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Covid Pill Dispensing Costs Push Pharmacies to Call on Medicare

Jan. 31, 2022, 10:35 AM

High-risk Covid-19 patients could see reduced access to Pfizer and Merck’s antiviral pills without a federal mandate that insurers pay pharmacies for dispensing the medications, industry groups and analysts say.

Pharmacy groups argue the Medicare agency should require minimum insurance payments for the tasks involved with distributing the at-home treatments, including conducting risk assessments and educating prescribers. Adequate payment is especially needed for small, independent pharmacies already struggling to meet testing and vaccination demands, but some health plans are doling out as little as $1, they say.

Pharmacists are getting “slapped in the face with really ridiculous payment rates,” said Kurt Proctor, senior vice president of strategic initiatives at the National Community Pharmacists Association. But they’re trying to “do everything they can for their patients,” he said.

Pfizer Inc.’s Paxlovid and Merck & Co.’s molnupiravir, cleared by the FDA in December 2021, offer treatment options for people who test positive for the virus and are at higher risk of hospitalization.

The Centers for Medicare & Medicaid Services said in November guidance that while certain antiviral drugs will initially be available at no cost to pharmacies, typical dispensing fees aren’t automatically covered. The agency said it “strongly encourages” sponsors of Medicare Part D prescription drug plans to pay those fees, but didn’t suggest an amount.

Without guidance on what an appropriate dispensing fee would be, “everybody’s left on their own to just make up a number,” Proctor said.

Health insurance plans are paying as high as $10.50 for the fee—an amount that should be closer to the $40 Medicare requires for coverage of a single dose Covid-19 vaccine, the NCPA, which represents more than 19,000 independent pharmacies across the U.S., said in a Jan. 18 letter to the CMS.

Plan sponsors, however, argue they are complying with the guidance and acting with an interest in keeping patient costs low.

The Pharmaceutical Care Management Association, which represents the pharmacy middlemen that help decide how a drug will be covered by insurance, said in an email that its members are “stepping up to support the government’s efforts” to provide effective Covid-19 treatments and that they are “making voluntary payments to pharmacies in order to maintain appropriate access to the medications for patients.”

A CMS spokesperson said in an email that the agency has encouraged health plans to consider paying pharmacies dispensing fees that may be higher than normal negotiated rates, due to the high demands placed on health-care providers during the pandemic. The spokesperson added that the agency is committed to making sure Americans can easily access any FDA-authorized Covid vaccines and therapies.

Access ‘In Jeopardy’

Pharmacists who can’t financially make up for the time spent to dispense Covid-19 antiviral pills are being forced to choose whether to stop offering the medications altogether, a situation that industry groups say could be detrimental to high-risk patients.

“It definitely puts patient access in jeopardy,” said Ilisa Bernstein, the American Pharmacists Association (APhA)'s senior vice president of pharmacy practice and government affairs. “Oftentimes, the pharmacist is the primary health-care provider in communities across the country, particularly in underserved and rural areas.”

The Merck and Pfizer pills require a prescription from a physician or other certified prescriber, but pharmacies are finding that a “lot of the prescribers” don’t “know much about these products,” she said. Pharmacists are having to explain to prescribers “what these products are and how they should be used and how they should be dosed.”

Pharmacists also conduct their own patient risk assessment, taking into account any other drugs a person takes and how those may interact with the Covid treatment. For example, patients with renal impairment must also have their dosages adjusted before they are given Paxlovid, according to an FDA fact sheet for health-care providers.

“The pharmacist is involved quite early and throughout the process,” Proctor said. He noted that pharmacies are facing added pressure to get these pills to patients as quickly as possible, since both treatments are most effective at reducing the risk of hospitalization when started within five days of symptom onset.

“You’re asking these organizations to spend money in terms of labor, in terms of time, in terms of acquiring inventory,” said Joey Mattingly, an associate professor at the University of Maryland School of Pharmacy. “If you’re asking them to spend their dollars to do something and essentially on a loss, a pharmacy says, ‘It’s going to hurt my business, I can’t do it.’”

Dispensing Fees

Mattingly said pharmacy dispensing fees for drugs are usually small because they can depend on getting “some additional profit from the product itself.”

“If the price of the drug is $530, then the pharmacy, if they can acquire the drug cheaper than that, they can make some markup on the product,” said Mattingly, who previously managed several Kroger pharmacy locations.

But because the government is purchasing these Covid-19 antiviral pills, pharmacies “will absolutely lose money” without a way to make up for their work, he said.

The NCPA and APhA have said the highest Covid-19 antiviral pill dispensing fee they have seen paid by a health plan thus far was $10.50. The lowest was $1 paid by BlueCross Blue Shield’s pharmacy benefit manager, Prime Therapeutics, according to the NCPA.

Marci Conlin, Prime’s vice president of pharmacy network management, said in an emailed statement that it is “evaluating how best to balance pharmacy demands for increased reimbursement with our clients and consumers desire to keep health care costs more affordable.”

She added the company must also remain “within the requirements of our contracts with the payer community, including government programs such as Medicare and Medicaid.”

Stronger Incentives

Pharmacy groups and policy analysts say the CMS needs to take additional action to encourage health plans to set higher payment rates for pharmacy dispensing fees.

“CMS is only recommending that the payment be higher than usual,” rather than suggesting a reasonable amount for health plans to pay, Bernstein said.

A CMS spokesperson said state Medicaid agencies may set their own provider payment rates so long as they follow federal requirements, and may develop contracts that require affiliated insurance plans to set specific payment rates for certain pharmacy services. States may also give additional reimbursements to pharmacies for any additional costs associated with dispensing the antirival pills.

Establishing a fixed rate that health plans can use across the board would “incentivize” pharmacies to devote more time to dispensing the Merck and Pfizer pills, Mattingly said. That would send a message to pharmacies that “you can make the quality of the experience for the patient better, because you’re not hurting financially,” he said.

To push health plans to actually raise their rates, though, the CMS needs to require that the payments be higher to help ensure Covid-19 treatments make it into the hands of patients who need them most, Bernstein said.

“The government, the payers, the plans, they need to provide the incentive for providers, for pharmacists in these types of communities to have these products accessible,” she said.

To contact the reporter on this story: Celine Castronuovo at ccastronuovo@bloombergindustry.com

To contact the editor responsible for this story: Alexis Kramer at akramer@bloomberglaw.com