Corporate & Securities Law

Proposed Antitrust Exemption for Pharmacies

By David Fischer

Health Care News (via the Heartland Institute) has a lengthy article about House Bill 971 which would provide antitrust immunity to independent pharmacies to jointly purchase pharmaceuticals. 

The U.S. House Judiciary Committee has approved a bill creating an exemption in antitrust law to enable independent pharmacies to negotiate contracts with Medicare Part D plans and private pharmacy benefit managers (PBMs).

…

Since the creation of the Medicare Part D drug plan, community pharmacies and PBMs have been competing for the business of senior citizens.

PBMs generally have offered inexpensive mail-order drug plans. But since many seniors prefer to pick up their drugs in person at the local drugstore, PBMs are trying to get their business by offering bigger pharmacy networks.

Under current law, PBMs negotiate the reimbursement rates and dispensing fees pharmacies receive when filling prescriptions for drug plan members. But they must negotiate those fees with local drug stores, and the more seniors a pharmacy network has, the more power it wields in those negotiations.

Community pharmacies that do not have the same negotiating power as larger pharmacy chains say they have no alternative but to accept lower reimbursement rates from health plans or forfeit the business of seniors in Medicare Part D plans. So they asked the federal government to pass a law nullifying the advantage held by their competition.

Full post as published by Antitrust Review on January 10, 2008 (boomark / email).