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To Express Scripts on Improving its Working Relationship with Independent Pharmacies

A letter from PUTT president Deborah Keaveny

Article from PUTT, October 31, 2023

Author: Deborah Keaveny, RPh


Dr. Stephanie Smith Cooney and the Express Scripts Leaders behind the IndependentRx Initiative:


Express Scripts announced it would seek input from independent pharmacies to improve our mutual working relationship. We respectfully submit the following recommendations, on behalf of our members. These recommendations are primarily organized around the business of pharmacy, understanding that, as a business, no pharmacy can provide quality patient care if it cannot generate sufficient revenue to conduct its daily operations.


Independent pharmacies received your memo stating an advisory board would convene to help Express Scripts understand how to work more closely with independent pharmacies and "improve the relationship." However, when Independent Pharmacy Advisory Committee members received their invitations, the invitation wording had shifted to how independent pharmacies can work more closely with Express Scripts. Subtle, perhaps, but a not-insignificant shift.


In the current construction, Express Scripts has all the power and has used that power to abuse independent pharmacies for years. Therefore we submit, the onus is on Express Scripts to repair this relationship and change its practices, if you are serious about having a better working relationship and the partnership you say you want to foster.


Let's start with a basic, but important point: reimburse independent pharmacies the full drug acquisition cost and eliminate the practice of reimbursing above some and below other drug cost. Make a fair and universal reimbursement policy the unbreakable operating principle of the PBM-independent pharmacy partnership.


The basis of the equation to determine payment to the pharmacy is not transparent. The contract contains an equation for 30 day or less network, 90 day or extended network, brand vs generic and even within the generic equation, there is an added mathematical equation for Maximum Allowable Cost (MAC) pricing. In some cases, the contract is 3 years long with rates reduced year over year. That must end. The pharmacy's cost of doing business has not decreased year over year, the reimbursement to the pharmacy should not either. The average cost to dispense varies by state, but is fairly consistently over $15 (more about professional dispensing to follow). This allows the pharmacy to cover expenses, but not to realize any profit. Profit is necessary to continue to take care of patients. While pharmacies do not currently enjoy a profitable business filling prescriptions for ESI members, Express Scripts does.


Pharmacies used to be able to absorb a loss on a prescription here and there. We always hope the market "basket of drugs" we dispense will keep us cash-flow positive, even with losses. But hope is not a strategy and the last few years we've seen brand reimbursements slashed to below acquisition, accompanied by decreasing reimbursements on generics. The pennies (yes, pennies) we are now paid for generic prescriptions cannot make up the $50 loss we take on branded medications.


Express Scripts contracts do not include margin on brands and generics have margins so slim we cannot cover dispensing costs. For the first time we are seeing losses on even the cheapest generic prescriptions. Being forced to dispense hydrochlorothiazide or atorvastatin at a loss is insulting. No matter how brisk a business we do, pharmacies cannot sell enough generics, greeting cards, toiletries, gifts or knick knacks to make up the losses forced by Express Scripts contracts.


The level of reimbursement paid to pharmacies today does not allow a pharmacy to purchase drugs from valid VAWD certified wholesalers, as your contract mandates. Purchasing drugs from reputable sources in order to assure patient safety does not allow a pharmacy to break even, much less make a profit. True partners do not engage in one-sided practices that erode the financial stability and set the other partner up to fail. There is not one practice Express Scripts currently has in place with the independent pharmacies the supports their business and their ability to serve Express Scripts plan members.


Reference a publicly available drug pricing index like NADAC as a true measure of drug acquisition cost when calculating reimbursement. Eliminate MAC, Brand Effective Rate (BER), Generic Effective Rate (GER) and other pricing scheme not tired to actual drug acquistion cost. The problem with MAC and other lists, even when updated regularly, is that they frequently bear no resemblance to pharmacies' actual acquistion costs.


Pay pharmacies a professional dispensing fee. NADAC plus a professional dispensing fee is transparent and predictable. NADAC is a published known value. A fair professional dispensing fee should cover the pharmacy's expenses to dispense the prescription, and a reasonable profit. But paying a pharmacy NADAC only covers the cost of the drug. The professional dispensing fee covers the cost of doing business as well as the knowledge and counseling a pharmacist conducts for your membership. The current dispensing fee offered by many of your contracts is $0.


Just for reference, many states do an individual study to determine the cost to dispense. NCPA also does a national study to determine cost to dispense. As previously stated, that dispensing fee is north of $15 in most cases. Also, as previously stated, NADAC plus a professional dispensing fee of $15 only brings a pharmacy to the breakeven point. While that is certainly a step in the right direction, a reasonable profit margin needs to be a part of the equation also. We all know the level of profit Express Scripts enjoys in its relationship with independent pharmacies.


Do not tie pharmacy reimbursements to patient outcomes. To state the obvious: drug acquisition cost is set by the wholesaler and out of the control of the pharmacy. Pharmacists are not prescribers (not in most cases, anyway) and have no control over the patient’s adherence once the patient leaves the pharmacy. Even under the best of circumstances there’s no guarantee a patient’s treatment protocol will work. So “incentivizing” a pharmacy to perform by tying their reimbursements to factors out of their control is unfair and smacks of anticompetitive intent.


