PITTSBURGH (TNS) — UPMC Health Plan is reducing by 60% statewide the number of drugstores where people with Obamacare coverage can fill prescriptions, a move that follows an industry cost-cutting trend and one the insurer said is needed to better align pharmacist services with overall patient care.
The smaller networks will affect both individuals and small employers who are insured through Pennsylvania’s online marketplace, called Pennie. Enrollment in Pennie plans for 2023 continues through Jan. 15 and will determine the number of people affected by the change.
But some independent pharmacy owners predict the downsizing — and similar efforts to drive down drug costs by limiting the number of participating pharmacies available to plan participants — endangers Pennsylvania’s 829 independently owned pharmacies, including many serving rural areas.
”This is catastrophic for people who can’t drive for a prescription,” said Ed Christofano, owner of three Hayden’s Pharmacy stores in Westmoreland County that aren’t part of the new UPMC network. “The selection process for participating pharmacies is a mystery.”
Restricted pharmacy networks can nudge consumers into buying lower cost drugs, with the savings used to hold down insurance premiums. Spending for pharmaceutical drugs could be cut by $1.34 billion if restricted pharmacy networks were adopted by commercial insurance plans, according to a 2021 study in the American Economic Journal: Economic Policy.
The switch would lower overall drug spending by 2% based on savings that have been realized by standalone Medicare drug plans, which most have implemented.
Between 2011 and 2023, the number of standalone Medicare drug plans that have shifted to restricted drugstore networks increased to 98% from just 7%, according to the Philadelphia-based Drug Channels Institute.
UPMC Medicare Advantage plans since 2019 have had preferred pharmacy networks, which most similar plans in the U.S. have, UPMC Health Plan Chief Pharmacy Officer Chronis Manolis said.
Effective Jan. 1, UPMC Health Plan has created a special pharmacy network for members with health insurance plans sold through Pennie. People with Obamacare coverage through UPMC Health Plan — the second largest ACA plan insurer in Pennsylvania — now have to fill prescriptions at an approved pharmacy to receive discounts.
Pharmacists say the restrictive network is a first for UPMC.
Based on 2021 enrollment, 17,100 of UPMC’s Obamacare members will have to switch pharmacies. The insurer had 114,000 ACA members in 2021 and said about 15% will have to find a new drugstore.
The numbers are somewhat fluid because contracts with pharmacies were still being negotiated, the Pittsburgh-based health plan said.
”Pharmacy is one of the biggest costs we have these days,” Mr. Manolis said. “Network continues to be a powerful lever in managing pharmacy costs.”
WORKING WKTH EXPRESS SCRIPTS
UPMC’s new network was created with pharmacy benefit manager Express Scripts Inc., which is based in St. Louis. Express Scripts spokeswoman Justine Sessions did not return calls seeking comment.
Express Scripts, a subsidiary of health insurer Cigna, also manages pharmacy benefits for UPMC rival Highmark Health, but a spokesman said the insurer was continuing its “broad network” of drugstores for Obamacare plan members in 2023.
In October, Express Scripts alarmed pharmacists by shrinking its nationwide drugstore network for active and retired members of the military by 15,000 stores, or 30%, according to the National Community Pharmacists Association, an Alexandria, Va.-based trade group. At the time, Express Scripts said it would help Tricare Pharmacy Benefit Program members find in-network pharmacies, which include 41,000 chain, grocery and independent drugstores.
Excluded from UPMC’s new pharmacy network are stores operated by Walgreens and CVS Health, drugstore chains that offer medical care for many common problems. Walgreens offers patients videoconferencing with physicians at some of its stores, and CVS operates MinuteClinic, where primary care services are offered by pharmacists and advanced practice nurses.
Mr. Manolis, who said he was an advocate for independent pharmacies, said Walgreens and CVS were cut from the new UPMC network to make room for more smaller, independent drugstores.
UPMC’s eventual goal is to create restricted pharmacy networks for all of its health insurance products, Mr. Manolis said.
Since 2021, UPMC pharmacists in other plan networks have been paid on a per member per month basis to counsel patients with asthma and other chronic breathing problems, and discussions are underway about expanding the program to include counseling for people with diabetes.
”Essentially, it’s a care plan,” Mr. Manolis said. “We think the program is worth expanding,” which is part of UPMC’s value-based contracting with pharmacists.
It’s not just an issue of being cut from a pharmacy network that stings small store operators; many of the drugstores that have been invited to participate in the new UPMCnetwork would have to operate at a loss for many products, said pharmacist Patrick Lavella, principal at Hilltop Pharmacy in Allentown, who also works for a pharmacy wholesaler.
”The bigger issue was when the pharmacists finally saw the contracts — they were unsustainable,” Mr. Lavella said. “The reimbursement for filling a brand-name drug was 5% to 6% lower than what we pay for it. Basically the independents have been cut out of it.”
Larger retailers can sometimes absorb reimbursement cuts because of the additional sales generated by the foot traffic to their pharmacy departments.
Creation of the new UPMC pharmacy network and similar changes in drug benefit design by other insurers could put Pennsylvania’s 829 independent pharmacies out of business in five years, Mr. Lavella said.
In addition, the new Express Scripts contract eliminated dispensing fees, which ranged between $11 and $13 per prescription and covered drugstore overhead costs.
THE CASH OPTION
One way independent pharmacies can push back on the industry trend is by offering discounts for consumers who pay in cash.
Pharmacists, including Kyle McCormick at Blueberry Pharmacy in West View, say preferred pharmacy networks don’t always offer the best price, even with insurance. An emerging pharmacy model has been offering lower than insured costs for prescriptions when consumers pay in cash.
Neighborhood pharmacies have a proven role in enhancing patient care, Mr. Lavella said, but the only goal of restricted networks seems to be cutting costs for the insurer.
”The pharmacies want to help, we’ve proven we can do it, yet we can’t,” Mr. Lavella said. “If we can’t keep our doors open, these patients are going to end up in the emergency room.
