Another day, another example of CVS not beating the vertical integration accusations.
Earlier this month, Aetna enacted a new policy for its commercial medical plans mandating drugs be supplied by third-party specialty pharmacies under CVS, the health plan’s parent company, and shipped directly to suppliers. Previously, these facilities have purchased drugs for patients independently and billed for them under a health plan’s medical benefit.
The policy, effective as of July 1, is a sign of vertical integration and puts infusion centers in a difficult financial position that could eventually lead to their closure, experts told Healthcare Brew.
Now, five drugs treating conditions like multiple sclerosis, uncontrolled asthma, and rheumatoid arthritis for Aetna patients are covered under a pharmacy benefit, meaning they will be delivered from a CVS specialty pharmacy.
An easy way to understand the challenges for infusion centers is comparing it to if customers brought their own steak to a restaurant and asked a chef to cook it, Robert Gelfand, founder and president of New York treatment facility American Infusion Centers, told us.
“Part of the business model we operate on is being able to buy the medication and bill for it,” Joshua Katz, director of Massachusetts-based medical clinic the Elliot Lewis Center, said. “If the specialty pharmacy buys the drug and bills for it, that eliminates that source of revenue for us. It’s hard to be profitable.”
Concerns continued
Gelfand said his center runs on “relatively modest profits” and policies where a company yields higher returns on a few drugs (which can turn into more and more over time) like this are “insidious.”
A 2023 study in JAMA found clinics could lose out on nearly $2,000 per month if their drugs are delivered via an insurance company (aka “bagging”) rather than when they directly purchase the drugs. The study showed on average a $300+ per month rise in out-of-pocket payments for patients under the bagging method as well.
Right now, CVS is in the spotlight, but Gelfand is worried this kind of policy could spread to other drugs or payers. If it does, his business may no longer be able to sustain itself, he said, and may even be at risk of closure.
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He may need to stop taking Aetna patients due to these financial challenges, Gelfand added.
Working with specialty pharmacies is also a “big administrative burden” on infusion centers, Katz said, as it requires phone calls, benefits verification, and shipment coordination. Without specialty pharmacies, the infusion centers can simply order drugs on their own.
A ship has…failed?
If there’s a problem with drug temperatures or a drug is contaminated during shipment, or if a delivery is sent to the wrong address, the infusion center isn’t allowed to substitute a medication with another drug they have on hand, Elliott Warren, executive director of advocacy group Infusion Providers Alliance, said.
Considering that many patients at infusion centers have serious illnesses, Warren said he’s worried quality of care will suffer.
“It’s another example of a big payer and insurance company standing between a physician and their patient, all for, frankly, their own self-interest,” he said.
The Infusion Providers Alliance was informed about the policy before it went into effect and sent a letter on June 12 to Aetna outlining the group’s concerns, highlighting potential patient care, cost, legal, and supply chain issues.
When asked about the reasons behind the new rule, CVS spokesperson Phil Blando told us in an emailed statement the policy will allow the pharmacy chain “to better control the cost of the drugs and keep premiums more affordable, while still providing members with safe, convenient access” to certain drugs.
Vertical integration
In recent years, CVS, UnitedHealth, and Cigna have come under fire over accusations that their pharmacy benefit managers (PBMs) have monopolized the healthcare industry. Essentially, these top three companies, which control 80% of the prescription medicine market, can set the cost of drugs while also operating the pharmacies that dispense them.
The infusion center leaders said this new Aetna policy is another practice in which CVS is pushing business into its own specialty pharmacy arm through beneficiaries covered under its health plan.
“It’s a theoretical death knell for infusion centers,” Glefand said.