you saying you cannot dispense prescriptions for other PBMs? I believe when you take the lens of the PBM as a customer they are saying they want a discount in exchange for coming to you more or only coming to you. Preferential customer or loyalty relationships exist in many different marketplaces in many different industries.
 

PharFromNormal

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All of you EMPLOYEE pharmacists had better open up your eyes; if owners like me are explaining to you the business fundamentals that are in the process of transforming our profession, you'd better take heed. Because as I demonstrated above, the chain stores are no less immune.

The level of pushback from most of you is embarrassing. You still don't know what you don't know.
I can somewhat get behind this statement that many do not understand the fundamentals to the pharmacy business. You should try to be aware of all risks and rewards in any new business/employment venture.
 
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BF7

BF7

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I can somewhat get behind this statement that many do not understand the fundamentals to the pharmacy business. You should try to be aware of all risks and rewards in any new business/employment venture.
It's incredibly pompous and hilariously ironic to have a non- business owner discuss the virtues of " being aware of all risks and rewards in any business venture".... The risk is more pronounced ( ANTI COMPETITIVE) in community pharmacy than in any other retail venture because of the ARTIFICIAL MARKETPLACE that PBMs create.

SEE ABOVE. enjoy your paycut boys, ' cause it's a comin'!
 
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BenJammin

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Am I the only one who thinks BF7 is speaking English with rock solid points? Imagine you're a dairy farmer. You buy a $1000 cow and sell it to a company with insurance who agrees to pay you for it. The insurance company tells you that they think the cow is worth $750 and to suck it up. Or they tell you they'll pay you at the lowest price available on the market (which is what you should be doing anyway) and refuse to tell you where their pricing data comes from. Privileged data. Any other profession and people would riot.
 

PharFromNormal

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It's incredibly pompous and hilariously ironic to have a non- business owner discuss the virtues of " being aware of all risks and rewards in any business venture".... The risk is more pronounced ( ANTI COMPETITIVE) in community pharmacy than in any other retail venture because of the ARTIFICIAL MARKETPLACE that PBMs create.

SEE ABOVE. enjoy your paycut boys, ' cause it's a comin'!
I believe I said employment as well. Everyone in retail should be aware of the reimbursement pressures. Everyone in hospitals should be aware they sit on the cost center. Everyone in academia should be aware of the increasing amount of schools and impact that has to their potential salary. Everyone at PBMs should be aware of consolidation in health plans and the constant focus for more regulatory involvement in managed care sectors. No one in any setting in any job is immune to risks. It's incredibly pompous of you to think others can't be aware of risks and rewards associated with the choices they didn't make.
 
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BF7

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Um... If a customer thinks you are charging them to much they simply won't buy your product. You are not forced to enter their network AGREEMENT.

Also reassess my described customer relationship again. When you enter a dispensing arrangement with a PBM where are you saying you cannot dispense prescriptions for other PBMs? I believe when you take the lens of the PBM as a customer they are saying they want a discount in exchange for coming to you more or only coming to you. Preferential customer or loyalty relationships exist in many different marketplaces in many different industries.
Wrong. Their are no firewalls between PBM operations and the pharmacies that they own. The PBMs dictate terms to us while also serving as our competitors. They are not our customers.

They also restrict who we can dispense meds to; which meds we can dispense, what day supply we can dispense and set our prices. No other business operates under these anti-competitive conditions.

I'm putting your noses right in it and you're all still sh*tting in the house.
 

PharFromNormal

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Am I the only one who thinks BF7 is speaking English with rock solid points? Imagine you're a dairy farmer. You buy a $1000 cow and sell it to a company with insurance who agrees to pay you for it. The insurance company tells you that they think the cow is worth $750 and to suck it up. Or they tell you they'll pay you at the lowest price available on the market (which is what you should be doing anyway) and refuse to tell you where their pricing data comes from. Privileged data. Any other profession and people would riot.
I think you're not clear on BF7's narrative. He just said it isn't about AQ cost. Please don't make reference to how much you got the cow for. I believe he stepped back from AQ imbalances and focused on the reimbursement side.
 