Pharmacies understand CMS’ star rating system is intended to ensure patients receive quality care. While the benchmarks pharmacies are required to meet in order to be considered a “high performing pharmacy” rarely, if ever, equate to better patient care, they also rarely equate to reasonable pharmacy payment, even for the highest-performing pharmacies. This is a CMS issue the pharmacies must work out with CMS on Part D business.


That said, Express Scripts and other PBMs have grabbed onto the star rating system as a means to turn their books of business into all performance networks, not just Medicare Part D. These “performance networks” contain metrics that a pharmacy cannot possibly meet, even if they are perfect. As with Medicare D metrics, your performance network metrics do not improve a patient’s healthcare experience. They only extract more money from your pharmacy “partners” on top of several other revenue schemes extracting money from us.


While we understand the spirit and intention of performance networks to drive quality care, evaluating pharmacies on their own merits is the only acceptable way to offer a performance network. The metrics we’re graded against should be truly meaningful to the patient (the entire reason we’re supposed to be here). Lumping pharmacies into groups and evaluating them as a group does not reflect the performance of individual stores and is inherently unfair.


End Direct and Indirect Remuneration (DIR), transaction, performative and other fees. According to NCPA, DIR fees have risen more than 107,400% in recent years. Even though DIR fees are “going away” January 1, 2024, pharmacies will still be forced to accept even lower reimbursement on the front side. Pharmacies cannot accept further cuts to reimbursements. Further cuts will devastate us as your pharmacy “partners”. Many will not weather this change and will be forced to sell or close their doors. As for other fees, it hasn’t gone unnoticed that the increase or addition of BER/GER fees in independent pharmacy contracts assures that pharmacies will remain in a submissive posture with Express Scripts. Meanwhile, Express Scripts will have preserved its profit streams off the backs of pharmacies and their patients.


Dump your pharmacies and drop the “preferred” networks. Stop steering patients. Allow patients to use the pharmacy of their choice. Pharmacies have been fighting the steering and stealing of our patients for years. Forcing or incentivizing a patient to move their prescriptions to your own mail order pharmacy is wrong at best and illegal in every other industry. Setting up preferred networks is another form of patient steering, pushing patients away from the local care they want and need.


None of us have ever met a single patient that said they were delighted with their mail order pharmacy, or the big box pharmacy they were suddenly forced to go to because of the terms of their benefits plan. Big chains tend to be severely understaffed and some do not open for business every day. Mail is late, gets lost, and contents spoil from overly cold and hot temperatures. If Express Scripts truly wants a quality health care experience for their patients, allow patients to choose the pharmacy that’s best for them. Correcting the contracting process and making contracts identical and transparent for pharmacies and payers, eliminates the need to steer patients to “preferred” pharmacies where service has been shown to be substandard at best.


Simply put, if you design and sell the benefits plan, own pharmacies, and incentivize/mandate the plan enrollees use your pharmacies while contracting with community pharmacies because of “network adequacy” requirements, you’re acting as a monopsony and that’s illegal.


End predatory audits. Yes, audits are a necessary reconciliation mechanism. Audits should be used to keep pharmacies honest, and recoup what should be recouped, but they should not be a “gotcha game” intended to generate revenue for the PBM. Where wrongdoing has occurred, by all means root it out and fix it, recoup and return the funds to the end payer, preferably without the added penalty “administrative” fee. But PLEASE stop these “audits” of day supply calculation opinions; auditing all brand and expensive drugs but not generics; financially penalizing minor clerical errors that do not change the patient copayment or the reimbursement to the pharmacy. Appeals for denied audits and pricing appeals should be reviewed by an outside party, not you, the entity whose decision we are appealing.


Audits should occur on suspicion of fraud, waste and abuse and should not be a revenue stream for Express Scripts or any PBM. There should never be audit recoupment guarantees as part of the contract with your clients or plans.


Give us fair and reasonable contract terms and respect us as the second party to the contract. Make your contracts uniform and transparent to all. Stop hiding behind “proprietary practices”; multiple unpublished MAC lists; obscure fees assessed with no detail; and halting claims processing with direction to change claims that benefit ESI and not the patient or the pharmacy that always result in additional transaction fees. The pharmacy should be able to predict exactly what they are going to be paid before a claim is even processed. Pharmacies should not be surprised by fees charged back to the pharmacy months later with no details or explanation.


As previously stated, stop offering pharmacies regressive contracts, the kind where reimbursement rates go down year after year, and stop forcing us to sign entire contracts without the opportunity to negotiate. End the “we do not negotiate” policy and be fully transparent with all parties to the contract, including the end payers. If 100% of the pharmacies have the same fair transparent contract, there is no need for negotiations, and no need for steering. You’ll cut expenses with easier contracting and maintaining a single pharmacy network open to all.


