The Bottom Line Pharmacy Podcast: The Complex World of Pharmacy Reimbursement and Negotiation Strategies with Frier Levitt Attorneys at Law

The sunsetting of DIR fees has brought about several changes to the percentages that payers have made up for different pharmacies.  

In some cases, you have the same payer and the same drug reimbursement with different rates at different times for different patients. 

On this special bonus episode of The Bottom Line Pharmacy Podcast, we sit down with Jesse C. Dresser, Esq. and Steven L. Bennet, Esq. with Frier Levitt to make sense of everything related to pharmacy reimbursement rates, negotiation strategies, understanding contracts with your PBMs, and more!   

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If you prefer to read this content, the video transcript is below:

Scotty Sykes: Welcome everybody to another episode of The Bottom Line Pharmacy Podcast today. We have two great guests with Frier Levitt. We got Jesse Dresser with Frier Levitt partner of the firm and he’s in the pharmacy practice group leads that up and we have Steven Bennet here as well partner as well at Frier and Levitt and he leads the Life Science team at Frier and Levitt so thank you guys for being here. We are excited to have you. We’re in the midst of tax season, so you’ll have to forgive us. We got a lot going on over here. We’re kind of jumping all over the place. But, you know, for Frier Levitt, I know you guys have been on the scene here in the pharmacy world for quite a bit. You guys have worked with several of our clients. I know you’ve been very successful with a few of our clients, as a matter of fact. And so, I guess I’ll just open it up and let you guys kind of touch on, you know, what you guys do and just the firm in general, and we can kind of get into some reimbursement topics. 

Jesse Dresser: Sure. And thanks again for having us again. Great to be back on this great podcast and hopefully share some important information with your clients and the pharmacy industry. So again, Jesse Dresser here. I head up the firm’s pharmacy practice group. My clients are mainly pharmacies of different types, retail pharmacies, compounding pharmacies, specialty pharmacies, hospital health system pharmacies, home infusion providers, and so on. I’m joined with my partner, Steven Bennett. Steve works a little bit more on the litigation team. And so, where issues that I face on a regular basis, my clients on kind of a day-to-day basis, when they kind of get to the point where we can’t resolve it through just discussions or can’t resolve it, just kind of figuring it out. We pass it over to Steve and his team and they get really involved in actually litigating and arbitrating against PBMs. And what’s great about his role is he’s able to do this thing called discovery. And I’ll let Steve talk a little bit about his experiences with that. 

Steven Bennet: Great. Yeah. Thanks, Jesse. Like Jesse said, I’m part of the life science litigation team. So, we represent pharmacy disputes that go past, you know, the regular dispute process where maybe you could work things out informally. Once matters really get to the point where there isn’t a business-to-business resolution, we could engage in arbitrations or litigations. Each contractor, the PBM has methodologies in which you could resolve disputes you know, after business-to-business discussions they have kind of run their course and it’s either going to be an arbitration or in litigation, depending on the PBM or the other adversary party. It’s not always PBMs, but it often is. In the litigation and arbitrations, there’s rules about how to get the evidence that it takes to prove your case. So, there’s a discovery process in both state federal courts as well as arbitration, where basically you get to ask questions, ask for documents get the information necessary to try to prove your case. And, you know, in other instances where maybe the PBM hasn’t been cooperative in answering questions, there’s a requirement that they have to answer your questions about either interrogatories, which is written questions, document requests, which is basically giving your emails or giving your contracts that say X, Y, or Z. And then as the discovery process moves forward, we could also ask questions under oath of corporate representatives for whoever entity we’re opposed to. And there it’s sworn testimony live for multiple hours where we get to ask pretty much any question we want, and they have to give an answer. And it’s a really important tool in moving a case forward, moving a dispute forward.  

Scotty Sykes: Interesting. 

Bonnie Bond: Yeah 

Scotty Sykes: That’s very interesting. 

Bonnie Bond: I guess they have to give some sort of answer. Does it matter what it is?  

