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Big Insurance PBMs Will Shut Down Your Local Pharmacy

Posted on Friday, March 15, 2024
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by Outside Contributor
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35 Comments
Pharmacist in pharmacy. Holding two bottles of pills.

In his State of the Union address, President Biden doubled down on his commitment to decreasing drug prices by expanding the number of drugs subject to Medicare negotiations. However, Congress and his administration have yet to address the middlemen who control these prices.

Millions of Americans may soon be stripped of the most accessible healthcare professional in their communities. An all-out attack is being waged against community pharmacies. This battle, years in the making, has reached a tipping point, and Congress just shelved one of the only lifelines.

Often cited as one of the most trusted professionals, community pharmacists have continued to operate in an environment of decreasing payment for the life-sustaining medications they dispense. Sadly, the community pharmacy is likely filling prescriptions at a loss. Local access to medications and free healthcare advice will be lost if this continues.

Nearly all medications dispensed by pharmacies are paid by insurance companies through their intermediaries known as Pharmacy Benefit Managers (PBM). These intermediaries decide what medications patients receive and what they pay. Their business model evolved from a simple data conduit to the most influential player in the prescription drug marketplace.

Only three PBMs control more than 80 percent of covered lives. These vertically integrated healthcare behemoths are numbers 5, 6 and 15 on the Fortune 100 list.

PBMs pit manufacturers against one another for placement on their approved formularies. In return, manufacturers pay PBMs a part of their revenues through rebates. As PBMs demand larger rebates, manufacturers increase their list price to cover the cost. The result is higher drug prices.

PBMs dictate what pharmacies are paid to purchase and dispense each medication. They offer “take it or leave it” contracts detailing how the pharmacy will be paid. Pharmacies are also subject to additional charges from the PBM, including the risk of audits: PBMs retain the right to audit pharmacy payments and take back funds at will. These audits typically focus only on high-dollar brand drugs that result in a significant payout for PBMs, and payments are usually disqualified for technicalities.

Pharmacy closures are being publicized at a seemingly accelerated pace. According to a recent National Community Pharmacists Association report, this trend will continue. The report shared that a third of independent pharmacies will likely close in 2024 due to “plunging prescription reimbursements by big insurance plans and their pharmacy benefit managers.” Despite many of these pharmacies dispensing more medications than ever in the past year, business owners are still seeing a drastic decline in profitability.

Even the nation’s three largest chain pharmacy operators are not immune to the shifting economic pressure in the industry. Each chain has announced store closures this year, pointing to “underperforming” stores, often in rural areas with smaller populations. The closures of independent and chain pharmacies in these communities create pharmacy deserts, effectively stranding rural populations from their most accessible healthcare professional.

With the recently added scrutiny on PBM’s role in setting prescription drug prices, one would have expected the industry to adjust and pricing to stabilize. Instead, PBMs have doubled down. After all, corporate earnings, shareholder dividends, and exorbitant executive compensation are at risk. Just last month, a PBM-owned data company fell victim to a cyber-attack. This incident resulted in pharmacies being unable to process claims, leaving them without assurance of reimbursement for the life-saving medications they dispensed. Even more egregious, this same PBM continued to send audits to pharmacies while this payment-delaying crisis was unresolved.

While some state legislatures have successfully recognized this looming crisis, most have not. The Federal Trade Commission, which has sunk its teeth into technology and grocery chain mergers, allowed vertical integration in healthcare and is beginning to realize the negative impact that stifled competition creates. However, real action from this regulator has yet to occur as they stall their investigation into PBMs.

Congress has another chance to include PBM reform in the coming March 22 budget package. If action is not taken again, it may be too late to create wide-sweeping changes to this opaque and corrupt system where the patient ultimately suffers.

Todd Stephens is COO of Stephens Pharmacy and Northeast Med-Equip. He wrote this for InsideSources.com.

The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.

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David Millikan
David Millikan
1 month ago

Another move by Dictator Beijing biden to eliminate another Freedom of Choice and COST YOU MORE MONEY along with his Tax Increases and INFLATION.
One more Communist move by Dictator Beijing biden to appease WHO which continues to lie about the China Virus and is controlled by Communist China with our tax dollars that Dictator Beijing biden gives them freely.

D G
D G
1 month ago

This has been going on for well over a decade. Even the big corporate pharmacies are losing money filling prescriptions. Pharmacists are now expected to spend much of their day giving immunizations, performing MTM (medication therapy management), and other tasks which take away from time spent checking prescriptions and counseling patients, but provide alternate sources of income for the pharmacy. Already a significant part of their day is spent performing “insurance agent” duties trying to get medications approved for people who need them. Meanwhile, pharmacies keep closing and prescription counts (pharmacist workload)keep rising.

Tim Toroian
Tim Toroian
1 month ago

Part of unintended consequences. It’s always a part of governmental interference.

Ironmike
Ironmike
1 month ago

Just another plot to get rid of the patriotic people and take care of the order of wokism and their communist support groups. Bidumb and his gestopo dems are working hard to turn America into a third world country.

Stonewall
Stonewall
1 month ago

I live in a small town and have always done business with our local pharmacy. Now the pharmacy is unable to fill some of my more expensive prescriptions because it cost them money to fill them. Just one more area our government has let us down.

