Drug Middlemen Got Big Markup In New York, Pharmacists Say

New York PharmacistsPharmacy-benefit managers are taking increasingly large markups on generic drugs in New York, according to an analysis of Medicaid prescriptions at independent pharmacies in the state.

In Medicaid, private insurers are paid by the state to cover low-income citizens. The insurers in turn usually contract with pharmacy-benefit managers, or PBMs, paying them to provide drug coverage. PBMs run by CVS Health Corp., Cigna Corp. and UnitedHealth Group Inc. then bill insurers for coverage, and reimburse pharmacies for drugs.

For years, small pharmacy owners have been complaining that PBMs have been shortchanging them, cutting to unsustainable amounts the reimbursement they get for dispensing prescriptions to millions of Americans. Drugstores have also claimed that PBMs are charging larger per-prescription amounts to their insurer and employer clients — and sometimes pocketing the difference.

A Bloomberg analysis this year of 90 frequently prescribed generic drugs in Medicaid managed-care plans in 31 states found wide variations in reimbursement and drug cost from state to state. In some states, Medicaid plans appear to be getting a good deal, Bloomberg reported earlier this year. In others, plans pay markups of threefold or more on some treatments, the Bloomberg analysis found. But Bloomberg’s analysis couldn’t tell how much of the markup was going to PBMs and other middlemen, versus how much was going to pharmacies.

The new analysis sponsored by the Pharmacists Society of the State of New York is one of the first efforts to quantify that spread in private Medicaid plans that cover about 4.3 million New York state residents. The state society has been a critic of the PBM industry and represents pharmacy owners upset over declining reimbursements.

In 2017, PBMs paid independent New York pharmacies in the analysis an average of $10.85 per generic-drug prescription. Private health plans that provide state-financed Medicaid coverage reported a cost of $14.34 per prescription. That represents a markup of 32 percent over what pharmacies were paid. The markups by PBMs more than doubled from 2016, according to the analysis.

Drug costs have become a major national issue for patients and politicians. Along with scrutiny of pharmaceutical companies that manufacture drugs, distributors, insurance companies and middlemen like PBMs have attracted attention for their role in health costs. State officials, in particular, have looked at how PBMs function in Medicaid, which relies on getting low prices to cover as many low-income people as possible.

Middlemen “are taking an increasing share of the margin on generic drugs” in New York, said Eric Pachman, a consultant at 3 Axis Advisors and former pharmacy executive who conducted the study. While PBMs often keep the spread on generic drugs, the analysis can’t rule out that some of the spread was shared by PBMs with their health plans clients, Pachman said.

The Pharmaceutical Care Management Association, a trade group representing PBMs, said that drugstores are overpaid in the New York Medicaid program.New York Pharmacists

New York’s Medicaid program wastes millions every year by overpaying drugstores,” said Charles Cote, a spokesman for the group. “By defending wasteful spending in a program that’s clearly in trouble, New York’s special interest drugstore lobby wants to rearrange deck chairs on the Titanic without offering ways to keep Medicaid afloat.”

PBMs, including CVS’s Caremark unit and Cigna’s Express Scripts unit, have said that spread pricing adds stability and predictability to drug costs for their clients. Health plans freely choose the spread arrangements over other fee-based options, they have said.

PBMs’ health-plan clients “are highly sophisticated purchasers” that negotiate exactly the type of contract they want, Cote said. Rates paid to pharmacies are designed to incentivize drugstores to manage their generic-drug inventory so PBM clients don’t overpay, he said.

The society’s analysis looked at payment data from 11 independent pharmacies around New York State, which included claims paid by 17 different private Medicaid plans. Those data were compared to a federal database of Medicaid spending. While the results are likely to be similar at other independent pharmacies, they don’t include data from large chains that may have more bargaining power, said Pachman.

The New York analysis follows a report by Ohio that also dug into the practice in great detail. The full Ohio report hasn’t been released publicly.

