Did letters mislead local customers about pharmacy coverage?

Many local citizens recently received a letter telling them Mount Horeb’s only independent community pharmacy would no longer be covered by their insurance. There is only one problem: It wasn’t true.

Dr. Matt McGowan is owner and lead pharmacist at Mount Horeb Family Pharmacy, located at 203 West Main Street in downtown Mount Horeb. He said the letters, which were sent by Navitus Health Solutions and SSM Health Dean Medical Group, were distributed in a heavy-handed attempt to mislead customers and bully small pharmacies during contract negotiations.

“[T]hese letters were sent out completely incorrectly, we believe as a threat or tactic during contract negotiations, to anyone with those insurance plans who have gone to a local pharmacy over the past several years,” McGowan said.

The letter sent by Navitus on September 22 was titled “PHARMACY TERMINATION NOTICE.” It stated: “The purpose of this letter is to inform you that the below pharmacy will no longer be participating in the Navitus pharmacy network. The change will start on December 31, 2022.” The letter then included the name and address of Mount Horeb Family Pharmacy.

“We recommend transferring your prescriptions to another participating pharmacy right away,” added the letter, which was signed “Navitus Health Solutions.” The return address was a post office box in Appleton, Wisconsin. Navitus is owned by SSM Health and Costco Wholesale Corporation

Navitus and similar companies, which are commonly called Pharmacy Benefit Managers, or PBMs, essentially function as middlemen. McGowan said their practices are often ugly and dirty, if not outright criminal. Critics like McGowan believe PBMs have gone rogue and are gouging customers and driving up healthcare costs, which has enabled them to amass a small fortune without actually providing any service or value to customers.

“PBMs actually make up [some of the] top … fortune 500 companies and they add absolutely nothing to the healthcare system, they only take from all sources; patients, employers, manufacturers and mainly pharmacies,” he said. Fortune has called the system “broken” and accused PBMs of “hogging our drug discounts.”  According to an article published in Fortune in July of this year, in 2021 alone, pharmaceutical firms provided a staggering $204 billion in price concessions for brand-name medicines, but the funds “have mostly benefited insurers and their pharmacy benefits managers.”

One of the local residents who received the September 22 letter was Molly Jahn, of Blue Mounds.

She said that rather than simply switching pharmacies, she decided to ask some questions. What she quickly discovered was that Navitus sent the letter while in the midst of contract negotiations with independent pharmacies. By the time most people read it, a new deal was already signed and in place.

That means customers can continue to use their local pharmacies if they wish, but some people worry the damage caused by the letter is already done. McGowan worried it could drive some of the state’s many small family pharmacies out of business.

“He told me that by the time this letter was received, next year’s deal is signed and in fact our coverage using his pharmacy will continue, and we will eventually get a retraction letter, but their goal is to scare subscribers to the big pharmacies with which they have more lucrative arrangements even though the letter is complete fiction at this point,” explained Jahn.

“We love this pharmacy as I am confident the service is better, the commitment to the community is much higher and the new owners are doing a spectacular job,” Jahn stated.

“I got the letter and was like, ‘What?’” said Matt Smith, also of Blue Mounds. Smith said his relationship with the staff at Mount Horeb Family Pharmacy is particularly important, because they help him understand potential drug interactions when treating a rare autoimmune disease.

“You don’t only talk to them about products they are selling,” said Smith. “We also talk about how our kids are doing, or sports.”

Smith said he initially thought he would have to start traveling to another pharmacy in a different community, so he was relieved to learn he could keep using Mount Horeb Family Pharmacy.

“They go above and beyond,” said Smith. “We’re their patients, and they go above and beyond for their patients.”

“It would be a tragedy to lose that pharmacy,” agreed Susan Lampert Smith, Matt Smith’s wife, who also received the letter. She said she did receive a second letter saying a deal had been struck.

When asked about the situation, a receptionist at SSM Health/Dean admitted the letters had gone out “prematurely.” She then said all questions about the subject were supposed to be “triaged.” After a lengthy wait, she returned and said the company would not be commenting on the matter.

Navitus did provide a statement.

“On September 26, we proactively communicated to impacted members that Navitus would be terminating its relationship with AlignRx, a pharmacy services administrative organization (PSAO),” said Mark Lawrence, Vice President of Network Management at Navitus, in a written statement sent out of the company’s San Diego, California office.

“This action was deemed necessary after an extended period of discussion to reach agreement on fair and reasonable market rates proved unsuccessful and ended in June of this year when termination notice was sent to AlignRx on June 7,” he continued. “Since that time we have been actively reaching out to AlignRx member pharmacies with the option to contract with them directly.”

“The decision to move forward with termination was guided by our commitment to remove cost from the system and to enable greater affordability of important medications for the people who need them,” Lawrence wrote. “Failure to act would have resulted in a significant increase to drug cost for Navitus clients and their members. We notified impacted members to provide them time to make a pharmacy change prior to end of year and to best comply with regulatory requirements for advance notification of a potential pharmacy termination.”

“Since that time, the situation has evolved,” he concluded. “We are pleased that our organizations have now reached an agreement that both alleviates the potential cost increase to our clients and enables their members to continue using their local pharmacy if they so choose. We believe that independent pharmacies are important network partners to ensure medication access, and we value their work.”

McGowan wondered how many people were misled by the letter, and how many local, independent family pharmacies could be put out of business by such practices.

“Overall, we just need to spread the word this letter was completely incorrect, and we are able to accept these plans going forward, with ultimately no change to the patient or end user,” said McGowan. “As a cherry on top, I’d love to spread the word that we honestly are able to accept nearly all insurance plans, and that our price is usually as good or better than any pharmacy in the area.”