[S]ix months after Rutland Pharmacy launched a court battle alleging unfair business tactics in the drug industry, U.S. Rep. Peter Welch is lending legislative support to the fight.
Welch, D-Vt., visited the pharmacy on Monday to announce two bills aimed at what he called “anti-competitive practices” by pharmacy benefit managers, who act as middlemen between insurers and drug makers.
Welch said smaller, independent pharmacies like Rutland’s are “under siege by practices that make it almost impossible for them to be economically viable.”
“I want to maintain the viability of our community pharmacies because of the important role they play in the community (and) the really wonderful service, by and large, they give to the patient,” Welch said.
In response to Welch’s announcement, a national organization representing pharmacy benefit managers countered that they “serve as the only check against drugmakers’ sole power to set and raise prices.” Benefit managers reduce prescription costs “while also fairly compensating pharmacies,” the group said.
“We look forward to working with Rep. Welch on ways to reduce prescription drug prices,” a spokesperson for the Pharmaceutical Care Management Association said.
As drug prices continue to rise, state and federal policymakers have been searching for solutions. And pharmacy benefit managers have become a frequent target from both sides of the political aisle.
Earlier this year, President Donald Trump’s administration said rebates paid by drug makers to pharmacy benefit managers amounted to “a hidden system of kickbacks.” The administration proposed a rule that removes legal protection for those rebates and instead incentivizes “drug discounts offered directly to patients.”
Welch is taking two different approaches to the pharmacy benefit manager issue.
One of his bills, H.R.803, would stop benefit managers from “imposing retroactive fees” on pharmacies. Those fees are not incidental for a small pharmacy: Jeffrey Hochberg, a Rutland Pharmacy director, said he just received a notice for $60,000 in fees for only part of the year.
The charges are labeled “direct indirect remuneration,” and Hochberg says they’re as inscrutable as that name implies. He said the fees are a mix of pharmacy performance ratings and claims of overpayment that “have very little transparency to them.”
Hochberg also said there’s no appeal process for so called “DIR” fees. “You don’t even have to pay it – they withhold it from future payments,” he said.
Welch said the practice should end. “I don’t see how, under any circumstances, that retroactive clawback can be justified,” he said.
Another Welch bill, which hasn’t yet been introduced, would prohibit pharmacy benefit managers from excluding independent pharmacies from “preferred pharmacy networks” for Medicare Part D prescriptions.
“That Part D market is huge, and if our local pharmacists are not even allowed to participate in it, they have no chance,” Welch said.
Hochberg confirmed that some insurers have “preferred providers” that exclude pharmacies like his. Welch’s bill would “level the playing field” and allow seniors to choose their pharmacy, he said.
The Medicare issue targeted by Welch has similarities to concerns raised last year in a federal lawsuit filed by Rutland Pharmacy against insurer MVP Health Care. The suit contends that MVP is circumventing the law by pulling customers away from independent Vermont pharmacies and steering them toward their preferred out-of-state supplier.
The complaint says MVP has been “artificially categorizing” medications as specialty drugs and then requiring prescriptions for those drugs to be filled via a mail order pharmacy in Massachusetts. The suit also is critical of MVP pharmacy benefit manager CVS Caremark, though CVS is not named as a defendant.
The legal dispute is ongoing. A federal judge denied MVP’s motion to dismiss the case, and MVP since has filed a response that “denies that any of its business practices were unlawful or circumvented Vermont law.”
Welch said the lawsuit “was helpful in bringing attention” to the issues independent pharmacies are facing.
The congressman also said he’s optimistic about the prospects for his bills because there appears to be bipartisan support for pharmacy benefit manager legislation. H.R.803 has nine cosponsors, eight of whom are Republicans.
The benefit manager issue also puts Welch on the same side as Trump, which isn’t likely to happen often.
“It’s definitely odd, but it’s very welcome on this issue,” Welch said. “Having Republican support and the president’s support obviously is going to be crucial to our success.”
Hochberg, who is president of the Vermont Retail Druggists, also believes there is momentum for change.
“This talk has been building for years, to where now every state is really honing in on the practices of these middlemen and putting a critical eye on it,” Hochberg said. “They can’t hide behind contract confidentiality forever … Congress has a duty to dive in and see what’s really going on.”