On Jan. 20, the Columbus Dispatch reported that an unredacted version of the Ohio report showed that CVS had been paying some large competitors, including Walmart Inc., far less than it was paying its own pharmacies in Ohio’s Medicaid managed care program.

CVS oversees drug benefits for about 94 million people in the U.S., while also operating about 9,800 pharmacies. CVS declined to comment on the New York report.

OptumRx, the third big drug benefit manager, is a unit of insurer UnitedHealth Group Inc.

CVS Pharmacy Unveils New Beauty Aisles Reflecting Significant Progress In Commitment To Transparency And New Standards For Beauty Imagery

Nearly 70 percent of Beauty imagery in CVS Pharmacy locations nationwide will be CVS Beauty Mark compliant1

Key national brand partners including Neutrogena, COVERGIRL, Olay and Revlon embrace unaltered beauty for new 2019 Campaigns

WOONSOCKET, R.I., Jan. 24, 2019 /PRNewswire/ — CVS Pharmacy, the retail division of CVS Health (CVS), today announced significant progress toward the goal of full transparency for all of its beauty imagery by the end of 2020 and its efforts to create new industry standards for post-production alterations of beauty imagery.  Just one year after the Company made the commitment to create new standards for post-production alterations of beauty imagery, nearly 70 percent of beauty imagery in CVS Pharmacy locations nationwide will be CVS Beauty Mark compliant.

Original Image with CVS Beauty Mark

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Original Image with CVS Beauty Mark


First announced in January 2018, the CVS Beauty Mark initiative was introduced to lead positive change around transparency in beauty in order to educate customers on the difference between authentic and digitally altered imagery.

At an event at the CVS Pharmacy in Times Square today, the Company revealed the first look at its updated beauty aisles and celebrated the leadership of the brand partners that joined in the effort over the past year to strive for transparency for beauty imagery. CVS Executives were joined by key brand partner executives at the event and by COVERGIRL Ayesha Curry, who appears digitally unaltered in a campaign image for COVERGIRL Outlast Lipstick.  Additionally, Neutrogena Brand Ambassador, Kerry Washington, and Revlon Brand Ambassador, Ashley Graham, as well as other influential brand ambassadors also appear digitally unaltered in their images as part of their respective new campaigns.

“As a purpose-led health care company as well as the second largest beauty retailer in the country, we want the millions of customers that visit CVS Pharmacy locations each day to see a more authentic and diverse representation of beauty,” said Kevin Hourican, president of CVS Pharmacy.  “We applaud the brand partners that truly embraced this initiative and helped us in taking significant steps forward in our effort to change an industry standard that has an impact on the health and self-esteem of our mutual customers.”

Brand partners throughout the beauty industry that have made the commitment to work together to reach the goal of full beauty imagery transparency by the end of 2020 include Neutrogena, COVERGIRL, Revlon, Olay, Almay, Aveeno, Rimmel, JOAH, L’Oreal, Maybelline, Unilever, Burt’s Bees and  Physician’s Formula.

In addition to the beauty imagery in CVS Pharmacy locations, all beauty imagery, including brand partner imagery, used on www.CVS.com, and in all marketing to customers, including on social media and for external advertising and promotions, reflects the CVS Beauty Mark commitment.  These channels reach more than 100 million consumers each year. In addition, CVS Pharmacy has instituted a contractual requirement for all of its beauty influencer partners to create and share only imagery that has not been digitally altered and does not use social filters.

“From TV to social media to walking retail aisles searching for a beauty product, Americans, particularly young women, are influenced by media portraying an unrealistic representation of beauty, leading to negative feelings about their own appearance,” said Dr. Tochi Iroku-Malize, a practicing family physician in Bay Shore, New York, and member of the American Academy of Family Physicians Board of Directors. “Research shows that exposure to altered media is linked to poor self-image, and that dissatisfaction can lead to critical health concerns. Working to reduce altered imagery from beauty campaigns and addressing this issue at the point of purchase is a great first step to improve how young people feel about their appearance.”

