When the 416 Fire shut down U.S. Highway 550 last summer and nearly marooned the tiny town of Silverton, registered nurse Lois MacKenzie traveled 60 miles to Montrose to get prescriptions for her patients. But one-stop shopping wasn’t an option – different insurance policies required Mackenzie to make multiple trips.
“We’d run to three or four different pharmacies,” said MacKenzie, who shared duties picking up prescription drugs with employees of the Silverton Clinic and the San Juan County Public Health Department.
Silverton is at least 50 miles in any direction from a pharmacy, and as the head of the Silverton Clinic, MacKenzie wants an easy way to get prescriptions to isolated residents. But insurance companies and the deals they offer on drugs limit where people can afford to get medication, making a trip to a single pharmacy in Durango or Montrose too complicated.
Rep. Marc Catlin, R-Montrose, wants to change that. For the second year, Catlin has proposed a bill that would allow Coloradans to get prescription drugs covered by insurance at the pharmacy of their choice. Backed by the bill, rural residents could pick a local pharmacy instead of traveling hours or miles to another one, and patients could maintain long-standing relationships with pharmacists.
But Catlin’s deceptively simple bill is likely to ignite a battle between lawmakers, pharmacies and their powerful middlemen, known as pharmacy benefit managers, who dictate the cost and supplier of prescription drugs. Experts say the bill will chip away at chain pharmacies and insurance companies’ networks, which restrict where people get care, prescriptions and how much they pay for both.
Advocates for the bill say it’s a common-sense measure passed by 26 states. But opponents – major pharmacies like CVS and consumer groups – say the dismantling of their relationships with insurance companies and pharmacy benefit managers would drive up the cost of prescription drugs.
But, Catlin said, breaking up those relationships is the point: “Monopolies don’t lower prices.”
Middlemen raise drug costsPharmacy benefit managers are middlemen who stand between the insurance company and the pharmacy. They set the prices of prescription drugs, determining how much pharmacies and insurance companies get paid when patients buy medication. But pharmacy benefit managers get a cut of the drug price as well, a practice that has come under scrutiny in recent years as the costs of prescription drugs continue to rise.
Catlin’s bill is part of a growing national interest in regulating the power of pharmacy benefit managers, an otherwise obscure piece of the prescription drug chain that has profound effects on how much Americans pay for medication. In January, the Trump administration announced it was considering plans to curtail some payments to pharmacy benefit managers, arguing that drug makers spike costs to ensure the benefit managers get paid. These types of payments could be considered an illegal kickback under the administration’s proposal.
In August, Ohio terminated a contract with two pharmacy benefit managers, CVS Caremark and Optum RX, after the state discovered it had been overcharged for prescription drugs in its Medicaid program, allowing the pharmacy benefit managers to pocket more than $224 million, according to a report released in July by the state. In Arkansas, legislators opted to regulate pharmacy benefit managers when faced with concerns that their pricing schemes were putting independent pharmacies out of business.
In Colorado, Medicaid patients already benefit from a system that allows them to pick where they get their medications. The vast majority of drugs acquired under Medicaid in Colorado are sold at wholesale prices, meaning there is no price spike driven by pharmacy benefit managers. But lawmakers have tried and failed for years to pass similar provisions that would apply to the general population.
Last year, a version of Catlin’s bill passed the House but died in the Senate in the face of opposition from business associations, like the Colorado Chamber of Commerce and companies like CVS and Express Scripts, a mail prescription service that relies on rural customers who can’t easily access pharmacies.
If passed into law, the bill would give Coloradans the option to strike a deal with the pharmacy of their choice, if the pharmacy agrees on the reimbursement that the patient’s insurance company will offer for a drug. This would circumvent the deal made by pharmacy benefit managers to send a patient to a particular pharmacy.
Catlin’s bill is expected to be heard by the House Health and Insurance Committee next week. Already, lobbyists for Cigna, CVS and Anthem Blue Cross and Blue Shield have registered their opposition to the bill, according data kept by the Colorado Secretary of State.
Despite support from rural residents, patients with chronic illnesses and independent pharmacists, the bill remains dogged by concerns that it will spike prescription drug prices.
Advocates point out that bills similar to Catlin’s have been successfully passed around the country, and that none have been repealed. But business advocates and insurance companies remain concerned the bill would fracture a system designed to keep costs low, said Dan Pilcher, executive vice president of the Colorado Chamber of Commerce, which has fought the bill for several years.
“If anyone can go to any pharmacy they want, the carriers don’t have the economies of scale to negotiate a good price with the pharmacies,” Pilcher said. “And it will drive up the cost of insurance for everyone.”
Research by the Federal Trade Commission backs up that claim. In 2014, the commission issued a letter to the Department of Health and Human Services warning that giving patients the right to pick their own pharmacy would dismantle a system that directs patients to the most affordable pharmacies. Medicare beneficiaries would particularly be harmed by higher drug costs, the letter said.
Limitations for independent pharmaciesThe benefits of preferred networks and the cheaper drugs they guarantee fall apart in rural Colorado, where pharmacies are few and far between, and residents must weigh the benefits of lower prices against the hazards of mail-order medication and the expense of traveling to get to a pharmacy. Mail-order medication may arrive late, may never arrive or may be exposed to temperatures that affect the medication.
Pharmacist Ky Davis runs the Harris Health Mart in Rocky Ford, the only pharmacy in town. There is a Walmart down the road, in the neighboring town of La Junta, but the closet CVS Pharmacy and Walgreens are hours away, in Colorado Springs and Pueblo, respectively.
As one of the few pharmacists in the area, Davis is in network with most insurance companies. But often his clients can fill only their initial prescription and one refill with Davis before their insurance sends them to mail-order services or pharmacies hours away.
Davis has instead become a last resort for locals who can’t drive hours to pick up medication or whose medication is ruined by exposure or never arrives. These people pay out-of-pocket for drugs they need immediately.
“That’s not really a problem if you are talking about an antibiotic that I can sell for six bucks,” Davis said. “But when you’ve got insulin at $400 to $500 a month, that’s not really an option.”
As preferred networks push patients to mail-order drugs and to pharmacies in other towns, Davis’ reimbursements from insurance companies are shrinking, as is his number of clients. But without his pharmacy, Rocky Ford will lose a crucial piece of the health care network, where a pharmacist is a friend, adviser and trusted medical professional, Davis said.
“We are the first and last line in health care,” he said.