Steven Bennet: We definitely have instances where there’s a, I don’t know, or a little bit of, you know, you’re deposing multiple people and they go, oh, you got to ask Sally here, and Sally says, you got to ask Tim. But that’s not always hurtful sometimes that’s helpful when we’re trying to prove maybe that a program or conduct that they’ve done is unfair or doesn’t follow requirements that terms and conditions be reasonable and relevant, for example. 

Bonnie Bond: Gotcha. Interesting. 

Jesse Dresser: Yeah. And one of the things with depositions too, just in general, is the idea is you’re locking them into a position. So, you know, even if they say something cagey, like, “I don’t know” or “I can’t recall” when they get up on stand during a trial or hearing and they say, now all of a sudden they have this glowing memory where they’re giving, you know, great, great answer. You can go back to the transcript. “Well, what happened between when I asked you the same question three months ago and you said no idea, and now all of a sudden you do. Was it your lawyer telling you, you know, basically what to say?” 

Bonnie Bond: Something different, yeah. 

Scotty Sykes: Gotcha. 

Bonnie Bond: Bet you guys run into some interesting stuff. 

Scotty Sykes: Golly, I can’t imagine. We could probably do a podcast series on dealing with PBMs. So, you know, obviously you guys are heavily involved in the pharmacy industry. So, what are you seeing today in the pharmacy industry? Obviously, we’ve gone through the change as of the beginning of the year with the reimbursement. We’re seeing some numbers start to come through with that, but…But in general, what are you guys doing on that end and what are you guys seeing on that end in terms of reimbursement so far this year? 

Jesse Dresser: Sure. So, one of the biggest things that we’re seeing among our clients this year is reimbursement rates. Reimbursement rates have become kind of the number one issue. And frankly, from a variety of different directions, right? There was the sunsetting of DIR fees and kind of what that has meant to pharmacy providers. There’s also been changes in kind of the percentages that certain payers might have made up for different pharmacies, whether it be from just growth, whether it be from acquisition or whether it be from certain big plans migrating from one PBM to another. And then we’re also seeing other things that relate to reimbursement rates, but aren’t necessarily one of those issues. Like for example, the implementation of prescription discount card programs onto benefits. You know, essentially GoodRx partnering with ESI or CVS or some of the other big PBMs and basically bolting on that prescription discount card program to those plans. So, it’s been one of the issues that has had a lot of our clients reach out to us since January 1st. And we’ve kind of seen a lot of different pieces of information from dealing with the clients, from dealing with the PBMs and even from, as Steve mentioned, from discovery and litigation arbitration. 

Scotty Sykes: I have heard that, I have heard some clients bring up the discount card issue. What are you telling clients in regards to, or what can you say regarding those when clients are seeing that those discount cards are being applied and so forth? So, what was the initial response to client concerns there? 

Jesse Dresser: Yeah, I want to get Steve to chime in on something that he’s seen with some of his clients in particular. But one of the big things that we advise clients to do is to make sure that you understand your contract. Make sure you understand what you’re signing up for, who it’s with, what the PBM has rights to do. But then at the point of sale, make sure you’re paying attention to that data. Make sure you’re paying attention to the basis of reimbursement. There’s a field that literally tells you, how they’re paying you. Make sure you’re paying attention to things like reimbursement network ID that tell you essentially what contract is being used to put that price into place. That’s kind of the first step. The first step is kind of really understanding some of that. And then from there, there’s some legal strategies that we’ve explored with some of our clients to either push back to either potentially reverse rebuild or potentially to leave a network altogether. Steve, maybe you want to talk about some of the specific experiences that we recently saw. 