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CVS Pharmacy is proud to support Girls Inc. in their mission to help all girls become strong, smart and bold in celebration of the CVS Beauty Mark initiative.  During select weeks in February, with the purchase of select Johnson & Johnson, Procter & Gamble and L’Oreal beauty products, a $1 donation will be made to Girls Inc., up to $300,000 collectively for the entire promotion period.  Learn complete promotion details, including offer periods and participating products at www.cvs.com/beautymark.

 “The mission of Girls Inc. is to inspire all girls to be strong, smart and bold. Foundational to this work is ensuring girls have the skills and knowledge to critically analyze the messages and images they receive daily and reinforcing the importance of valuing their whole selves. The commitment CVS Pharmacy has made through the Beauty Mark initiative aligns perfectly to our mission and sends a powerfully positive message to girls that beauty comes in all forms and is a reflection of every part of who they are and what makes them unique,” said Judy Vredenburgh, Girls Inc., president and CEO.

CVS Pharmacy also partnered with lifestyle experts Sara and Erin Foster to create a limited-edition t-shirt that celebrates unaltered imagery and the CVS Beauty Mark. The Sara & Erin x CVS “Sans Retouching” t-shirt will be available for purchase on www.cvs.com/beautymark beginning January 24, 2019 with 100% of the proceeds also supporting Girls Inc.

To raise awareness about the CVS Beauty Mark and the importance of a more authentic and transparent beauty imagery standard, CVS Pharmacy is encouraging consumers to post an unfiltered and unaltered picture of themselves on their social media channels with the hashtag #beautyunaltered.

CVS Health has previously made significant changes in its retail stores with the health of its customers in mind, such as ending the sale of tobacco products, delivering healthier food options throughout CVS Pharmacy stores and committing to remove parabens, phthalates and the most prevalent formaldehyde donors from our store brand beauty and personal care items by the end of this year.

To learn more about CVS Pharmacy’s beauty imagery initiative, visit www.cvshealth.com/beautymark.

About CVS Pharmacy: CVS Pharmacy, the retail division of CVS Health (CVS), is America’s leading retail pharmacy with over 9,800 locations. It is the first national pharmacy to end the sale of tobacco and the first pharmacy in the nation to receive the Community Pharmacy accreditation from URAC, the leading health care accreditation organization that establishes quality standards for the health care industry. CVS Pharmacy is reinventing pharmacy to help people on their path to better health by providing the most accessible and personalized expertise, both in its stores and online at CVS.com. General information about CVS Pharmacy is available at http://www.cvshealth.com.

1 Beauty Mark compliant means that all beauty imagery either features the CVS Beauty Mark watermark, highlighting that it has not been materially altered, or the image is clearly labeled “digitally altered.”

Media Contact: Erin Pensa/CVS Pharmacy/401.770.4786/erin.pensa@cvshealth.com

Kerry Washington in a Neutrogena Ad Featuring the CVS Beauty Mark

CVS Pharmacy

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Kerry Washington in a Neutrogena Ad Featuring the CVS Beauty Mark

More Digitally Altered Image

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Digitally Altered Image

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CVS Pharmacy Logo

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Making It In San Diego: Prescription Medication Costs Impacting San Diego Families

Prescription Medication CostsSAN DIEGO (KGTV) – Prescription Medication Costs


are pushing some San Diegans toward financial ruin.

Prescription drug prices are rising much faster than inflation rates in the United States, according to a recent article by ABC News . Experts describe the rising costs of prescription medication as unsustainable.

“I would say that it is catastrophically out of whack,” said Gloria Rickerd.

Around the start of 2018, Gloria Rickerd’s husband David was diagnosed with glioblastoma. It’s an aggressive type of brain cancer that can be very difficult to treat. Gloria says the average lifespan after diagnosis is between 12 and 24 months.

“Courtesy of having incredible doctors and good healthcare, he is still here after a year,” she said.

