Lynne Fruth weighs in on PBMs, reimbursement

Fruth Pharmacy provides medications to various insurance plans, such as WV Public Employees Insurance Agency, which hired Express Scripts to manage its drug benefit for its employees. 

Lynne Fruth, president and chairman of Fruth Pharmacy, discusses her concerns about PBMs and pharmacy reimbursement.

Drug Store News: What are your concerns about the way Fruth Pharmacy and other local independent pharmacies are treated by PBMs, particularly Express Scripts in West Virginia?
Lynne Fruth: Fruth Pharmacy and many other independent pharmacies are being paid well below the cost of acquisition for all brand drugs dispensed. This amount grew to account for an average reimbursement of $100 less than cost on brand drugs. This reimbursement rate was unsustainable. 

DSN: Why do you believe there is such a big discrepancy between what they pay different pharmacies—including their own mail-order pharmacies—to fill prescriptions?
LF: Only PBMs could answer that question for certain. We believe that some PBMs pay national chains higher reimbursement and then claw the overpayment back as part of a nationwide true-up of a Brand Equivalent Rate (BER) or Generic Equivalent Rate (GER). In that scenario, PBMs can overcharge certain plans and overpay certain pharmacies and then claw back the overpayment for their own profit. 

PBMs also mark certain generic “specialty” drugs as “not allowed to be filled at retail.” This pushes the patient to mail order, often run by the PBM. The PBM then charges any amount they choose. The data from WV PEIA showed that some of the drugs being sent to mail order resulted in a payment of as much as one hundred times the NADAC amount (National Average Drug Acquisition Cost). Since NADAC is published by CMS, this is the most accurate measure of a pharmacy’s acquisition cost. This is one way that PBMs drive huge profit to themselves at the expense of plan holders and plan members/patients.

DSN: Why do you believe that there are only a few drugs responsible for a large percentage of profit?
LF: This is an area of opportunity for PBMs to take huge profits. Often, plan sponsors and patients are not sophisticated enough in pharmacy and all drugs to recognize this practice as a huge overcharge. This is the basis of the recent Class Action lawsuit against Johnson and Johnson brought by Employee/Plan Members. Employees allege that J & J paid excessive fees and costs to Express Scripts (the company’s PBM). Employees allege that the lack of oversight by J & J resulted in huge increases to employees in premiums and costs of medications and co-pays. 

DSN: You’ve indicated that Express Scripts pays (some pharmacies) over one hundred times as much as Mark Cuban/Cost Plus would get (they have 15% markup) for dispensing the cancer medication Imatinib. Why?
LF: The simple answer is “because they can.”  If patients and/ or plan sponsors are not able to see what true costs are, then PBMs can charge excessive co-pays to patients and overcharge plans by thousands of dollars. 

PBMs often do not provide plan sponsors the transactional level of data to be able to figure out how their benefit plan is being overcharged. And all this time PBMs promote themselves as “the only groups working to help lower prescription costs.” 

As more of these profiteering practices are brought to light, it is easy to see that the increase in pharmacy benefits and the cost of medications is directly caused by PBM practices. 

DSN: What measures has Fruth Pharmacy taken to alleviate the problem?
LF: Fruth has become very involved in policy work at the state level. Fruth has spent a decade educating lawmakers and business owners about PBM practices. In recent years, Fruth has provided presentations at national pharmacy conferences about ways to engage legislators and government officials to implement fair and financially sound practices around pharmacy benefits.

DSN: What was the turning point in your fight that helped you to prove that you were not getting fairly paid for prescriptions? 
LF: A Fruth patient noticed some concerning information while looking at their PEIA coverage on the ESI portal for employees of the WV PEIA Plan. This patient printed out dozens of screenshots that showed reimbursements paid by PEIA at different pharmacies. 

The patient could not understand why their pharmacy was receiving a payment from PEIA/ESI that was hundreds of dollars less than national chains for the same prescription. This patient was like a “whistleblower.” The data provided to Fruth allowed meaningful conversations with government officials, state senators, delegates and the media. 

Fruth had previously done an internal analysis of its annual loss of PEIA. Because of the reimbursement on brands being well below cost of acquisition, Fruth was losing approximately $500,000 by filling prescriptions for PEIA patients. 

This was a trend that most WV independent pharmacies had also been seeing. The WV pharmacy community had become very outspoken about this problem.

DSN: Explain the key parts of Senate bill 453, and what it means for pharmacies in West Virginia and the industry. 
LF: The bill goes into effect on July 1, 2024. It immediately requires all WV domiciled pharmacies to be paid a fair reimbursement of at least NADAC and the professional dispensing fee currently used by WV Medicaid ($10.49). 

The more impactful part of the bill requires a comprehensive pharmacy study and analysis to be completed by Dec. 31, 2024. The bill requires the PBM to disclose all information and data for this study including any information or data requested by PEIA, the legislature and the vendor conducting the study.  

There are requirements for all PBMs of data that now must be provided. The bill will create definitions to provide clear understanding of terms like “rebates.”  This study will likely provide data that can and will be used in other states to drive transparency and help eliminate practices of overcharging.

DSN: J&J is facing a class action over employees’ prescription drug costs. Can you provide your insights about this lawsuit and what it means for the PBM industry at large?
LF: The J&J suit is potentially a precedent setting case that signals the beginning of company leadership and others that oversee plan benefits to be held accountable for wasting resources by allowing PBMs to overcharge the plan and the patients. This could force insurance plans and plan sponsors to be more careful and demand much more transparency and oversight of the dollars spent on benefits. The benefit plan is harmed by being “ripped off” and it results in harm to plan members. 

Plan members are beginning to demand better oversight. It will no longer be acceptable to accept the promise of savings from a PBM, or broker without someone from the company providing the appropriate level of auditing. 

This case could blow up the current practices of PBMs that have caused huge increases in pharmacy costs and spending. This lawsuit alleges some of the same type of overcharges that were identified in WV PEIA. 

DSN: What advice do you have for other pharmacies in other states?
LF: Our last slide in the NCPA presentation was a statement from Andy Becker, Fruth vice president of pharmacy.  It reads, “No one is coming to save you. “ “If you think somebody needs to do something, it’s you.” We are the fight of our life as retail pharmacy operators. If you want change, you need to fight for it.  Our industry cannot sit back and fear the consequences of fighting for fair reimbursement. It is time to fight for our industry and the noble profession of pharmacy.  Also, one person can make a difference. Do what you can.