Steven Bennet: Yeah, so we’ve been we’ve been seeing experiences where on some payers the term conditions in the contract make it so that the reimbursements are really variable. You could have the same payer, the same drug reimbursement, different rates at different times for different patients. So one, it makes it very difficult to ascertain what the reimbursement rate truly is. And what we’ve been telling our clients to do is really look closely at your contract and we can help pharmacies do this, look closely at the reimbursement terms. And one of the nuances we’ve been seeing in the beginning of the calendar year is a lot of providers saying they’re not even paying us what our contract requires them to pay us. And so, to determine the next steps from there, its understanding what your contract says, understanding the reimbursement rates, and looking at more than just one claim. I’ve been reviewing for some clients, for example, the first full month of the calendar year, looking at the specific reimbursement rates, the specific AWP, and capturing different data fields from the pharmacy software system to determine what contract is this going under. Like Jesse said, with the discount card, there’s specific NCPDP fields that will indicate, for example, is this going under the GoodRx discount card program, even when it looks like it’s adjudicating through a particular PBM. There’s a field that if you look at it actually says like GDX, GoodRX, and will tell you, oh, this actually isn’t adjudicating under your PBM contract. It’s being pushed through GoodRX. And that changes the scenario. We’ve also been reaching out to PBMs saying, you’re not paying us properly under the contract and really identifying the specific claims to get that information. We’ve been doing it through counsel, through legal counsel. So, what’s good is it’s bypassing some of the, maybe the no name email boxes that a lot of pharmacies deal with. And it’s getting to legal counsel knowing, okay, we’re getting an email from outside counsel. If we don’t answer this email, if we kind of brush this off, this might create legal consequences for us down the line. And also leveraging applicable laws. There is, depending on if it’s a you know, commercial program, a state Medicaid program, a federal payer program like Medicare. There are different laws that could intersect and make requirements for specific reimbursement rates. You know, Medicare Part D requires that reimbursement terms be quote unquote reasonable and relevant. There are some state laws that specifically say you can’t pay a pharmacy below acquisition cost or have a process for a pharmacy to appeal MAC reimbursement rates that are below acquisition cost. And understanding the intersection between your contract, the reimbursement rates, and the applicable laws gives pharmacies a fair number of tools to challenge underwater reimbursement or other unreasonable reimbursement terms. 

Jesse Dresser: And some of those laws, I want to mention, kind of bring you back to the, to, you Scotty, your question about the prescription discount card programs. I think some of those, it’s kind of a perverse offshoot of some of those laws where those laws that are meant to apply to PBMs or to health plans that say you have to have a minimum reimbursement, or you have to provide a MAC appeal framework there’s question as to whether or not those apply to prescription discount card programs because they’re not insurance. They’re explicitly not insurance. And so, I think one of the things that has kind of been an unintended consequence of some of this legislation is rather than give pharmacies the ability to appeal a low MAC price on a funded benefit, they just all of a sudden turn it into an unfunded benefit and route it through GoodRx. We don’t necessarily agree. We think that there may still be options, but nevertheless, we think that that’s one of the strategies that PBMs sent. 

Scotty Sykes: Interesting.  

Bonnie Bond: That was a lot.  

Scotty Sykes: I’ll tell you. So, what should pharmacies be doing at the start of this year? You mentioned going through the contract and understanding the reimbursement. I mean, I guess it’s safe to assume that you’re not being reimbursed maybe correctly and that you need to be paying attention to this. 

Steven Bennet: Yeah, I think you need to look at your reimbursement rates very closely. And like we were saying, look at even different NCPDP fields, not just the actual number that you get at the point of sale. I think it’s important to review your payment terms, like the 835 forms where it has a specific payment and understand the contract terms. Cause even in this post DIR fee world, there’s still effective rate agreements that can change your reimbursement. There’s scenarios where a claim process adjudicates but is later adjusted to understand what your reimbursement rate is. Claims that process in the very beginning of the year, maybe they’re being calculated first with an incorrect AWP, such that your AWP discount for claim on January 2nd might be different from February 2nd, for example. And really paying close attention to all of these things to evaluate what’s happening and what strategies could I undertake to improve those reimbursement. 