Jim
Jim
1 month ago

EVERY THING THE FEDERAL GOVERNMENT TOUCHED IS DESTROYED/RUINED!
ARREST BIDEN FOR TREASON! HE HAS FAILED IN HIS BASIC CONSTITUTIONAL DUTY TO UPHOLD OUR LAWS.
TRY HIM FOR TREASON!
GUILTY — EXECUTE IN PUBLIC!

Thinking
Thinking
1 month ago

Can anyone believe it? AMAC marked my comment on this article with:WAITING FOR APPROVAL. What made my statement, I am 84 years old by the way, so controversial that it had to be banned. Was it the true statements? Misinformation? What ever happen to freedom of speech, thought and opinion. Or is that only for the Fani Willis of this world. Who lies and lies some more but can stay as a lying prosecutor. What is happening in this country where free exchange of ideas is banned. But lies are allowed. Criminality and gangs from all over the world creating mayhem. But let an 84 year old comment on something we got to shut her up. And who is the person that decides this? Do we know his values and beliefs? Are they equal to mine or total opposite. Just asking.

Dan
Dan
1 month ago

Part of the corporations that will eventually control the dystopian communist world and the one world government. Energy, Communication/Media, Health(Medical/Pharmaceutical), Transportation, Real Estate/Housing, Finance, Agriculture/Food, Entertainment, Computer, and Manufacturing/Production.

Thinking
Thinking
1 month ago

Ole joe just threw the seniors under the bus with his stupid plan to lower drug cost, by putting a middle man between the manufacturers and the pharmacies. Instead of lowering the drugs by negotiating directly with the drug companies, they are being taken away from the seniors by the closures of many small pharmacies. Even the big three are closing stores. So much for not caring about the seniors. He screams his plans but in reality they don’t work. None of them have worked. Just throw it out there and see what sticks. But with any sh**ty plans it all runs downhill.

W.P. Turpin
W.P. Turpin
1 month ago

The only way to rid this blight is show up and vote them ALL out in the next election cycle. Just as you fight cancer, you kill it off or cut it out, plain and simple. Show up to the polls and VOTE!!!

Sean Rickman
Sean Rickman
1 month ago

Tik-tok joey doubled down on what today.His doubled down sucks,whats in the background is what we have to look at.No real offence to biden,it’s really the corruption that controls him.

Gail
Gail
1 month ago

Fortunately I have only 2 generic prescriptions. Both have been filled by my insurance company’s pharmacy and previously very reasonably priced. Between November ’23 and February ’24 one of my prescriptions increased in price by 105%, the second by 837%. If they do the same each year for only 2 years I will no longer be able to afford them. If they force all competition out of business they will charge whatever they want. We no longer have to worry about Social Security going broke. They will kill us all before then.

San
San
1 month ago

Welcome to government control of medicine

Bernard
Bernard
1 month ago

Direct evidence of a conspiracy to destroy this Constitutional Republic.

Stephen Russell
Stephen Russell
1 month ago

Still see some Indie RX shops amid Corporates IE CVS & now ex Rite Aid

Phoenix
Phoenix
1 month ago

Just like doctors. They want to make them an employee of a large corporation that will simply demand obedience and fire you if you have any ethics counter to what they want. We already saw this with covid
add tons of personal debt and well your freedom is pretty much gone

Bob Chase
Bob Chase
1 month ago

Congress has totally failed in dealing with the health care boondoggle we face. Folks on fixed income and relying on Medicare are doomed. Retired veterans with TriCare are tied to Medicare which effectively stifles TriCare. Have any senior relatives? Talk to them about their health care. If they fit into the categories stated here you may be shocked at what you hear.

Fed Up
Fed Up
1 month ago

Big Insurance PBMs Will Shut Down Your Local Pharmacy with sleazy assistance from price gouges anf

Steven
Steven
1 month ago

I am a capitalist, but unfortunately this is the problem with capitalism…greed.

harry
harry
1 month ago

This is all happening to make us say, “we give up, let the government take over our Healthcare system.”. He who controls our Healthcare, controls us.

sue
sue
1 month ago

It is time for biden to leave the house. He is a do-nothing. Talks like he will do something but actually does nothing. All talk and no action.

Nancy Perrine
Nancy Perrine
1 month ago

As long as drug companies operate with the premise that all people in the USA are rich, and can afford to pay more than the rest of the world, we will have high drug prices. Until that premise is thoroughly debunked in our government, all the levels of management and owners of the drug companies, and some other countries, we will have the highest prices for our prescriptions. Now. if we can get it through the heads of our national representatives that the USA doesn’t have to look like the richest country in the world, we might make some progress in this matter.

NAncy
NAncy
1 month ago

Time to reign in the insurance companies again

James Thompson
James Thompson
1 month ago

Good,I don’t want to get poisoned anyway

Laura Bentz
Laura Bentz
1 month ago

That’s another reason NOT to take drugs… Supplements and vitamins under the guidance of a naturopathic doctor works so much better. My husband and I are in our late 60’s and are proof of that. We have no chronic diseases between the both of us…

Freddy
Freddy
1 month ago

Sounds like the mafia.

Lonnie
Lonnie
1 month ago

“March 22 budget package”? When was this written? May still hold true for March 24 but tends to lend to recycled articles.

An older blonde women laughing in the kitchen with a grey haired man.
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