Independent Drugstore Lobby Seeks ‘License to Collude’: Proposal Would Increase Costs, Decrease Competition

(Washington, DC)— While its own economic report found that 400 new independent drugstores opened last year and that profits (3.2%) were three times greater than the rate of U.S. inflation (1.1%) during an economic downturn, the independent drugstore lobby continues to seek unprecedented collective bargaining rights in order to charge consumers higher prices on prescription drugs, the Pharmaceutical Care Management Association (PCMA) said today.

"Prescription drug prices will soar if competing independent drugstores are given a license to collude," said PCMA President and CEO Mark Merritt.

CBO: Collective Bargaining Would Increase Costs

The Congressional Budget Office (CBO) has found that special anti-trust protections for independent pharmacists would increase federal costs by $640 million over ten years and that increased drug costs to private health plans, employers, and consumers would result in "reductions in the scope or generosity of health insurance benefits, such as increased deductibles or higher copayments." CBO's analysis also contends that cost increases would be passed along to workers, reducing "both their taxable compensation and other fringe benefits."

FTC: Collective Bargaining a "Costly Step Backward"

During testimony before the House Judiciary Committee Antitrust Task Force, the Federal Trade Commission (FTC) stated: "Giving heath care providers . . . a license to engage in price fixing and boycotts in order to extract higher payments from third-party payers would be a costly step backward, not forward, on the path to a better health care system."

Bargaining Tools Already Available to Independent Drugstores

Independent drugstores also enjoy numerous bargaining tools to gain market power in government and commercial programs, including:

• Independent drugstores often participate in joint purchasing groups that allow them to lower costs and compete more effectively.

• Both Medicare and private insurers require geographic pharmacy network access standards for their enrollees that already provide pharmacies-particularly rural pharmacies-extensive negotiating power with pharmacy benefit managers (PBMs).

• All health care providers, including pharmacies, can form joint ventures with other pharmacies to provide quality and clinical services and negotiate the fees for those services.

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