Bonnie Bond: And you mentioned the word reasonable earlier. So even if you sort of maybe understand your contract, how do you know if what you’re seeing is reasonable? Like what is reasonable? 

Steven Bennet: Yeah, that’s a gray area, right? What does it mean if a reimbursement is reasonable or relevant? The regulations and guidance does not yet say here are factors to consider. We think of it in a couple of different ways. There’s some bright, what I think of as a bright line rule. If you’re buying a drug for $1 ,000, but you’re only getting reimbursed $900, it doesn’t take a very long time to explain that that’s not reasonable. And I’d even go to like if you’re buying a drug for $100 but they’re paying you $100 and one penny, is that reasonable? I don’t think so either. I think there’s a reasonable margin that a pharmacy needs to be able to have on their reimbursement claims. And there are some state laws that do set out more specific terminology, but on the federal side, it’s a gray area, but that means there’s something that we could work with essentially to challenge the reimbursement. 

Jesse Dresser: And there is federal legislation right now, a couple of bills that are seeking to create better guideposts and guardrails around what is or is not reasonable and relevant. At the moment, and when we talk about this, we’re talking primarily in the context of Medicare Part D, because that’s where the language comes from, the laws and regulations. And CMS has explicitly stated, for example, paying less than acquisition costs on a specialty drug is not reasonable or relevant. But beyond that, as Steve mentioned, there hasn’t been much guidance, but there are a couple of bills that are floating around now that would either give CMS the ability to set standards and to kind of be an arbiter of what is or is not reasonable, or alternatively would kind of set forth specific statutory standards of what goes to reasonableness or what goes to relevance. In the absence of that, this has been something, and Steve can obviously speak to this, has been something that we’ve litigated many, many times. There are a couple of reported public cases, essentially, where we’ve obtained an award that said that the PBMs reimbursement structure was not reasonable, was not relevant, and went through a variety of factors that laid out why. So, in the absence of that legislation, it becomes kind of a fact-finding inquiry, something that, you know, if we get to it with a court, we go through the process and seek to demonstrate that the methodology being used was not reasonable or relevant. 

Scotty Sykes: Yeah, I imagine that reasonable areas is obviously a gray area. We run into that as well.  

Bonnie Bond: Use that word a lot in accounting. 

Scotty Sykes: So, yeah. So, how can pharmacies efficiently review their claims data and reimbursement received from payers, PBMs? 

Steven Bennet: So I think using pharmacy software system to basically push out data into an Excel file and then, you know, running some rules, you know, let me look at the claims that were, uh, if the pharmacy software system has actual acquisition costs paid for a pharmacy, you could evaluate, okay, let me look at the claims that I’ve been reimbursed poorly on and blow acquisition or some blow some threshold, whatever it might be. You could also use those types of reports from your pharmacy software system to get a pretty quick picture on how am I getting paid respective to AWP. You know, if you have the actual reimbursement and then the contemporaneous full AWP price, it’s not difficult to manipulate that data set to look at your reimbursement as a percentage of AWP or a percentage of WAC or whatever the reimbursement structure is in the contract. But using that type of data reporting and understanding of your contract, you could, you know, with some relatives evaluate, okay, am I getting paid according to my contract? Am I getting paid differently for different claims, even though I think I shouldn’t be? Am I getting paid less than I’m paying for the drug? And if I know, say, my operating expenses on an average fill basis. You know, oh, I need to make $50 a fill or whatever it might be. If you’re getting only paid $2 over the fill, maybe you’re getting above acquisition. But if you fill too many of those claims, you’re not going to be in a healthy position as a business. 

