Creative PBM Spin on the Express Scripts-Walgreens Fallout

By B. Douglas Hoey, RPh, MBA

An acknowledgement to the Pharmaceutical Care Management Association, the association representing 12 corporations and their PBM and mail order interests, for its consistent and creative spin on the business realities of pharmacies. PCMA took another chapter out of that book yesterday with the release of its survey and a press release titled: “Walgreens’ Customers Flock to Independent Pharmacies.”

According to the “nationwide” survey of 300 independent pharmacies (commissioned by PCMA), independent pharmacies were called and asked if patients had come to their pharmacy from Walgreens—no doubt as a result of Walgreens drawing the line on low PBM reimbursement and one-sided contracts. Part of PCMA’s spin is that consumers don’t really need so many pharmacies after all and, look at how “local drugstores” have benefitted from Walgreens being out of the picture with Express Scripts.

It’s interesting that the PBM’s lobby group would tout choice at the same time that two of its most prominent members, Express Scripts and Medco, are trying to restrict competition through their proposed merger.

The survey failed to ask the pharmacies the most important question: Are these transferred prescriptions profitable? Don’t get me wrong, community pharmacies want to have access to patients. But the PBM practice of ratcheting down the maximum allowable costs, or MACs, of their retail pharmacy network on a whim sometimes creates an upside-down dynamic in which increasing business decreases profits.

And, just in case PCMA’s survey deceived you momentarily into thinking that it really had any interest in anything that could benefit community pharmacy owners, it stated that, “Since there are now more pharmacies than McDonalds, Burger Kings, Taco Bells, Pizza Huts and Starbucks combined, public and private payers can offer drug benefits that weed out drugstores that overcharge.”

While there is a grain of truth that pharmacies usually locate their business near where consumers live (go figure!), it masks the fact that PBMs are desperately trying to restrict or remove patients’ choice by driving them to PBM-owned mail order pharmacies where they can more easily manipulate the pricing reported to payers, control patient choice, and increase their windfall profits.

It’s also an interesting choice for a comparison, since fast food is often cited in the context of overindulgence and the U.S. obesity epidemic, while the PBMs’ self-owned mail order pharmacies are increasingly becoming known for stuffing patients’ mailboxes with higher-cost medications that are then wasted or create an accidental poisoning or environmental hazard.

Where the comparison with community pharmacy completely falls apart, however, is the allegation that pharmacies have the ability to “overcharge” or have any say with how much the patient is charged. PBMs dictate how much the pharmacy can charge, so even if the pharmacy wanted to “overcharge” it couldn’t. The reality is that the overcharging takes place in the “spread” the PBM charges the employer versus how much it pays the pharmacy.

Despite the spin, the reality remains that the current PBM business model does not align the interests of the PBMs, pharmacies, patients, and payers. Better models must and will develop. This latest example of the PBMs’ monopsony power (this time over Walgreens) only shows that negotiating with PBMs is as fictitious as the PBMs’ genuine interest in “local drugstores.”


For yet another example of outrageous mail order waste, be sure to watch this incredible story featuring Marra’s Pharmacy in Cohoes, N.Y. and Marra’s owner and pharmacist-mayor John McDonald. Share it far and wide.

4 Responses to “Creative PBM Spin on the Express Scripts-Walgreens Fallout”

  1. 1 Terry Forshee March 16, 2012 at 9:11 pm

    What I find really funny is that at the same time Walgreen’s was taking a stand against PBMs, the “whores” of the pharmacy world, CVS and Rite-Aid made a big play for their business. Instead of joining with Walgreens and taking an opportunity to deal a blow to the anti-competitive practices of PBMs and standing up for our profession these 2 fine businesses decided to throw themselves at the mercy of the PBMs they profess to despise. How a pharmacist can stand to work for businesses like this pretty much sums up the state of chain pharmacy. Greed at its finest.

  2. 2 Concerned pharmacist March 17, 2012 at 3:04 am

    Unbelievable! I can see how the spin can be used to persuade the FTC to approve the Express Scripts/medco merger. Without understanding community pharmacy, it appears that Express Scripts standoff with Walgreens was a win for community pharmacy. In reality, Walgreens is representing the dignity of community pharmacy. The merger will be a huge loss for not only community pharmacy, but for Walgreens as well. As of last week, Wall Street is predicting that the merger will happen. I sent letters to my government representatives. We need to do more, I just don’t know what else to do!

    • 3 ncpa1 March 20, 2012 at 3:20 pm

      Thank you for taking the time to reach out to your elected representatives in this critical time for independent pharmacy! For concerned community pharmacists and patients to learn more about issues facing community pharmacy and how to reach your legislators to discuss these issues, go to the Legislative Action Center.

  3. 4 Carrie March 28, 2012 at 1:29 pm

    @Terry Forshee: I find your comments offensive. While the corporate battles ensue, someone has to take care of the untold numbers of patients left at the mercy of the WAG/ESI stand-off. Or did you forget about them?

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