CVS Cuts In-House Dispensaries Out of Part D Plan


A move by CVS Health to place in-house physician dispensaries out-of-network for purposes of Medicare Part D drug payment would force hundreds of thousands of cancer patients across the country to find alternate sources for their oral oncolytic drugs.

Josh Cox, PharmD

A move by CVS Health to place in-house physician dispensaries out-of-network for purposes of Medicare Part D drug payment would force hundreds of thousands of cancer patients across the country to find alternate sources for their oral oncolytic drugs, the Community Oncology Alliance (COA) argues in a newly released white paper. The exclusion also would significantly reduce the amount of specialty drug distribution at oncology practice dispensaries.

CVS has stated that its own revised interpretation of CMS policy gives it the authority as a pharmacy benefit manager (PBM) to declare many physician in-house dispensaries out-of-network and to restrict Medicare Part D payments to licensed retail pharmacies that meet its terms and conditions. The move would force many patients to obtain Part D oral cancer drugs from CVS pharmacies, an outcome that COA alleges would profit CVS at the expense of patient health and convenience.

Members of COA are alarmed about the change not merely because of the impact on their business operations but because it would become significantly harder to effectively coordinate care for their patients, they said. Although oral oncolytics can be taken at home, it can take days for a patient to obtain a prescription from a retail pharmacy owing, in part, to the information exchanges that must occur between that pharmacy and the doctor’s office, said Josh Cox, PharmD, BCPS, director of pharmacy services for Dayton Physicians Network in Dayton, Ohio. Cox said as much as 30% of Dayton’s in-house prescription activity would be affected by the CVS change. The reduction in specialty drug volume also would make it harder to pay for the support staff who already assist patients with their drug needs, Cox said.

“We have built our dispensing programs in our office for patient convenience and to be able to impact medication adherence and clinical outcomes, and it’s unfortunate to say the least when we are powerless to affect change in that regard—when an outside entity takes away the freedom of choice for our patients and then renders us powerless or, at the least, puts us in a situation where we’re handicapped in our ability to provide comprehensive care for our patients,” Cox said.

In a statement, a CVS spokeswoman said the drug company has determined that many in-house physician dispensaries do not qualify under CMS policy as being acceptable drug distributors under Medicare Part D. “CMS Medicare Part D rules define ‘sponsor networks’ as pharmacy-only networks. We have not removed physician-owned pharmacies that are licensed and meet our network terms and conditions,” said the spokeswoman, Christine Cramer. The change goes into effect January 1, 2017.

“We do not expect this change to have an impact on our Medicare Part D patients’ access to oncology medications. We will notify affected plan members well in advance of the January 1, 2017 implementation date in order to provide them with ample time to select a participating pharmacy in our network,” Cramer said.

COA strongly disagrees with the CVS policy change, noting that it is based not on any recent change in CMS policy but represents a reinterpretation of CMS policy. COA said that in-house physician dispensing has been a longstanding practice in the medical industry that has been demonstrated to promote good quality patient care and is essential to enable CMS to fulfill its oft-stated goals of achieving better coordinated, safer, and cost-efficient care, especially in oncology.

“If you look at where healthcare reform is going, it’s certainly about coordinated care, and when you start ripping a part of healthcare (dispensaries) out of the site of care, you’re going to start running into problems,” said Ted Okon, executive director of COA.

Huge consolidation among pharmacy benefit managers has given the remaining players enormous control over the healthcare market. The influence of these companies is further leveraged by the subsidiary pharmacy benefit plans and pharmacy retail outlets they own. “Currently only five PBMs control network access for more than 80% of the covered lives in the United States,” according to the white paper, which was prepared by Frier Levitt Attorneys at Law of Pine Brook, New Jersey. Those five include Express Scripts, Prime Therapeutics, OptumRx, and CVS, according to the white paper.

For the oncology care market, the oral oncolytics that fall under the Medicare Part D benefit represent a rapidly growing slice of activity at in-house pharmacies. “In 2015, 37% of the total US spending on drugs was attributed to specialty medications, and specialty medications are projected to account for 50% of total drug spend by 2018,” the white paper said. “By 2020, specialty drug spend is projected to total about $400 billion, representing about 9% of national health spending. Moreover, dispensing physicians comprise about 46% of the specialty medical spend.”

COA is hoping that CMS and Congress will step in to prevent the CVS policy from taking effect. The oncology association contends that the CVS move is financially motivated and that, contrary to the CVS interpretation, is actually contrary to CMS policy. The exclusion of in-house practices runs counter to the coordinated care theme promulgated by CMS and flies against the “any willing provider” provision of Medicare dispensing policy, COA contends.

Whereas intravenous cancer drugs are administered under Medicare Part B and would not be subject to the CVS exclusion, there is a strong need for physicians to have in-house supervisory control over Part D oral distribution, Cox argues. The mere fact that Part D drugs are oral doesn’t make them easier to manage or less toxic, he said. “It doesn’t reduce the number of side effects. In fact, it sometimes complicates things because it makes medication adherence infinitely more difficult. It requires a high level of coordination of care and real-time access to the latest patient medical records—so that we can manage patients in a very timely fashion, make rapid dosing adjustments when necessary, and dispense smaller quantities to patients that are having frequent dosage adjustments. This then leads to reduced waste and significant reductions in cost.”


Frier Levitt, LLC. Pharmacy benefit managers’ attack on physician dispensing and impact on patient care: case study of CVS Caremark’s efforts to restrict access to cancer care. Published August 2016. Accessed September 1, 2016.

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