During a Senate Judiciary Committee hearing on Tuesday, Sen. Marsha Blackburn (R-TN) questioned Randy P. McDonough, Pharmacist & Co-owner or the CEO Towncrest Pharmacy Corporation and President of American Pharmacists Association, about pharmacy benefit management growth.
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00:00I'm sorry, you're the chair.
00:01Yes, thank you very much, and I'll recognize myself for questions.
00:06I want to thank all of you for being here.
00:08This is an issue that our health care marketplace has struggled with for many years.
00:16And Dr. McDonough, I do want to come to you first, because in Tennessee, where I represent,
00:23since 2010, we have had 120 of our independent pharmacies close, and this is tragic.
00:32Many times, that pharmacy is the only access point for health care in these communities.
00:39And to a pharmacy, when I go in and talk with these individuals, and I'm in each of our 95
00:47counties every year, and they will talk about how horribly they were treated by the PBMs.
00:56So, I'd like for you just to talk about, for just 30 seconds, about how growth and consolidation
01:05around this PBM model has strangled not only you, but other independent pharmacies.
01:11You know, when we saw the chart that showed the $7.3 billion in profits that the PBM industry
01:18is making, I can guarantee you during that same time, from 2017 to 2022, we just saw our
01:25profits going down to the point where we have no profits.
01:29We're being squeezed.
01:31And that's very concerning to me, because when we lose that community pharmacy, whether it's
01:36in an urban area where they might be the community pharmacy for that area, or in a rural area that
01:41we're in, they aren't coming back.
01:44I've had so many mayors and city managers and towns come to me and saying, will you open
01:50up a pharmacy?
01:51I'm like, we can't.
01:52We can't afford to.
01:54So, it has had dramatic impact on us to the point where now we've closed a pharmacy and
02:01converted another one to a hybrid telepharmacy, and that's still struggling.
02:05And I want to make it clear, it's not because we're bad business people.
02:09I want to make that perfectly clear.
02:12It's because we are not making any money on the drug, let alone the services that we provide
02:21to the patient to ensure that patient is achieving a therapeutic outcome with that medication.
02:25So, we're losing it twice.
02:27We're losing it on the drug side, and we're losing it on the service side.
02:31There's no way.
02:32You're right about that.
02:34I want to talk about bad actors with Mr. Scott for a few moments.
02:40We recently had the Department of Commerce and Insurance in Tennessee do a report that
02:47gave us some really disturbing information on 1PBM in Tennessee.
02:52And what they found was that they were forcing these independent pharmacies, the non-affiliated,
03:02to pay a higher inflated rate on over 550 drugs.
03:11And they profited more than $30 million through spread pricing.
03:17Now, this gets to my first point about those 120 independent pharmacies that we have lost in Tennessee.
03:26Now, this same PBM failed to reimburse 265 pharmacy claims within the legally, legally set seven-day business day period.
03:45And that impacted 40 separate pharmacies in the state.
03:51You know, it doesn't take a lot to connect the dots on this.
03:56And there are just, there are so many examples of these egregious practices.
04:02For the purpose of this hearing, I've given you one finding from this report.
04:10And what we have seen is, you talk about transparency, we don't have it.
04:19And it is insulting to patients and to pharmacies and pharmacists and to these independent pharmacies.
04:28So, talk to me about how a $30 million spread and delayed reimbursement for pharmacy claims meets the transparency standards you claim the PBMs are putting in place.
04:45Thank you, Senator Blackburn.
04:47I can't speak specifically to the individualized example, but I can cite to another report that was recently produced by Dr. Carlton from the University of Chicago.
04:55Looking at these questions and using the exact same data set that's been submitted to the FTC for their ongoing study.
05:01And the conclusion was that unaffiliated pharmacies are not being paid less than affiliated pharmacies.
05:07Well, I will tell you, in Tennessee, that is not the case.
05:11And if you would like to see the study, I would be more than happy to submit it to you.
05:16I will certainly take a look at it, Senator.
05:18If I could make two quick points.
05:20Very quickly.
05:21My time's expired.
05:22The practice of affiliation is not unique.
05:25Hospitals, wholesalers, grocery stores, Amazon, others are all partnering with pharmacies in order to provide that efficiency of care.
05:32And the other is, this same point has been made a couple of times, paying pharmacists to be able to do more services for patients is something that we really strongly support, and there's legislation.
05:42Do you support that like you support the hike in administrative fees that your pharmacies have put in place?
05:49They have doubled?
05:51Doubled?
05:52You've got administrative fees for prescriber education, medication adherence, data analytics, pardon me.
06:01And these have increased 51%, 3.8 to 5.7 billion in a two-year period of time.
06:08If I had my way, I'd do away with PPMs.