The following article was originally published in the Ohio Capital Journal and published on News5Cleveland.com under a content-sharing agreement.
Compromise budget language hashed out this week by an Ohio House-Senate committee will make problems hurting Ohio pharmacies infinitely worse, the leader of a group that represents them said Thursday.
He added that the Ohio Chamber of Commerce — which advocated part of the legislation — seemed blind to the effect it would have on member businesses by making it more difficult for employees to access medicine.
As it works against a June 30 budget deadline, a House-Senate conference committee approved an amendment that keeps part of a bill meant to help ailing pharmacies but slashes another.
The result, said Dave Burke, a pharmacist, former state senator, and executive director of the Ohio Pharmacists Association, will be that pharmacies will go from earning scant profits to none at all.
“It’s any pharmacist’s suicide bill,” he said Thursday.
Ohio pharmacies have been in trouble for years.
They’ve complained of high fees and low reimbursements from huge middlemen known as pharmacy benefit managers, or PBMs. Last year, Ohio lost 215 pharmacies and their total number dropped below 2,000 for the first time in memory, according to an online tracker launched by the Ohio Board of Pharmacy.
As pharmacies disappear, they create a lack of access that is particularly hard on the poor, elderly and disabled. Not only do they get their medicine at what are often main-street businesses. They also get professional medical advice about chronic conditions like diabetes and high blood pressure.
PBMs, the middlemen, decide which drugs are covered, and they use a non-transparent system to decide how much to reimburse pharmacies that dispense them. The three biggest control nearly 80% of the marketplace.
Each of those companies is part of a Fortune 15 health conglomerate that also owns a top-10 health insurer. CVS owns the largest retail pharmacy chain and all three own mail-order pharmacies.
So, when the big PBMs decide reimbursements, impose rules and charge fees, they’re doing so for their own pharmacies and their competitors. That’s a glaring conflict of interest, their critics say.
There have been abuses in Ohio. In 2018, the Ohio Department of Medicaid peeled back the curtain and learned that a year earlier CVS and UnitedHealth’s PBM, OptumRx, charged taxpayers $224 million more for drugs than they paid the pharmacies that had dispensed them. The Medicaid department fired the PBMs.
In 2022 it got rid of their hidden, seemingly arbitrary system of reimbursement in which the same companies sometimes pay 500 different prices for the same drug. Instead, prices are determined by a public survey published by the U.S. Centers for Medicare and Medicaid Services — the National Drug Acquisition Cost, or NADAC.
With pharmacies no longer losing money on some drugs and making it on others, the Medicaid department set a $10 per-prescription dispensing fee to cover pharmacies’ overhead. Even with the increased dispensing fees, an analysis said the state saved $140 million from the reforms.
Ohio state Rep. Tim Barhorst, R-Fort Laramie, this year proposed to use the same arrangement in many non-Medicaid transactions. That measure made it into the Ohio House budget, but then ran into opposition in the Ohio Senate, where the Ohio Chamber had been telling members the dispensing-fee requirement was a tax.
What emerged from the conference committee late Wednesday might have seemed like a compromise to its members. It kept the provision that drug reimbursements would be based on NADAC, the publicly available price list, but it got rid of dispensing fees.
To Burke and other Ohio pharmacists, it’s the worst of both worlds. Not only couldn’t they profit from over-reimbursements under the traditional, non-transparent system, they also couldn’t cover overhead from a fixed dispensing fee.
Of the measure agreed to by the conferees, Burke said, “That proposition only works with a second proposition — the dispensing fee. Because the bag, the bottle, the lid, the pharmacist, the tech, the lights, the heat and the air conditioning all have a cost. In any business model, whether it’s medications, pizzas or cars… you can’t buy ingredients for a dollar and sell pizzas for a dollar and stay in business.”
He predicted that if it becomes law, there will be a mass exodus from the already depleted ranks of Ohio pharmacies.
“If pharmacies can’t make any money — this legislation makes it so that you’re not making any money at all — it would probably force the closure of the overwhelming majority of pharmacies in this state,” Burke said. “Even a child mowing yards is not going to buy a dollar’s worth of gas and accept a dollar to mow your yard.”
Once conferees agree on a budget, Gov. Mike DeWine has the power to veto line-items in it. Burke said he hoped the governor would consider such a move.
“I think the governor’s office would be well placed to consider a veto and we will be expressing our concerns that the legislation is flawed, and that if he doesn’t, the amount of pharmacy closures in Ohio in the next weeks if not months will explode,” Burke said.
Dan Tierney, DeWine’s press secretary, was non-committal when asked about the matter.
“We have not received final budget language but will be reviewing the final language when received,” he said in an email Thursday.
Burke didn’t accuse any of his former colleagues of ill-intent in agreeing to the measure.
“I think they believed that if they stepped in and said we’ll make sure you get paid what you paid for the drug that will fix everything,” Burke said. “But this legislation takes everything you made a profit on and brings it to zero.”
However, he did say he was mystified about the Ohio Chamber’s reasons for intervening in the matter.
“I don’t know where the chamber adopted its stance from, but it’s hard for me, as an independent business owner, to understand why major employers would want to increase their employees’ difficulty getting medications.”
Burke was incensed that the Ohio Chamber would call dispensing fees — payments to cover overhead — a tax.
“It’s amazing to me that the chamber should take the position that business owners should not make a profit,” he said. “I thought the Ohio Chamber was all about profit, pro-business and competitive markets. But they’ve adopted the position that this particular sector of business owners should not make any money. They consider the dispensing fee to be a tax. So apparently, any profit that any business makes is a tax. Maybe they’ve gone socialist over there. I don’t understand. Maybe they’re not looking at their own pharmacy benefit with any understanding.”
The Ohio Chamber didn’t immediately respond Thursday to a request for comment. But earlier this week, Senior Vice President Rick Carfagna said the goal was to protect Ohio businesses from paying too much to underwrite employees’ drugs.
There are, however, questions about the body’s relationship with the giant conglomerates that own the PBMs. For example CVS Health was a “presenting sponsor” of the Chamber’s 2024 Healthcare Summit,
Among the questions the Ohio Chamber didn’t immediately respond to was how much CVS paid to sponsor the event — or how much the chamber had received from the big-three conglomerates over the past five years.
In earlier responses, Carfagna didn’t address the growing number of pharmacy deserts in Ohio, or that struggling independent and small-chain pharmacies are themselves small businesses that the Ohio Chamber says it wants to protect.
Burke said all the Ohio Chamber’s members will be harmed if the conference committee language becomes law and mass closures result. That would mean sicker employees with difficulties getting medicine.
“I hope the Chamber actually goes and speaks with the people they’re supposed to represent and see if this policy position is reflective of the way they want to treat their employees,” Burke said.
