CVS Reverses Course on Dispensary Exclusion Plan

CVS Health has changed its mind about excluding physician-owned dispensaries from Medicare Part D drug distribution.

CVS Health has changed its mind about excluding physician-owned dispensaries from Medicare Part D drug distribution. The Part D class includes the rising class of oral oncolytics, which are both lucrative and make up a growing proportion of oncology drugs prescribed.

The pharmacy benefit manager owns a huge chain of 10,000 pharmacies through its corporate conglomerate and it had been accused by oncologists of trying to cut them out of business so it could capture a bigger slice of the oral oncolytics market.

In a statement Friday, October 10, CVS spokeswoman Christine Cramer said that although the exclusion policy had been found to be in conformance with longstanding CMS policy, CVS was not going to go through with it. The implementation would have begun in January 2017 and Cramer said that CVS had already begun notifying physician dispensaries and beneficiaries of the decision to abandon its exclusion plan.

“While we had received confirmation from CMS on our interpretation of the rule related to the role of physician dispensers, based on ongoing dialogue with Oncologists as well as CMS, we will not be making this network change,” Cramer said.

“As a result, Oncologists who dispense medications will remain in our Medicare Part D networks pending future dialogue with CMS. We are in the process of communicating this information to affected dispensers and beneficiaries,” she said.

The Community Oncology Alliance (COA) said in a statement that it welcomed the change. "We are relieved that CVS has reversed course in allowing cancer patients to continue receiving their oral medications from their oncologists,” said Ted Okon, the executive director of COA. “This removes one less strain seniors covered by Medicare Part D plans face in dealing with cancer. It ensures better care coordination, closer treatment monitoring, and cost efficiency and convenience for patients."

CMS policy expresses a bias for the use of licensed pharmacies where the distribution of Part D drugs is concerned. CVS had relied on this part of the policy in declaring its intention to go ahead with the exclusion.

Oncologists represented by the Community Oncology Alliance (COA) fought back with a white paper that argued that the quality of care received by patients is actually quite high when they receive their drugs from an in-house, physician-owned dispensary. The paper contended that in-house pharmacy workers can work closely with doctors to ensure that patients adhere to their medications and receive supplies that do not result in unnecessary waste.

For oncology practices, that exclusion would have cost them heavily in terms of revenues, as many of them are now in the dispensing business and they rely on oral oncolytic revenues to fund other aspects of patient care.

Josh Cox, PharmD, BCPS, director of pharmacy services for Dayton Physicians Network in Dayton, Ohio, has previously stated that as much as 30% of Dayton’s in-house prescription activity would have been affected by the CVS change.

“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 stated.

COA blames events like the aborted exclusion policy on the rising power of pharmacy benefit managers which through consolidation among themselves now control a huge swath of the drug distribution market—working as sponsor managers for CMS while at the same time operating street-level pharmacy networks. This puts them in increasing contention with physician dispensary operations.

Cramer did not immediately elaborate on the reasons for CVS’s decision to abandon the exclusion plan, nor would she comment on the ongoing dialogue between CVS and CMS over the matter.

There was no immediate comment from CMS about the change or the reasons for it.

CVS is one of the big 5 pharmacy benefit managers that control virtually all Part D payments. Those include Express Scripts, Prime Therapeutics, and OptumRx, according to a white paper commissioned by COA and authored by Frier Levitt.

“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.”


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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