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How PBMs Hurt Local Pharmacies

Posted on Monday, December 4, 2023
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by Outside Contributor
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46 Comments
Portrait of pharmacists standing with arms crossed in pharmacy

Local pharmacies are boarding up nationwide. Nearly 2,200 American pharmacies shut their doors between 2017 and 2020, leaving 20,000 in business nationwide — about half the number in 1980.

Rural areas are particularly hard hit. About 630 rural communities that had access to at least one pharmacy in March 2003 had none by 2018.

These closures are bad for local communities and patients’ health. When small, independent shops close, patients lose access to the pharmacist who personally knows local residents. They have personal knowledge of their health conditions, prescribed medications, and the potential interactions those medicines might have with new ones. Local communities may also lose a convenient place to get a flu shot, other immunizations or blood-pressure screening.

Small pharmacies often operate as town hubs, and many sponsor local events. Although their numbers are falling, they still employ more than 300,000 people.

Fortunately, lawmakers across both parties are aware of the plight of local pharmacies and the consequences of their diminishing numbers. That is why bipartisanship has rallied behind three dozen bills during this session of Congress. These bills aim to curb the power of pharmacy benefit managers (PBMs) — the giant, secretive corporations that have played a significant role in driving drug prices higher and independent pharmacies out of business.

PBMs negotiate discounts from drugmakers on behalf of insurers. In exchange, pharmaceutical companies receive favorable inclusion of their products on a plan’s formulary. PBMs also administer reimbursements from the system’s payers — insurers, federal and state governments, and corporations — to providers, including pharmacies and clinics.

Their apparent role in the health system is to lower drug costs and save consumers money. Instead, PBMs have made the system increasingly complex, enabling them to extract outsized revenue from it while crowding out the small mom-and-pop drugstores that have long supplied various community needs.

Three big PBMs — CVS Caremark, Express Scripts and OptumRx — control 80 percent of the market for prescription drugs.

Today’s biggest PBMs are vertically integrated with drugstore chains and their mail-delivery services, and the biggest insurance companies. That creates additional opportunities for advantageous self-dealing.

Drugstores buy medicines wholesale, but PBMs decide how much pharmacies get reimbursed for dispensing medications to patients with insurance. There’s no legal requirement for PBMs to provide equal reimbursement, so they can favor affiliated pharmacies while leaving independents out. PBMs also coordinate with their insurance companies to steer plan enrollees to their pharmacy groups.

They do so by restricting where patients can access specific medicines or requiring patients to refill prescriptions at an affiliated pharmacy, no matter which drugstore supplied the original dose. PBMs can also encourage insurers to push unaffiliated pharmacies out-of-network. Hence, patients face higher prices if they stick with their neighborhood drugstore.

As one would expect, the operations of these middlemen take place out of sight. Rules for the disclosure of contractual and other arrangements are practically nonexistent.

PBMs have also taken on the role of quality-control enforcer in prescription dispensing. Purportedly, this is to incentivize high-quality service. In reality, PBMs use their audits to justify “clawing back” fees from, you guessed it, small, independent pharmacies.

During the COVID-19 pandemic, some PBMs even revoked reimbursements for failing to obtain patient signatures. These clawbacks, called “direct or indirect remuneration fees,” wreak havoc on the small-business finances of independent drugstores.

It’s time to put an end to secret and unsavory practices. It’s time PBMs were required to make their negotiations public, forbidding the practice of clawing back reimbursements and allowing patients to access the local pharmacy of their choosing.

Karen Kerrigan is president and CEO of the Small Business & Entrepreneurship Council.

Reprinted with Permission from DC Journal – By Karen Kerrigan

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Rob citizenship
Rob citizenship
4 months ago

This is a very good article on a very important topic, Well done Karen Kerrigan, people ,American citizens, who are interested in the idea of fairness, fair business practices, should appreciate what you wrote here. You used the words secret and unsavory in the last paragraph to describe the pharmacy benefit managers practices – there is no place for secret and unsavory anymore – there needs to be standards that are based on fairness, on the principles of Honor, Honesty, Integrity , Courage and Loyalty – the sort of stuff, the qualities that will help to hold the Country together, not tear it apart. In the spirit of God bless America, land of the free and the home of the brave. And with respect for the ideals of Faith,Family and Freedom – a better prescription for an improved pharmacy system needs to be written . This article suggests a healthier way to approach the matter. Praise for your profound writing about pharmacies and the ethical situation involved.

Monique Whitney
Monique Whitney
4 months ago

If a patient uses their insurance at the pharmacy counter, the price they pay is set by the PBM – NOT the pharmacy, and not the manufacturer. When patients can get their prescription meds for way, way less at Mark Cuban Drug Company, or even just paying the cash (non-insurance) price at their pharmacy, it makes you wonder why we have PBMs at all. PBMs impact every stage of the prescription drug supply chain, driving prices up while driving a wedge between providers and patients. The U.S. has nothing to lose and everything to gain by ditching the “Big 3” PBMs. That we haven’t says everything about why patients are paying so much more for so much less.

USN Retired
USN Retired
4 months ago

Yet another way the Left is chipping away at our freedoms. Government control of health care is the goal of these communist in our government (read: Democrats and some Rhinos). People (like “tex” posting here) are blind and ignorant to the slow demise of our country. Keep believing the Lefts propaganda tex, hopefully you are young enough you will live in poverty in the new communist rule and learn to regret your ignorance of today.