Along with the emotional toll etched into cancer treatment, there’s the financial toll. Procedures aren’t cheap, and the price of the medication can be lethal.

“A $400 copay for 15 capsules for a five-day supply,” Rickerd said.

David only has a handful of prescriptions, but without help, the co-payments could break their family financially. Gloria estimates 50 percent of their income goes to healthcare; 20 percent of that to medicines.

“It’s incredibly frustrating that families are expected to deal with these things without any training with limited resources,” she said.


According to a report from the AARP Public Policy Institute, the retail prices of some of the most popular prescription drugs take to treat everything from diabetes to high blood pressure to asthma increased by an average of 8.4 percent in 2017.

“People simply can’t afford their prescription drugs,” said Leigh Purvis, director of health services research for the AARP Public Policy Institute.

“The prices and costs associated with them have gotten so high that people are walking away from the pharmacy counter.”

Purvis says the main reason for the increase is because there’s nothing to stop it from happening.

“There’s nothing in the U.S. healthcare system that will stop drug manufacturers from setting really high prices and then increasing them pretty much whenever they want,” Purvis said.

She told 10News they are seeing a lot of brand name drugs coming on the market that aren’t facing generic competition.

Without competition, the costs can skyrocket.

According to the AARP’s “Rx Price Watch Report: Trends in Retail Prices of Prescription Drugs Widely Used by Older Americans: 2017 Year-End Update” the annual average retail cost for just one popular brand-name drug among the 267 that AARP studied would have been nearly $6,800 in 2017. But had pharmaceutical price increases been limited to the country’s general inflation rate between 2006 and 2017, that cost would have been more than $4,600 lower. Retail prices increased in 2017 for 87 percent of the brand-name drugs studied.

“This really is an issue that affects everyone,” Purvis told 10News. “A lot of people tend to think about high prescription drug prices as something that only affects the people who are taking them, but that’s not the case. If you have healthcare coverage, your premiums and your cost sharing are being driven by high prescription drug prices even if you aren’t taking the product yourself. You also are paying taxes, and taxpayer-funded programs are paying a lot for prescription drug prices.”


While lawmakers debate ways to fix what many consider a crippling problem, there are simple solutions to cut some costs.

Some websites allow you to search prescriptions, compare costs by a pharmacy, and get coupons. If you have the option, experts 10News spoke with suggest buying in bulk through mail order. Also, if you’re at the pharmacy counter make sure to ask if there’s a generic or alternative available.Prescription Medication Costs

RELATED: Making It in San Diego: How to save money on your prescriptions

“I basically Googled patient assistance programs, patient copay assistant programs, and I listed the name of the drug I was looking for,” said Rickerd.

Gloria says she was able to call the manufacturer and find a program that eliminated the co-pays.

She says even if you think someone’s going to say no, it’s always worth trying to get a discount.


In San Diego, many people live close enough to the border they head to Mexico to buy prescription drugs at what they say is a lower price.

10News checked with U.S. Food and Drug Administration and Customs and Border protection on whether that’s even legal.

RELATED: Making It in San Diego: What you should know about traveling with prescription drugs, medications

A spokesperson for the FDA says in most circumstances, it is illegal for individuals to import drugs into the United States for personal use.

“The FDA cannot ensure the safety and effectiveness of medicine purchased over the internet from foreign sources, storefront businesses that offer to buy foreign medicine for Americans, or during trips outside the U.S. Such drugs present risks to American patients, including the risks that such drugs may be contaminated, counterfeit, contain varying amounts of active ingredients or none at all, and/or contain different ingredients than the FDA-approved product. In addition, the directions for use could be misleading or inaccurate, the recommended dosage may be harmful to the consumer, or the contraindications may not contain all of the products the user should avoid when taking the medication leading to serious injury, illness, or even death. For these reasons, FDA recommends only obtaining medicines from legal sources in the U.S.FDA’s personal importation policy [fda.gov] (PIP) describes its enforcement priorities with respect to the importation of unapproved drugs for personal use. This policy is applied on a case-by-case basis and is specific to the individual merits and facts surrounding an individual’s drug offered for import. Under PIP, several factors are considered in determining whether or not the agency intends to object to certain personal imports of unapproved drugs:• The drug is for use for a serious condition for which effective treatment is not available in the United States;• There is no commercialization or promotion of the drug to U.S. residents;• The drug is considered not to represent an unreasonable risk;• The individual importing the drug verifies in writing that it is for his or her own use, and provides contact information for the doctor providing treatment or shows the product is for the continuation of treatment begun in a foreign country; and• Generally, not more than a 3-month supply of the drug is imported.”

