JACKSON, Miss. (WLBT) - For years, locally owned pharmacies have been a bedrock in so many communities, big and small.
They were often more than a place to just get your medicine.
Now, those hometown pharmacies are disappearing and part of the reason, says one owner, is a complicated payment system that needs regulation.
Allred’s is one of two locally owned pharmacies in Hazlehurst, each one logging over 100 years in business. Jackie Thompson has worked and owned Allred’s for a good portion of those years.
“Came here in ’74 when I graduated from pharmacy school and been standing behind this counter 45 years,” said Thompson.
Business had been good for Thompson until about 3 years ago, when a new component of Medicare Part D called Direct and Indirect Remuneration or DIR became a thing.
Thompson said, “When we fill a claim and look at the screen, we have an adjudicated claim, you think you’re getting paid X number of dollars for, which you can plan on paying your wholesaler. But in two weeks, if they choose to do so, they can say, ‘Well, we actually over payed you.’ They can take the money back. Based on what? How can they do that? They can do anything they want to. Nobody oversees them that I know of.”
It’s a very complicated fee system, that leaves even the most seasoned professionals scratching their heads, but here’s how the National Community Pharmacists Association explains it.
On day-1, the pharmacist dispenses medicine to a patient. Day 14 the pharmacist is reimbursed, for example, $95 for the drug he paid $90 for.
Up to ninety days later the pharmacist gets a notice from the DIR of a $15 fee deduction for the drug, a DIR clawback for medication already dispensed.
So, the final accounting of the pharmacists balance sheet shows a drug bought for $90, reimbursed for $95, then hit with a DIR fee of $15. The net loss is $10 instead of a $5 profit.
“So, you have to dig in your pocket to cover, yes, doing more business than we’ve ever done and making less money,” said Thompson.
Asked how much it has cost him, Jackie Thompson said, “Out of pocket, my pocket about 400-thousand dollars."
He said there’s no way to keep going like that.
"I cannot. No way,” said Thompson.
Robert Dozier said, “So, we lose with DIR fees and the patients also lose with DIR fees.”
Robert Dozier is Executive Director of the Mississippi Independent Pharmacies Association. He’s also part owner of a pharmacy and both he and Thompson say the system is hurting consumers also, by pushing them into the so-called “donut-hole” or monthly amount spent by the Medicare Part-D plan, a lot quicker.
Jackie Thompson said, “When they go into the donut hole, they have to pay considerably more for their medication, still paying their monthly fee to the PBM, but they’re having to pay out of pocket a lot more money until the point in time they spend whatever the contract is.”
“That and contracts with branded products that cost, in some cases, ten times as much as the generic, but they won’t cover the generic because of the rebates they get from the manufacturers,” said Thompson.
Robert Dozier said, “Medicare Part-D plans are not practicing healthcare, they’re practicing corporate greed.”
Thompson and Dozier both say they’ve reached out to their state and national legislators for help, but to no avail at this point. Dozier says the larger pharmacy benefit managers or PBM’s like CVS Caremark are some of the most profitable corporations in the United States today.
Asked what is the solution, Jackie Thompson said, “Regulation; enforceable regulations.”
As for the future of Allred’s, Jackie Thompson says he will continue the fight as long as he can.
3 On Your Side reached out to the Pharmacy Management Care Association for comment.
Spokesman Greg Lopes responded in an email with these links to studies citing studies that show that without DIR, Part D premiums and program costs would be much higher.