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BF7

BF7

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I believe I said employment as well. Everyone in retail should be aware of the reimbursement pressures. Everyone in hospitals should be aware they sit on the cost center. Everyone in academia should be aware of the increasing amount of schools and impact that has to their potential salary. Everyone at PBMs should be aware of consolidation in health plans and the constant focus for more regulatory involvement in managed care sectors. No one in any setting in any job is immune to risks. It's incredibly pompous of you to think others can't be aware of risks and rewards associated with the choices they didn't make.
Your lack of comprehension and expressed unfamiliarity with all other retail sectors and how and why anti-trust and fair-competition laws exist make your comments hollow at best; laughable at worst.
 

PharFromNormal

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Wrong. Their are no firewalls between PBM operations and the pharmacies that they own. The PBMs dictate terms to us while also serving as our competitors. They are not our customers.

They also restrict who we can dispense meds to; which meds we can dispense, what day supply we can dispense and set our prices. No other business operates under these anti-competitive conditions.

I'm putting your noses right in it and you're all still sh*tting in the house.
This is all very technically false. You can dispense prescriptions to whomever has a valid prescription.

The technical truth is there may be contracts and processes in place to provide certain PAYMENT. If a patient has no insurance, express scripts won't tell you that you can't dispense a prescription for them.
 
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BF7

BF7

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Does McDonalds set the price for a hamburger that Wendy's and Burger King are allowed to charge?

Does McDonald's limit who can purchase a hamburger at Wendy's and Burger King?

Does McDonald's make a customer pay MORE for choosing to get a hamburger at Wendy's or Burger King?

If they did, it would be deemed a monopolistic practice whereby McDonalds is manipulating the hamburger markets to increase their market share and pad their bottom lines at the expense of customer choice.
 

PharFromNormal

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Your lack of comprehension and expressed unfamiliarity with all other retail sectors and how and why anti-trust and fair-competition laws exist make your comments hollow at best; laughable at worst.
All please be aware this is all behavior in line with standard tactics associated with those who can't argue on facts. They resort to personal attacks and try to dimish or deflect the facts presented to them.
 
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BF7

BF7

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This is all very technically false. You can dispense prescriptions to whomever has a valid prescription.

The technical truth is there may be contracts and processes in place to provide certain PAYMENT. If a patient has no insurance, express scripts won't tell you that you can't dispense a prescription for them.

See my Hamburger example since you still don't get it.

Plus, There is a diminishing market of customers who don't have pharmacy insurance ( less than 10%) and it will be closer to ZERO in the coming years with the implementation of increasing ACA penalties. So that example is the equivalent of finding a needle in a haystack. ( unfortunately and to our professions detriment)

In a cash market every pharmacy is free to compete on PRICE and SERVICE. PBMs alter that equation and tilt it to their economic advantage by creating artificial measures that I've repeatedly noted above.
 

PharFromNormal

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Does McDonalds set the price for a hamburger that Wendy's and Burger King are allowed to charge?

Does McDonald's limit who can purchase a hamburger at Wendy's and Burger King?

Does McDonald's make a customer pay MORE for choosing to get a hamburger at Wendy's or Burger King?

If they did, it would be deemed a monopolistic practice whereby McDonalds is manipulating the hamburger markets to increase their market share and pad their bottom lines at the expense of customer choice.
A pharmacy can charge a patient whatever they want. IF a pharmacy wants to charge a copay/co insurance associated with that patients PBM, then they agree to a reimbursement as agreed upon with that PBM. It's not rocket science.
You are not mandated to accept any PBMs. You are well within your rights to operate as a cash only business.
 

PharFromNormal

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See my Hamburger example since you still don't get it.

