THE QUEENS
FEBRUARY 2019
Photo by Jenna Bagcal/THE COURIER
NEGATIVE SIDE EFFECTS
Queens pharmacies say new claim program is killing them
BY JENNA BAGCAL
jbagcal@qns.com
@jenna_bagcal
For years, customers who walked into
independently owned pharmacies in
Queens received a level of service and care
that is oft en unmatched by bigger chains.
“When people didn’t have a doctor, they
knew the drugstore was there and you
could walk downstairs, go to the pharmacist
and say, ‘Could you help me with
something?’” said Bob Hopkins, president
and pharmacist at Total Care Rx in
Flushing.
But now Hopkins and other local pharmacists
in the business said that their status
hangs in the balance due to the lack of
transparency amongst unregulated organizations
called pharmacy benefi t managers
(PBMs), which act as an intermediary
between insurance companies and pharmacies.
According to Hopkins, PBMs unfairly
reimburse local pharmacies or changing
reimbursement rates for prescription
medicines without prior notice. Th ree
main PBRs — Express Scripts, CVS Health
and OptumRx of UnitedHealth Group —
control over 70 percent of the market and
are not regulated or checked by the government.
PBMs are responsible for determining
how much pharmacies will be reimbursed
for the drugs that customers buy through
their insurance. Th e organizations also
charge the insurance companies and then
pay the pharmacies and are paid by the
drug manufacturers.
Parthiv Shah, a pharmacist and owner
of Hopkins Drug on Roosevelt Avenue in
Woodside said that PBRs are earning 80 to
90 percent of all fees in their role as middleman
while the pharmacy staff only sees
5 to 10 percent of the money.
“You can’t operate a drugstore in negative
margins,” Shah said.
Bob Hopkins of Total Care Rx
He added that over the past two years,
PBMs have paid them little in reimbursements
and inundated the pharmacy with
fees.
“Th e PBMs started slashing the prices
on our reimbursements and the pharmacy
and now the insurance companies are
paying cost to cost on drugs,” Shah said.
“Th en they have DIR Direct and Indirect
Remuneration fees so even aft er we send
the claim to the insurance company, we
see on the screen that we have made a few
dollars but then they take the money back
on the DIR fees.”
Hopkins said that DIR fees can run 2 or
3 percent per prescription and PBMs have
now started charging a generic equivalent
rate where they give insurance companies
a guarantee that the cost of drugs won’t go
above a certain number and retroactively
take back money from the pharmacies.
For Total Care Rx, this means about $1
million a year is taken from them because
of the generic equivalent rate.
According to a survey conducted by the
New York City Pharmacists Society in
February, 70 percent of 500 of the city’s
independent pharmacists were forced to
cut hours or lay off employees in 2018.
Ninety-two percent of pharmacists surveyed
this year are considering doing more
of the same in 2019 due to abusive PBM
practices.
Hopkins and Shah are two of the local
pharmacists in Queens who have had
to set shorter work days, cut employee
bonuses and contemplate shutting down
the pharmacies altogether.
Th ey both shared that their businesses
may be in jeopardy this year unless PBMs
become more transparent.
“Transparency is the goal and so is government
insight. Customers should know
that the PBM is being paid by these manufacturers
on the backend. Regulations
need to be there, transparency has to be
there. People need to be aware of what a
PBM is, why does it exist,” Shah said.
Parthiv Shah and Kang H. Ko of Hopkins Drug in Woodside
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