Pharmacists Object to Medicare Drug Payment System

Many who dispense the drugs the government now pays for say they're getting paid too little and too late. Companies managing pharmacy benefits say the complaints are without merit.

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DEBBIE ELLIOTT, host:

This is ALL THINGS CONSIDERED from NPR News. I'm Debbie Elliott. Medicare's new prescription drug benefit is now five months old. So far, a majority of patients say they're saving money, but one group that's still unhappy with the program is the nation's pharmacists. They say they're doing more work for less pay while the companies managing the benefit are making all the profits. NPR's Julie Rovner reports.

JULIE ROVNER reporting:

Edward Scaff(ph) opened his first pharmacy in Evergreen, Colorado, in 1962. He later opened two more stores in nearby towns, but now he's left the pharmacy business entirely. He says he just couldn't make ends meet selling medications anymore.

Mr. EDWARD SCAFF (Former Pharmacy Owner): Say you have a $100 prescription, and they would only give you, like, $4.50 back for a dispensing fee, and it cost you $6.50 or $7 to dispense it. And I didn't major in math, but I figured it out.

ROVNER: So Scaff sold his stores. Today he runs Evergreen Discount Liquors next door to his old pharmacy in the small town just west of Denver. He says he was sorry to leave his profession, but his interactions with customers are now so much easier.

Mr. SCAFF: They don't come in and question. You know, when they buy a prescription and it's $100, they think we're getting rich, and we're losing money. But they come in and buy $100 of liquor, and they are happy.

ROVNER: But pharmacists who are still selling drugs are anything but happy. They were on the front lines back in January when computers balked and millions of beneficiaries couldn't get their drugs. Many pharmacists spent hours on the phone with Medicare drug plans trying to straighten things out. Others took out loans to keep their businesses above water, while still others just gave drugs away to their sickest patients.

Mr. MIKE JAMES (Owner, Person Street Pharmacy): My phrase has been all along that pharmacies across this country were underwriting the program, and they were. They were turning out medications and not getting paid for them.

ROVNER: Mike James owns the Person Street Pharmacy in Raleigh, North Carolina. He says many of those early problems have now been smoothed out, but many pharmacists are still in financial trouble, and they blame the private companies that run the program. He says not only do those firms pay pharmacists too little, when they do pay, it's taking far too long.

Mr. JAMES: We had an example that a check was written on February the 22nd. The postmark on the envelope was March the 14th.

ROVNER: Mark Merritt heads the trade group that represents the pharmacy benefits management firms. He says his members do pay pharmacists within 30 days. Pharmacists, however, say that's not good enough because they have to pay their wholesalers every two weeks. Merritt says that's not his problem.

Mr. MARK MERRITT (President, Pharmaceutical Care Management Association): That's really an issue between them and the wholesalers. It really doesn't have much to do with us because standard practice, not just in healthcare, but in American business, in individual billing - I don't pay my mortgage every 14 days. I don't pay my electric bill every 14 days.

ROVNER: Merritt's group is currently fighting legislation now pending in Congress that would, among other things, require the pharmacy benefits managers to pay pharmacies electronically rather than by mail.

Mr. MERRITT: We're not a bank. We're not an ATM machine. We're not built like that. So we certainly understand the argument for it, but there are costs associated with it and complications that would be created by it.

ROVNER: One of those complications, of course, is that the longer the pharmacy benefit firms hold onto the money from the government, the more they earn in interest from what's called the float, and with billions of claims, just a few pennies each can add up fast. That makes pharmacists like Mike James furious.

Mr. JAMES: Most states around this nation pay their pharmacies electronically, so I find it very difficult to understand why PBM's as large as they are and as smart as they are are not able to pay electronically also.

ROVNER: Because they're making money off the float.

Mr. JAMES: Right.

ROVNER: Pharmacists also complain that the pharmacy benefit managers are profiting from secret deals with brand-name drug makers. Those drug makers pay the management firms rebates to favor specific drugs. The pharmacists say that can actually drive drug spending up, a charge the pharmacy management firms vehemently deny, but the extent of those deals may soon be a matter of public record.

Just this week, the Supreme Court let stand a controversial Maine law that requires pharmacy benefits firms to make more of their business practices public. Other states are already moving forward on similar bills. Julie Rovner, NPR News, Washington.

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