Plus, There is a diminishing market of customers who don't have pharmacy insurance ( less than 10%) and it will be closer to ZERO in the coming years with the implementation of increasing ACA penalties. So that example is the equivalent of finding a needle in a haystack. ( unfortunately and to our professions detriment)

In a cash market every pharmacy is free to compete on PRICE and SERVICE. PBMs alter that equation and tilt it to their economic advantage by creating artificial measures that I've repeatedly noted above.
So going back to other posters, you have accepted the risk of going into a business that is heavily dependent on someone (not the patient) providing you your revenue stream. As you mention anyone accepting PBM reimbursement is not immune to these risks. Figure it out, pass legislation to stop it or get out.
 

PharFromNormal

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Can I go into Sams Club or BJs and demand discounted groceries if I don't pay membership costs? Or is there a customer relationship with the establishment that gives me purchasing privileges?
 
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BF7

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All please be aware this is all behavior in line with standard tactics associated with those who can't argue on facts. They resort to personal attacks and try to dimish or deflect the facts presented to them.
I've presented plenty of facts including linked to articles supporting my legitimate points
A pharmacy can charge a patient whatever they want. IF a pharmacy wants to charge a copay/co insurance associated with that patients PBM, then they agree to a reimbursement as agreed upon with that PBM. It's not rocket science.
You are not mandated to accept any PBMs. You are well within your rights to operate as a cash only business.
That's completely disingenuous and you know it. The PBMs set the market by dictatorial contracts that limit free competition as noted above by me many times above. There is no sustainable CASH marketplace for these products at 30 and 90 day supplies.
 

PharFromNormal

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See my Hamburger example since you still don't get it.

Plus, There is a diminishing market of customers who don't have pharmacy insurance ( less than 10%) and it will be closer to ZERO in the coming years with the implementation of increasing ACA penalties. So that example is the equivalent of finding a needle in a haystack. ( unfortunately and to our professions detriment)

In a cash market every pharmacy is free to compete on PRICE and SERVICE. PBMs alter that equation and tilt it to their economic advantage by creating artificial measures that I've repeatedly noted above.
So would you like me to provide examples in which a supplier also has a stake in distribution with external competitors in distribution? I mean God forbid I use google chrome on my iPhone not safari!
Wait when I google "bing" it brings me to Microsoft bing results page but shows google ads and google is making money on that! I want Microsoft not Google! You know what else stinks?! Cox owns the cable boxes that I need to access for my Verizon cable!
 
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BF7

BF7

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A pharmacy can charge a patient whatever they want. IF a pharmacy wants to charge a copay/co insurance associated with that patients PBM, then they agree to a reimbursement as agreed upon with that PBM. It's not rocket science.
You are not mandated to accept any PBMs. You are well within your rights to operate as a cash only business.
False.

If you have a contract with a PBM you are legally required to honor that contract with ALL prescriptions presented to your store whether you are profitable or not.

You cannot choose to run it on CASH if you are contracted with that patients insurance.
 
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PharFromNormal

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False.

If you have a contract with a PBM you are legally required to honor that contract with ALL prescriptions presented to your store whether you are profitable or not.
I believe exactly what I said was true. If a pharmacy wants to charge a copay or co insurance (to anyone, that patient or someone else) they agree to the reimbursements associated with that patients PBM.
 

PharFromNormal

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I'm really not sure why you're so upset. Indy owners are in a position of higher reward due to the fact they don't have shareholders and massive amounts of overhead to support.

But large chain pharmacists are also generally more insulated from the risks due to large scale purchasing advantages and stronger (although I agree decreasing) reimbursement negotiation strength. You are in a position to have a bigger payoff if you can operate your business in environment it's in but again you face all the risks associated with those rewards.
 
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BF7

BF7

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Can I go into Sams Club or BJs and demand discounted groceries if I don't pay membership costs? Or is there a customer relationship with the establishment that gives me purchasing privileges?
Does SAMs club set Costco and Bjs prices? Do they restrict people from going to Costco or Bjs ?

Good grief.