Jesse Dresser: And the other thing I’ll mention too is it’s important to try to control for as many variables as you can and make sure you’re comparing apples to apples to the best ability. And a lot of that is born out in the actual NCPDP fields data. So, for example, if you’re using submission clarification codes, make sure you’re kind of sorting by those. For example, if you’re a 340B contract pharmacy and you’re using the submission clarification code that you’re using for the inventory, make sure you’re comparing that to other similar claims. Same thing goes for things like pharmacy service type or place of service codes. Those are NCPDP fields that we’ve seen alter reimbursement frameworks to, you know, if you’re doing some home infusion business and you’re using the home infusion modifiers you may be getting different reimbursement rates or being reimbursed under a different contract than if you were building under a retail contract. And then finally you know kind of as I mentioned before looking into the data on what the PBM says it’s using to pay you know what is the basis that they’re paying, are they paying you on the AWP the contracted AWP discount, are they paying you based on a MAC price, are they paying you based on some other methodology. So, it’s important to kind of control for as many of those variables as possible because they’re all going to play into which contract is going to apply and how you’re actually getting paid. 

Bonnie Bond: This is good info, actually just was on a call this morning with a client who they’re definitely starting to pay more attention to this, pulling reports, looking at these things. It used to be where we had a lot of clients that would look at each drug or maybe just look at the patient themselves to see it like if they had six different things being filled. Okay, we lost money on two of these, but we made a good amount of money on the other three. So, we wanna keep them here, so we’re gonna fill it. But this guy was mentioning this morning that he actually has gotten to where he had to even move to a situation where he’s looking at the entire family. He’s looking at the wife, everything that she’s having field and then the children maybe. And looking at that whole picture as a whole to get sort of a net idea of what he’s coming away with, which just seems like a lot. 

Scotty Sykes: Well, it’s interesting because in the past, a lot of pharmacies just what we call the fill and hope method. 

Bonnie Bond: …Pray. They’ll hope and pray. 

Scotty Sykes: where they just fill prescriptions and you know, they check their bank account, they use their bank account to measure the success, whether they’re getting paid or not. Obviously, we don’t subscribe to that theory. You know, we, you know, you got to have those sound accounting to know what’s going on but especially now, so you can just see how this is evolving into you’ve got to know every single prescription going across that bench and what’s going on. So, it’s very interesting. 

Bonnie Bond: You gotta pull a report and look at the losers and figure out what you’ve got. 

Jesse Dresser: And there’s a number of additional pieces of information that are important to gather when you find out that you’re not getting paid well. Let’s say you’ve done everything you could, you’ve tried to see if you could switch to a lower cost generic or buy better or switch to a different buy, similar, whatever the case is, you’ve done all that and you’re still coming up against the wall where you’re going to lose money on that particular claim. It’s important to document that. It’s important to document what it is that you’re losing. Important to understand what type of plan it is. Is it a self -funded plan? Is it a Medicare plan? Is it a Medicaid? Is it a self -funded commercial, commercially insured, so on and so forth. And then finally, if you get to the point where you’re turning away business, where you’re actively saying, particularly for higher cost product, and you’re going to run into situations where technically planned documents are going to suggest that you still need to fill it, but you’re still getting, you’re going to lose $150 by filling it and you’re turning away business. Where is it going? And if it’s going to another provider, is that provider affiliated or owned by that PBM that’s giving you that low reimbursement rate? That’s important data that from a legal perspective, Steve and I, we jump on because it helps us demonstrate and prove a case that it’s unreasonable, that it’s steering patients to wholly owned pharmacies in violation of state or federal law. But it also, there are several active investigations going on to PBMs. There are investigations at the FTC level, looking at the vertical integration and the tactics used to drive business to their wholly owned pharmacies. There are a couple of congressional investigations looking at PBM tactics. There are state level investigations. And importantly, there are state level complaint processes. There are a variety of states that have created pharmacy benefit bureaus or other mechanisms to complain about PBM behavior. And the more data that you have, the more information you have, the more potential you have to be successful in either presenting it to one of these investigations or to filing a complaint to bureau. 

Scotty Sykes: Boy, that’s important because you hear a lot of people complaining about the PBMs and such and that’s all well and good but have the documentation to support it. 

Bonnie Bond: Mm. It’s nice. Yep. 

