Opinion: Your local pharmacy is at risk of going away

Tampa summers are typically the “slow season” for local pharmacies. But during COVID-19, nothing is typical nor should be taken for granted. 

The coronavirus pandemic coined the term “essential workers” and your local pharmacy is obviously essential, right?

Pharmacies are always open, even in a public health crisis. Of course, they’re open, why wouldn’t they be open? Pharmacies are always there when people need them.

But what happens if your local pharmacy can’t be there for you?

Opinion column by Pharmacist Alex HerwigA recent survey among Florida independent pharmacies shed light on a little-known, but critical issue. Intended to examine the viability of Florida’s Medicaid managed care model on local pharmacies, the survey instead uncovered disturbing statistics: 61 percent of community pharmacies are being forced to reconsider participating in the Medicaid system. Another 41 percent are considering whether to close their business altogether.

The problem is not limited to the Tampa Bay Area.

The source of these troubling trends is the Medicaid managed care payment model used by the Agency for Healthcare Administration (AHCA) to pay providers, particularly pharmacies serving Medicaid patients, and it is affecting patient access everywhere in Florida.

Under AHCA’s model, while taxpayers and the State of Florida pay the full, contracted price for medications on the Medicaid formulary, the middlemen managed care organizations (MCOs) and pharmacy benefit managers (PBMs) who manage the contracts DO NOT pay the providers the full amount owed.

For pharmacies, that means a loss on the actual costs of dispensing medications. Most drugs covered by Medicaid are filled at a loss to the pharmacy. Worse, pharmacies in the Medicaid network are contractually obligated to absorb those losses. Tell me what business can sustain itself if forced to sell its goods and services at a loss? Eventually, that business would have to close. That business is your local independent pharmacy.

So where is the state’s Medicaid money going if not to the healthcare providers or the pharmacies? That’s the Florida Medicaid budget's $30 billion question. No one actually knows because MCOs and PBMs require iron-clad, non-transparent contracts, which means taxpayers are prohibited from knowing where their tax dollars are going. 

We have some clues: CVS Health’s quarterly earnings (CVS Health is an MCO that owns both pharmacies and a PBM) show extremely healthy profits, even during the height of COVID when most people were under stay-at-home orders. CVS is based in Rhode Island, though its CEO has a home in Naples FL. And here’s a fun fact: CVS CEO Larry Merlo’s compensation is 790 times that of the average CVS employee’s compensation.

CVS has the incentive to ensure community pharmacies close: They own competing pharmacies. Fewer pharmacy choices for patients means more business forced over to fewer, bigger pharmacies that manage to survive.

CVS is one of the MCO/PBMs that not only competes with locally-owned pharmacies but sets the price for which other pharmacies can sell prescription medications. One of the “perverse incentives” of this system is CVS can set its own drug pricing and make special “deals” with customers but bans other pharmacies from doing the same. To the customer, CVS looks like the good guy, but behind the pharmacy counter, they are charging AHCA to manage the Medicaid pharmacy network and paying themselves the spread between what they bill the State of Florida and what they actually pay their own and other pharmacies and healthcare providers.

Mail-order prescriptions notwithstanding, pharmacy is not a commodity, not something you can comparison shop like paper goods or electronics. Pharmacy at its best is a high-touch, healthcare industry.   

It is also a fragile industry, under assault by more than just the pricing and reimbursement deals perpetrated by MCOs and PBMs. There are also rising drug prices, mandatory mail order for some, and now a virus without a vaccine that leaves many patients too afraid to leave home to see the pharmacist -- the one healthcare provider they don’t need an appointment to see. 

Patients have a right to pharmacy access and to choose their pharmacy. Pharmacies have a right to be fully reimbursed for medications dispensed and medication counseling provided. It’s that simple, but it requires patients to be there for their pharmacies the way pharmacies are there for them.

Talk to your elected officials about ending Medicaid managed care abuse. Florida’s Small Business Pharmacies Aligned for Reform (SPAR) has made it easy for patients and pharmacies to work together. You can reach your elected official directly via the SPAR website; click the bright orange “Take Action” button in the upper right corner.

If we can stop the middlemen from exploiting Florida’s Medicaid program, we can ensure that pharmacies will still be there when patients need them. 

Alex Herwig is President of Small Business Pharmacies Aligned for Reform (SPAR) and owner of Gulf Shore Apothecary in Naples, where he and his family also reside. He earned his Bachelor of Pharmacy degree from Ohio Northern University and is an advocate for accessible community healthcare.
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