While many pharmacists across the U.S. have struggled to get their hands on Ozempic, some haven’t bothered.
Nate Hux, the owner of Pickerington Pharmacy in Ohio, stopped stocking the diabetes drug — which has soared in popularity, particularly for its off-label use as a weight loss aid — last summer.
At that time, there were widespread shortages of Ozempic, but that’s not what drove Hux to ditch the drug. Instead, he said, it was because selling the medication was hurting his business.
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The average wholesale price of Ozempic that pharmacies pay is about $900 for a 30-day supply, he said. But Hux said for each prescription, he was typically reimbursed just $860.
“It is too expensive for us to stock,” he said.
Hux is among a group of independent pharmacists who have stopped carrying Ozempic and other drugs in the same class, in part, they say, because of the underpayments by pharmacy benefits managers, who act as middlemen between pharmacists and insurers. These drugs, called GLP-1 agonists, are relatively new and still under patent, meaning there are no generic alternatives.
The development adds a twist to the Ozempic saga in the U.S., where many patients over the last year have been forced to visit multiple pharmacies in search of the drug, which has been difficult to find because of shortages.
Steve Hoffart, the owner of Magnolia Pharmacy in Magnolia, Texas, stopped stocking Ozempic and similar diabetes medications about a year ago. He was seeing reimbursements at about $10 to $40 below the cost of the drugs.
The change, he said, was needed to keep his pharmacy afloat.
“There have been supply issues, but a lot of independents are just telling people we can’t get it because we can’t afford to dispense things below cost,” he said.
A threat to independent pharmacies
Underpayments are a huge problem for independent pharmacists, who are often given lower reimbursement rates than larger retail pharmacy chains that have more bargaining power, said Inma Hernandez, an associate professor at the University of California, San Diego’s Skaggs School of Pharmacy and Pharmaceutical Sciences.
“This is the reason that many independent pharmacies are going out of business,” she said, adding that there isn’t a whole lot that pharmacists can do in response.
“These aren’t contracts we can negotiate,” Hoffart said. “They’re take it or leave it. You either accept the contract or you lose access to patients.”
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Allison Schneider, a spokesperson for Novo Nordisk, the maker of Ozempic, said the company cannot control the price individual pharmacies pay for the medication or how much they are reimbursed by pharmacy benefit managers. “These details are negotiated between pharmacies and external third parties,” she said.
According to the Commonwealth Fund, a nonprofit organization focused on public health issues, three pharmacy benefit managers — CVS Caremark, Cigna’s Express Scripts and UnitedHealth Group’s OptumRx — make up 80% of the market, giving them enormous negotiating power. All three are tied to major health insurance providers.
Pharmacy benefit managers have a special incentive to underpay pharmacists because it may steer customers to their own businesses, said Andrea Pivarunas, a spokesperson for the National Community Pharmacists Association, a trade group for independent pharmacies.
Greg Lopes, a spokesperson for the Pharmaceutical Care Management Association, which represents pharmacy benefit managers, said, “Independent pharmacists are valued partners of pharmacy benefit companies in delivering quality care and necessary medications for patients at affordable costs.”
The high costs of brand-name drugs
Underpayments aren’t only seen for drugs like Ozempic.
According to Antonio Ciaccia, it’s a problem for brand-name drugs in general. Ciaccia is the CEO of 46brooklyn, a nonprofit group that researches drug pricing in the U.S.
The reimbursement rates offered by pharmacy benefit managers are meant to incentivize pharmacists to shop around for the lowest-priced drug, Ciaccia said. It’s typically not a problem for generic drugs, which can be found for low costs.
Finding a low price for brand-name drugs, however, is much harder, because they are sold by a single manufacturer and are usually offered to pharmacists at a set price, he said.
Pharmacists may be able to get by selling brand-name drugs at a loss, if they’re able to make up the difference through sales of cheaper generic drugs that yield higher reimbursement rates.
“For many pharmacies, they have no control over that,” Ciaccia said, referring to the demand for generic drugs. “So as a result, many pharmacies will look at medicines that are being significantly underpaid and make a business decision to not let that drug deep-six their entire business.”
About two years ago, Mike Koelzer, a pharmacist and the owner of Kay Pharmacy in Grand Rapids, Michigan, was forced to make that choice. In order to stop his business from going under, he made the difficult call to stop selling all brand-name drugs.
Doctors will still sometimes write prescriptions to his pharmacy for Ozempic and other brand-name medications, and some customers still come in asking for them, but Koezler tells them he doesn’t have them. He doesn’t think his decision not to carry the drugs has led to lost business.
“I think they understand,” he said. “They know people get pushed around by insurance.”
Hoffart, of Magnolia Pharmacy, acknowledged that his decision to not carry Ozempic and similar drugs could drive away some customers.
“I can’t afford to give away things anymore just out of kindness and goodwill,” Hoffart said. “It is hard for some patients, but at some point, if we’re not in business, we can’t take care of any patients.”
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