Steven Bennet: Or even, and two things to add to what Jesse was saying. One, make sure you’re comparing apples to apples. One of the things that we’ve had some pharmacies do is compare your 2023 reimbursement rates to the 2024 to understand how they’re changing. But in doing so, you need to make sure you’re properly accounting for DIR fees in the 2024 reimbursement, because you don’t want to compare your point of sale reimbursement rate to in ‘23 to your point-of-sale reimbursement in ‘24 because DIR fees won’t be accounted, you’ll see a much bigger shift. And then two, understanding where your prescriptions are going that could form the basis of an argument for damages or to prove an element of a cause of action against the PBM. And we had an arbitration that we were successful in getting back DIR. We were successful in getting a final award against Caremark for DIR fees. And one of the, one of the points of evidence that was, I think, compelling to the panel in reviewing that decision, in reviewing our case, was that the provider was really surrounded by CVS pharmacies. And when we were saying, listen, if the patient didn’t get their medication from this provider, they’re going to go to CVS pharmacies. CVS and Caremark, they’re really competing with these providers and when they have an unreasonable DIR fee program, they’re really trying to push a competitor out. They’re not just managing a program and managing an adherence program. They’re actively trying to, you know, if this provider wasn’t in a network, those patients would go to a CVS pharmacy, and you could just look at a map to help drive that point home. Now that wasn’t the only argument, obviously, but I think it was a compelling one. 

Scotty Sykes: Makes sense to an average person, you know, like something’s fishy there. 

Bonnie Bond: Yeah. So, for any of our independents out there listening, if you really truly feel like you’ve gone through, you understand your contract, you understand the terms, you’ve looked in, you’ve pulled reports, you really feel like there’s an unreasonable reimbursement situation going on. Like what are the steps of, what can you do with that? 

Jesse Dresser: So, the first thing to do is to understand the claim and plan at issue. When I do any of these talks, I always start with this one chart that is a pie chart and shows where everyone in the country sits in terms of whether they have self-funded commercial, whether they have fully insured commercial, whether they’re Medicare, Medicaid, whether they’re Tricare. That’s the first inquiry is what type of plan is that patient? Because that’s going to dictate what laws are going to apply. If it’s going to be federal laws, if it’s going to be state laws, if it’s going to be a mix of the two. If it is, let’s say, federal laws, you know that the federal system is going to apply, and you have some legal tools that are out there. You have the federal any willing provider law, you have the federal freedom of patient choice law. Those are laws that give rights to providers to be able to assert some of their rights. At a state level, you have state, any willing provider laws that while not as strong as the federal law in terms of reasonable reimbursement, they can still create avenues. You also have state laws like minimum reimbursement laws. Tennessee, for example, has passed a law to that effect that sets reimbursement at a minimum of NADAC plus a certain dispensing fee. You have other state laws that create MAC appeal procedures or underwater appeal procedures. You also have state laws like in Georgia that prohibit steering to PBMO and pharmacies. And so, to Steve’s point, if you can show that the effect is that they’re being steered to the PBMO and pharmacy, that’s a basis for violation. And then there’s also a couple, even in states that don’t have an any willing provider law or even in self -funded plans where the any willing provider law might not necessarily apply. There are other strategies that we’ve utilized. Some of these involve stepping into the shoes of the patient. For example, if the patient has insurance coverage through their job, they have what’s called a summary plan document. That is a 200 plus page document that describes all of their benefits, describes all the rules, and lo and behold, there’s a lot in there that the PBM probably isn’t following, especially if it’s directing the patient to a wholly owned subsidiary that’s giving substandard care and the patient can document it. There’ve been a couple of cases where that’s been able to be leveraged. And there are a few other similar things like utilizing the Americans with Disability Act and other state and federal laws that even in the absence of any one provider law or some other minimum reimbursement law, you might be able to use to kind of leverage that. Steve, do you want to talk a little bit about kind of the mechanics of the next steps? Those are the laws, essentially. Those are the tools. 

Bonnie Bond: Yeah. 