Stop sending contracts via fax. Fax is unreliable and neither party can confirm the fax actually went through or that the fax was received. Sending a contract via fax and then giving the pharmacy a scant number of days to reject the contract is also poor practice. Passive contracts and amendments as a whole should stop immediately.


Abolish the draconian terms of arbitration and allow us to come to the table to work out our differences with you, not against you. Your fellow “Big 3” PBM OptumRx’s contracts have been found to be unconscionable. Be a change agent for good and help us to work with you by opening the lines of communication. I am optimistic we can find ways to bridge our differences if you work with us as partners instead of as adversaries.


Stop “specialty” pharmacy profiteering and steering patients to Express Scripts specialty pharmacies. Specialty drugs make up about 2% of the drugs dispensed, but account for more than 50% of the dollars spent on drugs. The 50% drug spend is the result of Express Scripts and other PBMs marking up “specialty” drugs as much as 1000% over what the independent pharmacy was reimbursed. There is nothing special about specialty drugs except the expensive price tag. Express Scripts uses the higher price as justification for patient mandates to exclusively use its in-house specialty drug pharmacy.


Further, Express Scripts can designate any drug at any time a specialty drug, regardless of category or handling requirements, and do so without warning. This capricious practice rips patients away from their hometown pharmacies, leaves pharmacies with unused medication stock and creates havoc when the change is discovered upon claim rejection. Plus, specialty pharmacy — this precious, expensive medication — is also primarily handled by mail order and subject to mail order pharmacy issues (Lost in the mail, late to arrive, improper storage conditions, patient unable to talk to a live person for help, etc).


Fix your provider help desk. Express Scripts’ provider help desk is a total failure. The first person we speak with when we need assistance for an Express Scripts member is someone overseas, and not necessarily in a professional setting judging by the chickens and dogs in the background (Yes, that actually happened. No, I’m not exaggerating).


Initial interactions with the overseas help desk rarely result in resolving the issue — a waste of time for us and Express Scripts, given we must first enter our NPI then run through your phonebot questions before we speak to a human … every time we call. Then — frustratingly and inefficiently — once a live body answers the call, we must provide that information all over again.


When the overseas help desk cannot help and we ask to be transferred, we once again do the NPI — phonebot questionnaire, wait, and some 15 or 20 minutes later we might get a person who can actually help. If we do that 3 or more times a day — and sometimes we do — that’s an hour of patient care time lost. Multiply that by a month and we’ve lost almost a full work week, the result of Express Scripts’ inefficient help desk.


Simplify prior authorizations. Some of your PA requirements are ridiculous. They obstruct patient care and waste time. Consider this example: a patient moved from an ESI bin to a Cigna bin but the claim was rejected because the patient needed to have been be on that drug for the previous 12 months as a prerequisite to ESI reimbursing the pharmacy (a factor not in any pharmacy’s control, by the way). However, this patient had been on the drug for years. Even though Express Scripts is part of Cigna — and the Cigna help desk could see the claim — Express Scripts refused to acknowledge the claims data history and forced the patient to go through the PA process again. Redundant and wasteful.


Stop requiring pharmacies to undergo re-credentialing and charging pharmacies for credentialing/recredentialing. Every pharmacy in the U.S. must meet the requirements of both their state board of pharmacy and the DEA in order to practice. If the state and federal government say the pharmacy meets the requirements to operate, that should be enough.


Your contract requires us to notify Express Scripts of changes. Pharmacies are required to maintain their NCPDP profile, including attesting to FWA (fraud, waste and abuse) training. Express Scripts has access to this data as well. Charging pharmacies a fee to provide information is blatant exploitation: 19,000 independent pharmacies paying $150 fee = $2.85 million dollars in addition to the fees you charge the major retail chains … if you even require chains to credential/recredential.


Stop inappropriately rejecting claims. Express Scripts rejects claims at the pharmacy for ridiculous reasons, far too many to list in a single letter. But here’s a common example: if we submit a claim for a 30 day supply, you reject it with a note that we should dispense 90 day supply, then tell us to resubmit the claim. The prescription may not be written for a 90 day supply. The patient may not be a good candidate for a 90 day supply. The physician may not want the patient to have a 90 day supply and the drug may not be a drug for a 90 day supply — like Norco.


Stop the transaction fees. These “nominal” fees are anything but that. If the average pharmacy runs 30% of the daily average 180 prescription claims through Express Scripts at $0.76 per transaction, that’s a daily $41.04 per pharmacy, a substantial revenue generator. If 25% of these submitted claims are rejected and must be resubmitted, that’s around a $200,000 revenue stream per day for Express Scripts based on 19,000 independent pharmacies. PLEASE STOP fee-ing us to death!


If you take nothing else from this letter, take this: treat independent pharmacies as the equal and respected partners you say we are whenever your trade lobby CEO is speaking to Congress. We’re willing to work with you, as long as you stop trying to drive us and our patients underground with untenable, unsustainable, anticompetitive practices.


Respectfully,


Deborah Keaveny, RPh


President, Pharmacists United for Truth and Transparency; Owner, Keaveny Drug, Winstead, MN

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