The Vanishing Private Pharmacy- No More Checks and Balances
20 for 2020 is a newsletter sent to 20 people in preparation for the U.S. Presidential election of 2020. This is the seventh newsletter and its subject the loss of subsidiarity in health care. Dec 2019
Today I went to pick up my prescription at a local pharmacy, part of a metropolitan wide health care system and I was informed by the highly trained and very thorough clerk that the pharmacies (all of them in the system) would be closing for good on January 20, 2020. This deeply saddened me and it deeply saddened her. She shared with me she had hoped to work at this job until she retired and that the prospect of working a large national chain where volume and long shifts outweigh care and attention is not how she wants to use her God given talents.
I shared with her that I had just written Larry Merlo, CEO of CVS and a pharmacist himself of the important role local pharmacists used to play in our healthcare system. The pharmacist knew the doctors and they knew the patients and they knew the drugs and they served as a safety check. Perhaps if it weren’t for such industry concentration we may have had more of a forewarning of the opioid crisis and how opioids were never a safe long term treatment for pain. I wonder how many family pharmacists would agree with the big pharma notion that we as a nation need more drugs faster and that say depression should be treated for years by prescription and that six months of study in clinical trials is sufficient? Somehow owning the shop mattered and the buck did stop here.
Subsidiarity is one of the four Catholic social teachings and acknowledges that activities are to take place at the lowest common level and that unnecessary higher levels or bureaucracy are to be avoided. Keeping things simple, unrestrained can often yield the best outcome. Being a pharmacist or a doctor is now a job with human resource manuals, guidelines and expectations for efficiency, and top down approaches to problem solving that have taken the art and creative or customized problem solving and perhaps even the care and healing out of medicine and allowed for executives of large corporations and shareholders to profit exorbitantly while macro level measures of quality and effectiveness have plummeted. While the government has failed to enforce antitrust laws that protect competition and encourage small locally owned businesses it has increased regulations and decreased payments to below cost levels, making private practice almost prohibitive, despite its many health benefits.
With doctors seeing us in fifteen minute intervals and seeing thirty patients a day prescribing drugs they have learned about from pharmaceutical company reps and being evaluated by patient surveys and perhaps being incentivized to prescribe verses treat by diet or exercise or reducing another medication, it is as if inappropriate size has left us with an impersonalized system that dictates solutions without diagnosing problems or applying true educated knowledge and experience and training and with undo emphasis on monetary efficiency. God given talents and medical knowledge are frequently forfeited and the patient suffers and all of society suffers.
“Add to that the increasingly prohibitive cost of running a private practice, says Dr. M. Zuhdi Jasser, a primary care physician and chair of the AMA’s private practice physicians caucus. “The free market aspect of medicine has disappeared,” he says. “You have prices that are fixed and prices that are predetermined so the only institutions that can make any profit are the big ones that cost shift. If you’re in a private practice, like I am, you get paid $40 or $90 or $150 [per procedure]. That’s it. My phone calls, my rent, my lab draws, my collections, my front desk, it’s all unfunded.”
“What’s happening is we’re slowly seeing the institutionalization of medicine and there are no incentives for small business,” while many doctors can’t afford the dwindling incomes and higher financial risks of private practice, so they’re bailing to become employed docs, Jasser adds”, in the article Private Practice on Life Support by Wayne Condro in CMAJ. 2012 Aug 7; 184(11): E571–E572.
Simultaneously, the cost structure and competitive landscape is forcing many locally owned pharmacies to shut their doors, and especially hard hit are rural areas. An article in the Washington Post reported that “more than 16 percent of the independently owned rural pharmacies in the United States shut down between March 2003 and March 2018, according to a policy brief published last month by the RUPRI Center for Rural Health Policy Analysis at the University of Iowa. The report found a drop of more than 1,200 independently owned rural retail pharmacies during that time, bringing the total down to 6,393.
Experts agree that this is due in large part to legislation like the Medicare Modernization Act of 2003 which adversely impacted reimbursement rates and Pharmacy Benefit Managers (PBMs). PBMs are middlemen organizations that secure contracts with employers or unions to manage their prescription drug plans and negotiate deals with pharmaceutical manufacturers for pricing and rebates and pay the claims generated by the pharmacies. The rebates from the pharmaceutical manufacturers are paid to the PBMs and the PBMs may share all, part or none of the rebates with the plan sponsors, depending upon the contract.
Chains like Walgreens and CVS own or operate their own PBMs and thus are able to capture these rebates. In addition, starting in 2013, for many small to medium sized pharmacies Direct or Indirect Remuneration (DIR) fees started appearing in their contracts with PBMs for the 2013 Medicare plan year. These DIR fees are not adjudicated at the point of sale, meaning the pharmacy lacks knowledge of it and they can be as high as $12 per script, which the pharmacy would be required to pay back to the PBM. This has led to situations where in some cases pharmacies are reimbursed below cost for prescriptions they fill.
PBMs have operated in such murky manner that many states have taken legislative action to bring transparency to the situation and in April of 2019, Congress held hearings on the subject matter. Meanwhile, small businesses, vital to safeguarding care in health care are going under.
If reading about this gives you a headache, just think about how operating in it must be. Think of the burden inappropriate cost structures and practices have placed on key links in health care, not to mention the government reporting regulations. Do we remember how the Obama Care legislation was passed and it was too long for anyone to read? All of this happening in a back drop where corporate leaders thoughts that maximizing shareholder profits was the purpose of a corporation. No wonder so many Americans are depressed.
There is no magic pill. There isn’t an immediate solution to this problem, but there are guiding principles. There is a need for: a thorough understanding of the cost practices- as they say follow the money, an understanding and application of antitrust legislation designed to preserve consumer choice and competition at a micro level and for appropriate steps to be taken to do so, an understanding and application of the four principles of Catholic Social Teaching, including subsidiarity, and a need for appreciation and prayer. Appreciation for what doctors and pharmacists go through. They are healthcare providers first and business owners second. There is a need to pray and work to preserve the good.
The 4 Principles of Catholic Social Teaching are: The dignity of life- human beings are equal in dignity and created in the image of God, The common good-activities are to be done for the good of all and not just one party, Subsidiarity –activities are to take place at the lowest level possible without undue interference from higher levels. The elimination of unnecessary layers and bureaucracy, and Solidarity-the notion that we all share and participate in what we are doing, not just now but from generation to generation and no one is exploited. These principles must all be present and one is not be done at the expense of another.