Jesse Dresser: But maybe, Steve, do want to talk about the mechanics? 

Scotty Sykes: So, there’s a lot of tools out there. I mean, it sounds like that. I mean, find yourself in a pickle there. There’s probably something, right? 

Jesse Dresser: Yeah, there are plenty of tools. Yes. Yes. 

Steven Bennet: Yeah. So practically speaking, okay, I think I’m getting paid unreasonably low. What do I do? What we have pharmacies do is one, make sure we get an eye on the data. So those Excel reports that I was talking about, exporting from your pharmacy software system, we’ve walked clients through that. We want to make sure that we have the right contracts. Make sure we have all the due diligence done, best factual due diligence and legal due diligence. What state are you in? What laws apply, what kind of payers are we talking about? From there, practically speaking, let’s say we looked at the data and it’s not clear that they’re even paying what they’re supposed to under the contract. Each contract with every PBM lays out a dispute process. If you have a dispute with us, what should you do? And there’s a process for that in it. What’s nice about it is it sets obligations on the PBM to actually respond. I can’t tell you how many times I’ll speak with a client and they’re like, I emailed the email boxes, but I don’t get out in any response or, you know, they say, we’ll get back to you and nothing happens. If you follow the dispute process requirements under the contract, there’s a legal obligation for the PBM to respond. They’ll have to have a conference call with a decision maker from a PBM to air the issue. And at a minimum that’s typically, not always, but typically there’s a scenario where you have to complete that sort of good faith dispute resolution process before you could bring a claim. But regardless, legal counsel is going to be involved. They’re going to explain, no, we really do need to be involved. There’s typically a time period in which they have to respond and get involved. And we’ll usually lay out the dispute pretty clear. If you’re not, you know, a simple example I should have been getting paid X, but instead I’m getting paid less than X. We’ll have a demand letter, you know, five pages or less saying this is what your contract says, this is what you’re paying us. Here’s an exhibit with all the claims that you’ve paid us below what you’re supposed to under the contract. It tallies it up and you owe us X dollars. And we’ll use that as the basis for the dispute notice. And we’ll send that to legal counsel through the, we’ll send it through the contractually required notice provisions. We’ll also send it to legal counsel. We’ve had lawsuits or arbitrations against really every major PBM. We deal with their legal counsel on a daily, if not more than daily basis across everyone at Friar Leavitt. They know who we are. We get that to them, and we’ll have a call scheduled and we’ll prep our client for the call. If we get through that dispute call and we’re not able to resolve it or make progress we’ll increase the pressure. Sometimes we’ll send them a demand letter, say, we met on this, we explained our issues, you haven’t resolved it to our satisfaction. And sometimes we’ll include a draft complaint, say we’re going to initiate an arbitration or litigation. We’re not filing it yet, but this is what we’re going to file. So, we’re serious, we need to resolve this. That will sometimes up the pressure. Some matters are able to be resolved at that phase. And we do have active arbitrations. Most of the PBMs have some confidentiality provisions, so there’s relatively few cases that we could talk about, but we deal with the same legal counsel. They know that if we bring a case that it’s not a nuisance lawsuit, that there’s a real issue behind that. And we’re able to resolve some matters, and some matters are worthwhile to go through an arbitration. Fier Levitts worked with a lot of pharmacies. We know that they’re dealing with patients on a daily basis. So, we have processes in place to really minimize the impact on the normal workflow of a pharmacy during even a very active arbitration or litigation. 

Scotty Sykes: So, I guess you don’t need to use your real estate local attorney down the street to help you with this. 

Bonnie Bond: Hahaha! 

Steven Bennet: You know, we have a lot of times where the local attorney that they might use for a lease, they’ll call us. We work well with the general, you know, local counsel. We bring in a level of expertise and really lack of learning curve, call it. You know, if you could pick up a PBM provider manual, it’s several hundred pages for a local attorney to just understand what the contractual obligations are. That takes time and time’s money. 

