Mr. President, I’ve come to discuss with my colleagues the plight of our local pharmacists, which is always difficult, particularly in small towns. And it’s going to be particularly difficult coming January 1st and through next year.
I’ve heard firsthand from rural pharmacies about the looming cash flow challenges that they face next year.
These challenges are a direct result of powerful pharmacy benefit managers (PBMs) and the managers’behavior in response to federal regulations.
This is the situation.
You see, pharmacies are going to face direct and indirect remuneration (DIR) clawback fees from the PBMs for calendar year 2023, just after January 1st, 2024.
And at the same time, pharmacies arealso facing lower post-point-of-sale reimbursement from PBMs beginning that same day, January 1st next year.
It’s a double whammy against cash flow problems of small rural pharmacies.
For over a decade, these powerful PBMs have gouged rural pharmacies by clawing back part of the reimbursements many months after the sale. It’s almost like you sign a contract the 1st of the year that you’re doing business with the PBMs, and then at the end of the year, you get a dun to pay back sometimes thousands of dollars. I’ve even heard examples of tens of thousands of dollars.
You see, three very large PBMs control nearly 80 percent of the prescription drug market.
Some of them are vertically integrated, also, with chain pharmacies, insurance companies and other parts of the prescription drug supply chain.
So, PBMs have a lot of power over what the prescription drugs patients can access through the formulary and how much they cost the patient, and then reimbursement for the pharmacy. In other words, what is the pharmacy getting paid for doing this service?
I want to end all DIR fees. I attempted to do this in legislation that never passed the Senate, but a bipartisan bill by Grassley and Wyden called the Prescription Drug Pricing Reduction Act.
Now, even though that didn’t pass, we luckily, in 2021, had the Centers for Medicare and Medicaid Services (CMS) determine that agency had the authority to end most – but not all – DIR fees.
I support the actions CMS has already taken, but we still need to passlegislative action to end all DIR fees.
CMS’ regulation will go into effect this January.
With CMS’ regulations nearing the effective date to end most DIR fees, you’d think rural pharmacies would be about to see some relief. Sadly, this is not the case.
Thesechanges have turned into a cash flow issue for many rural pharmacies, forcing many rural pharmacists to consider closing or go without pay for a while, so that they keep their staff around and keep the lights on.
Now, let’s get to a suggested solution for this issue.
PBMs should work with rural pharmacists to make sure they don’t close. Because if you’re paying everything back to the PBMs or you’re getting less reimbursement and you’re running your accounts from day to day, it brings financial problems – particularly to these small rural pharmacies.
Now, of course, PBMs are so financially strong that they have the ability to help these small pharmacists after the 1st of the year. We aren’t asking them to help forever, we’re just asking them to help through this interim of clawback and less reimbursement.
So what I’m asking here of PBMs is PBMs should work with pharmacists to give a little extra time to pay back the 2023 DIR fees. I’m not asking the PBMs to give up a single dollar that they’re entitled to.
In CMS’ final regulation, because CMS can help us solve this problem, in their final regulation, the agency spoke to concerns about rural pharmacy cash flow issues, saying in their words, they were “particularly attuned” to this issue.
CMS said that, through law, they had the power to conduct oversight. They said that they could enforce, first of all, provider network access standards, and second, prompt payment rules.
In July, I wrote to the CMS Administrator to see what the agency is doing to conduct this oversight, and in turn, help small pharmacies through 2024 – and of course, only that one year – with their cash flow problems.
As of mid-September, I had not received a response from CMS. So, I’ll soon tell you about a telephone call I had with them.
It shouldn’t take an agency almost two months to respond to you about a problem they said they’re “particularly attuned” to. And remember, I told you previously, the words “particularly attuned to” are their words.
So, last week, I spoke for a long time on the phone with the CMS Administrator.
I asked what her agency is doing to conduct oversight and protect our constituents’ access to their rural pharmacy – particularly our older seniors who can’t travel for miles to get their drugs. And I asked that question because, so far, I hadn’t seen any action of oversight by the agency.
The Administrator committed in the phone call to monitoring compliance to pharmacy access standards and the prompt payment requirements, but at the same time, the Administrator didn’t offer any specific action she’s taken, or even what actions she might take.
The Administrator also committed to looking into what the agency can do to encourage payment plans between rural pharmacies and PBMs, or at the very least,bring rural pharmacies and PBMs together to work out a joint effort.
I’m going to be holding the CMS accountable for following through on that promise.
Iowa’s seniors and rural pharmacists are counting on CMS. The agency can’t sit on the sidelines and let rural pharmacies go out of business.
I told this directly to the CMS Administrator, and I’ll state it now to the same CMS Administrator: please use your authority and bully pulpit to protect seniors’ access to their rural pharmacies.
Powerful PBMs – who receive a lot of public funding from the Medicare and Medicaid programs – can also put many rural pharmacies out of business if you just stand down.
PBMs can’t put the blame on others.
They must and ought to work with rural pharmacies. Don’t drive them out of business by idly standing by. PBMs have the opportunity to protect senior’s access to their local pharmacy.
It’s kind of this situation in rural America because I see it all the time in rural Iowa, losing local health delivery professionals. It happens that your local pharmacy is oftentimes the only health care provider you have. So, obviously, what I’m telling my colleagues today is we need them in our communities.
I hope my colleagues – because everybody in the United States Senate has rural communities – I hope that you’ll check into this situation affecting small pharmacies starting January the 1st, 2024.
We’ve got about three months to get CMS, rural pharmacies and PBMs together to smooth out these cash flow problems pharmacies are going to have through next year.
I’m not going to stop fighting to protect rural pharmacies. Thank you.
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