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TheStreet Open House

Independent Drugstore Lobby Wants Sweeping Antitrust Exemptions To Charge Higher Prescription Drug Prices

GAO Report: PSAOs Effective Negotiator for Independent Drugstores

WASHINGTON, March 15, 2013 /PRNewswire-USNewswire/ -- The independent drugstore lobby is again seeking special antitrust exemptions (HR 1188) that would empower independent drugstores to charge consumers, employers, unions, and government agencies higher prescription drug prices, the Pharmaceutical Care Management Association (PCMA) said today.  

A recent Government Accountability Office (GAO) report found that nearly 80 percent of independent drugstores already hire powerful Pharmacy Service Administrative Organizations (PSAOs) to negotiate their contract terms, negating any need for sweeping changes to antitrust laws.

"Prescription drug prices for employers, unions, government agencies, and consumers will skyrocket if competing independent drugstores are given a license to collude," said PCMA President and CEO Mark Merritt. "Prospects for this bill won't be helped by the GAO's recent finding that independent drugstores already hire large and powerful PSAOs to collectively bargain for higher payments."

According to the GAO report :

  • Three of the five largest PSAOs are run by the country's largest wholesalers, AmerisourceBergen Corp., Cardinal Health Inc., and McKesson.
  • PSAOs routinely provide contract negotiation and are authorized to negotiate and enter into contracts with PBMs and third-party payers. The contract provisions that PSAOs negotiate include reimbursement rates, payment terms and audits of pharmacies.
  • PSAOs provide drugstores with a range of services, such as payment reconciliation and back-office functions, to improve the efficiency of their businesses.
  • Rural drugstores can more effectively negotiate contract terms than a drugstore operating in an urban area with many competitors.

CBO: Collective Bargaining Would Increase Costs to the Federal Government

  • The Congressional Budget Office (CBO) has found that special antitrust protections for independent pharmacists would increase costs to the federal government and that increased drug costs to private health plans, employers, and consumers would result in "reductions in the scope or generosity of health insurance benefits, such as increased deductibles or higher copayments."  CBO's analysis also contends that cost increases would be passed along to workers, reducing "both their taxable compensation and other fringe benefits."

FTC: Collective Bargaining a "Costly Step Backward"

  • During testimony before the House Judiciary Committee Antitrust Task Force, the Federal Trade Commission (FTC) called pharmacy antitrust exemptions a "costly step backward" noting that such exemptions " would allow pharmacies to engage in collective bargaining to secure higher fees" and would " increase costs to private employers who provide health care insuranceā€¦ without any assurance of higher quality care."

CRA Study:  H.R. 1946 Would Increase Costs by Up to $15.6 billion

  • Similar legislation introduced in the last Congress (HR 1946) would raise prescription drug costs for payers and consumers by up to $15.6 billion, according to research conducted by Charles Rivers Associates (CRA).

PCMA represents the nation's pharmacy benefit managers (PBMs), which improve affordability and quality of care through the use of electronic prescribing (e-prescribing), generic alternatives, mail-service pharmacies, and other innovative tools for 215 million Americans.

Follow PCMA on Twitter

SOURCE Pharmaceutical Care Management Association

Copyright 2011 PR Newswire. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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