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May
26

Work comp pharmacy news – RiteAid dropping FirstScript

Retail pharmacy giant RiteAid is no longer accepting work comp claimants administered by PBM FirstScript. RiteAid, which owns almost ten percent of all retail pharmacies in the nation, decided to terminate their relationship with FirstScript due to a dispute over processing of work comp scripts.
Despite reports to the contrary, RiteAid is still working with other work comp PBMs.
FirstScript uses CVS/Caremark’s network of pharmacies;FirstScript was allegedly processing work comp scripts through the CVS/Caremark group health network, thereby getting lower prices than if the scripts had been identified as workers comp. This has long been a bone of contention among PBMs and retail chains alike, as those PBMs that use work comp contracts typically pay significantly more for their drugs than they would pay under group health (or Medicare) contracts. PBMs that play by the rules (only processing comp scripts via their comp contracts) contend that some PBMs do not play by the same rules, a situation that puts the ‘rule-abiding’ PBMs at a distinct disadvantage.
Retail stores charge more for comp scripts because it costs them significantly more to identify the correct payer, establish eligibility, and comply with utilization review edits and processes. That’s entirely reasonable and appropriate.
Price compression in the comp PBM business has driven down margins, and is likely behind this alleged conflict. As PBMs compete for business in what is a rapidly-maturing market, they make price concessions to get new deals. This drive for share has come smack up against the reality that the PBMs’ cost of goods sold is pretty consistent across all PBMs; thus the ones that want to continue to slash price to gain share have to figure out another way to reduce their cost.
RiteAid is still in the business of filling work comp scripts – just not for FirstScript claimants.
The chain continues to work with other workers comp PBMs, including ScripNet, Progressive, Cypress Care/Healthcare Solutions, Express Scripts/MSC, Aetna, Modern Medical, PMSI/Tmesys, Cogent Health, and MyMatrixx.
Of note, FirstScript claims their network includes 61,000 retail pharmacies. This may not have been updated to reflect the RiteAid termination, as it is next to impossible to have that many retail outlets without RiteAid.
Sources indicate other chains are closely monitoring this situation, as they too have been frustrated by PBMs processing work comp scripts under their group health pricing arrangements. Industry watchers (including your author) have been waiting…and waiting…and waiting for the chains to actually do something to stop this practice. Perhaps other chains will follow RiteAid’s lead and force compliance with their contracts.
Their failure to do so has – and continues to – penalize(d) those PBMs and payers that complied with their contracts.
Kudos to RiteAid for stepping up. About time.


Joe Paduda is the principal of Health Strategy Associates

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