Bonnie Bond: Yep. Makes sense. 

Scotty Sykes: Oh yeah, I was just kidding on that one. We run into that quite a bit with buy-sale transactions. So, I guess just, I always think that it’s best to, it seems like to me this is something you need to be doing on a daily basis. So, at the end of the day, maybe pulling that Excel sheet, running through it. I mean, is that fair to say? Is this something kind of stay on top of every day or? 

Steven Bennet: I think there’s a what’s best and what’s practical, right? There’s always that kind of push and pull. Yeah. I have a lot of clients, sometimes very large clients, where we’re walking through this at the end of the month, or the quarter and they haven’t done it in other times.  

Bonnie Bond: There’s gonna be days it’s not gonna work out, yeah. 

Steven Bennet: But yeah, in a perfect world, you look at everything with that level of scrutiny. 

Scotty Sykes: All right, well, coming up on 30 minutes here and this has been a great, great conversation. Very pertinent information with today’s environment. I guess kind of the takeaway guys overall, how do y’all feel about just this overall new payment method, new reimbursement method in general for pharmacy? I mean… 

Bonnie Bond: Yeah. 

Scotty Sykes: Going into this the feeling was that I was getting that you’re gonna know the lowest net reimbursement. You’re gonna know your cost. Hey, that’s a good thing. I mean so overall, in your opinion with your expertise and what you’re dealing with is this overall gonna be a good thing for pharmacies or are they gonna be getting hosed again somewhere else? Which I’m sure PBMs are always gonna be trying to get an edge but just overall, how do you feel about this change for pharmacy? 

Steven Bennet: I think that there’s a slightly, there’s a little less unknown. How much am I going to get paid? And I know so many pharmacies, so many of our clients that just that unknown was making it difficult to run their business. I also think it gave PBMs something to hide under when you were saying, hey, I’m not getting paid properly or I’m not getting paid reasonably. They were able to hide behind a well, if your adherence scores are good, if the hidden metric that we use to maybe measure you on is good, then you’ll get paid better. I think that was not accurate at all, not consistent with even what their contract is. So, there’s less for them to hide under. And I also think that some PBMs are paying reasonable rates, and some aren’t. And I think the key here is to be a zealous self-advocate to make sure you’re challenging those areas in which you should challenge it. And we didn’t talk about it here, but giving some report back to federal governments that are exploring regulating PBMs, Jesse talked about it a little bit in the beginning of the call, but the idea that the government is looking into pharmacy benefit managers more than it ever has, I think is a great thing. 

Scotty Sykes: Well said. 

Jesse Dresser: One kind of parting sense of optimism, at least, to leave on is there are some other reforms that have been passed and will be going into effect for Medicare Part D that I do think will benefit a lot of pharmacies. These include some of the reforms to the benefit design in Part D where beneficiaries are going to be paying less overall this year, especially for higher cost drugs, they’re capped a little over $3,300. And next year, they’ll be capped at $2,000 over the course of the year, and even will have the ability to smooth out those payments into $167 monthly payments. And so what that means is if you have a Medicare Part D patient that was previously not able to get prescriptions, or you had to turn away business because they can’t afford the co-pays, ideally it should make it a lot more palatable for them to be able to stay on therapy and get more of the medications that are being prescribed to them and hopefully for pharmacy owners to be able to capture greater share of those. 

Scotty Sykes: Very good, very good. Well Bonnie, I guess that’s kind of the bottom line. I mean, the… 

Bonnie Bond: That’s the bottom line and I do not feel like the smartest person in the room here. I’m like number four. You guys are awesome. Lots of good information 

Jesse Dresser: We appreciate being on again. 

Scotty Sykes: Yep. Appreciate all Frier and Levitt does for the pharmacy industry. I know you guys do a lot out there and so we certainly appreciate that. Appreciate you guys getting on and we’ll have to do it again sometime, but I wish you guys all the best and a great 2024. 

Bonnie Bond: Absolutely.