Copyright 2019 Scripps Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Lawsuits No Longer Lingering, Hippo Brings To Market Its Service For Buying Discount Drugs

DrugsThe long and litigious saga of Hippo Technologies may finally be over now that the company is finally launching its service to sell discounted prescription drugs to members just three months after settling a lawsuit with its chief competitor, Blink Health.

Hippo and Blink were locked in a lawsuit for much of last year, with Blink accusing the company of stealing pretty much every aspect of its business. For its part, Hippo’s chief executive and co-founder had sued Blink for wrongful termination under whistleblower protection rules after he allegedly uncovered corporate malfeasance at the discount drug membership service.

Both companies use a mobile app and online tool to help consumers find low prices on medications. In its March 2018 suit against Hippo, Blink wanted up to $250 million and had accused the company, which was founded by former Blink employees, of obtaining trade secrets, sabotaging existing contracts and unfairly competing with Blink’s business.

There’s no doubt that bad blood exists between Blink Health’s co-founders, the brothers Geoffrey and Matthew Chaiken, and Hippo co-founder Eugene Kakaulin.

A former chief financial officer at Blink, Kakaulin filed a suit in 2016 claiming that Blink had fired him in retaliation for alerting the company founders to security violations.

With most of those lawsuits now settled, Hippo is bringing its service to market. The company said that it can save patients up to 97 percent on their prescription drugs at almost any pharmacy in the country.

“People deserve to know how much they will pay for meds and get access to the lowest prices available. This is why we started Hippo,” said Kakaulin, the company’s co-founder, in a statement.

Kakaulin’s co-founder Charles A. Jacoby grew up in the healthcare business watching his father work as a general practitioner and grapple with prescribing patients with drugs that they can afford.

 “Markets are only fair and efficient when people are presented with pricing options. Whether people have good insurance, bad insurance or no insurance at all, they should check the Hippo price before going to the pharmacy,” Jacoby said in a statement.

Access to low-cost medicine is a significant part of what’s broken about healthcare in the U.S. today. Blink and Hippo are among a slew of companies trying to provide a fix, including GoodRX, Amazon (through its PillPack acquisition) and RxSave.

Hippo and its competitors operate on a simple premise. They cut out middlemen and guide consumers to use generic drugs, taking a cut of the sales from the drug manufacturers. The process saves customers money and can also generate some revenue for pharmacies that agree to work with the companies.Drugs

Pharmacy benefits managers aggregate the purchasing power of buyers through insurance networks to cut the prices that customers have to pay for their medications. But many people argue that the discounts are not significant, and most of the difference in cost just goes to line the pockets of the benefits managers themselves.

What companies like GoodRX, Hippo and Blink do is bring those benefits to anyone who signs up. Hippo gives participating pharmacies a guaranteed rate for drugs in exchange for lower prices. Sometimes the company will make money on the sale of a drug and sometimes it will lose money, but it ideally is profitable by arbitraging costs across a population.

To sign up for Hippo, potential customers can text “Hello” to Hippo (44776) on their phone or visit the company’s website to receive an individual, digital Hippo card.

Users can then compare costs between medications at local pharmacies and see which location is offering the best price. Once in the pharmacy a user just shows the pharmacist their Hippo card and can start saving.


Hy-Vee Expands Discount Medication List

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