Is Flat Fee A New Trend?

Payers understand that one of the major advantages of a PBM (Pharmacy Benefit Manager) is their pharmacy network. PBMs sign up pharmacies, approve and monitor pharmacy claims in real time, set up formularies, and send the pharmacies checks for prescriptions filled.

• Most pharmacies expect to get paid for dispensing prescriptions based on a formula that is outlined in their network contract.
• Most payers expect to pay their invoice for dispensed prescriptions based on the formula that they agreed upon in their contract.
  
  It is understandable that pharmacies may be paid a different price in one network. One would expect urban dispensers to compete for the network and drive the dispensing fee down. Conversely, a rural pharmacy (possibly the only drugstore in town) would probably get a higher price for filling a small community’s prescriptions.
  
  Networks also contain other dispensers such as mail order pharmacies, specialty products pharmacies, and preferential pharmacies. Each group would probably have a different contract and a different payment formula.
  
  What about government pharmacies that fill prescriptions in a non-government network? The VA (Veterans Administration) is such a network.
  
  Government pharmacies buy drugs at special government prices. Many prices are 50-75% below the community pharmacy cost.
  (The government doesn’t need to buy drugs from Canada because it already gets a very special low price.)
  The government, because of their buying advantage, is not supposed to compete with community pharmacy. In many cases, the government gives away prescriptions to the disadvantaged and has many programs to assist states in covering the medical needs of those that can not afford care.
  
  Based on the government’s goals and purpose in the health care system it is understandable that they would get a special low price on drugs. It is also understandable that the government can dispense drugs for a much lower price than can retail pharmacy. But what about the reverse? What if the government charges a payer more than retail pharmacy – in a flat fee system?
  
  One network (XYZ) that is of interest is with one PBM and the VA on the east coast. Instead of charging a low price for drugs, they are paid $51 for each prescription they fill no matter what the cost. How could this happen? More importantly, why did this happen? Community pharmacy is paid on a cost plus a dispensing fee formula and the VA on the east coast is paid on a flat fee formula?
  
  We called several VA pharmacies and tried to find out if they knew that they were being paid much more than retail pharmacies on each prescription and no one knew what we was talking about. When the PBM was asked we were told that this is what the VA demanded.
  
  Should community pharmacy ask for a flat fee too? Is this a new trend in contracting? And even more complicated, should the government give payers the advantage of their lower cost of drugs?
  
  Please let us know if you have seen any of these issues. We are interested in your comments and opinions.
  
  
• Developed by Barry Pascal, PharmD, Pro Pharma Pharmacist