Fran
Fran
4 months ago

Having worked for a PBMfor many years I try to use my local pharmacy as much as possible. Too many layers. I’ve seen patients needing critical meds have lifelong consequences because my company didn’t get the med to the patient within the required time. My local pharmacist knows me, my conditions, the vaccines I’ve had and check the interactions. If I have a question for the pharmacist I don’t have to go through a long telephone tree and then wait for a long time only to be transferred once or twice , having to repeat my story for the third time. Also, these PBMs are very involved politically and can sway legislation. Not good.

Lew Larson
Lew Larson
4 months ago

I’m sure the Biden Criminal family gets their share.

Patriot Bill
Patriot Bill
4 months ago

When pharmacies block medicine from prescriptions like HCQ and Ivermectin then they deserve ALL they get

Samson
Samson
4 months ago

Anytime anything involves money it has to turn evil or corrupt. They can’t do anything anymore because they’re all worried about how much money they’re making instead of what kind of job they’re doing. This is another reason our society is going down the drain. The sin of greed.

legally present
legally present
4 months ago

WHY do you even come on here??? It’s the fault of the stupid congress, there fixed it for you, and remember Tex Biden was in the Senate for HOW many years???

Janice
Janice
4 months ago

We get NO pharmacy benefits unless we use CVS. CVS is so inefficient and doesn’t have enough help in their pharmacy. I’d love to use a smaller pharmacy.

Robert Zuccaro
Robert Zuccaro
4 months ago

My moms insurance told us they were dropping our more convenient pharmacy coverage and we should go to CVS instead. I elected to pay out-of-pocket and keep the lical pharmacy and guess what? The cost increase is negligible! So WHAT exactly DID Medicare cover? Dunno.

Andy
Andy
4 months ago

As a retiree stuck in the Tricare system, what is the alternative to Express Scripts in order not to get screwed on prescription pricing? Someone educate me please.

Thinking
Thinking
4 months ago

Big Pharma with govt regulators set the price and which company’s medicine to use and which drugstores get a kick back. This has to be cleaned up, but will it? Bipartisanship you say? I doubt that.
Isn’t ole Joe in on that too? It wouldn’t surprise me one bit.

Tina Hand
Tina Hand
4 months ago

What can we do to ensure PBMs become transparent and their negotiations are public?

Pat R
Pat R
4 months ago

After a hospital stay and a couple new prescriptions filled at a local pharmacy, Express Scripts emailed urging me to change them to Express Scripts. Then they proceeded to present a price comparison (I’m sure this was automatic or AI generated) which showed the local pharmacy price of $.84 (after insurance) and their price was $8.00. Another was $1.79 locally, theirs was $8.00. Only one of the three was cheaper to go with them but only by about $1.00.
Other than the obvious idiocy of them thinking I’d pay that much more was the fact they even knew about the new prescriptions to begin with since they’d been sent to the local pharmacy. It must have been the insurance (Tricare) who notified them because of a gov’t contract with Express Scripts. Or did PBMs somehow get involved??

Musaiga
Musaiga
4 months ago

Don’t you mean Biden’s handlers?

Rhonda
Rhonda
4 months ago

Self pay for your meds, if you can.
You can use Good Rx even if you have a Part D policy. That is what I do. I have a Part D policy because I legally have to. But I self pay for meds. I do not go through my Part D insurance policy. It’s cheaper for me. And if you self pay, you should be able to get your refill along with the original prescription filled because you are not going through insurance. In other words, when I get my prescription here in my area, I find the cheapest price in my area (which is usually Walmart or CostCo), and I take the prescription and get 6 months of my meds (the original prescription for 3 months and the refill for another 3 months).

Big Dave
Big Dave
4 months ago

I use my local Pharmacy as much as I can. In my rural area it is 8 miles away. The nearest prefered pharmacy, Rite Aid, is 26 miles, others reccomended by insurer are 30 to 45 miles on a lot of rural roads. Gas prices eat up the possible savings very quickly.
Also in an emergency I can call my local Pharmisist on a Sunday evening and he will meet me at the store to help. Try doing that at Rite Aid.
Lets all try to keep the local independents open.

Steven Alton
Steven Alton
4 months ago

We need to get rid of the PBM’s because they are hurting Pharmacies and People on Medicare and medicade..

SOCsr
SOCsr
4 months ago

hello House Republicans! Use your Power to go after the PBMs. Local pharmacies were shining examples of the strength of small business who once made America great.

Brenda
Brenda
4 months ago

I think we all knew this was occurring, except not as widespread. Of course, all for money

Theresa Coughlin
Theresa Coughlin
4 months ago

I use my local pharmacy as well. Under my health insurance plan using my local pharmacy is cheaper than mail-order.

jon
jon
4 months ago

My insurance wants mail order for 90 day prescriptions. They charge 2 co-pays instead of 3. The local pharmacy works with GoodRX or Visory on self pay plan that is MUCH less cost to me than 2 co-pays in most cases.

Michael Warren
Michael Warren
4 months ago

I will admit that I am more and more amazed at the Women power that I see rising up. God I am so happy watching this, thank you AMAC, and Karen Kerrigan for a report we needed to hear.

Win Adams
Win Adams
4 months ago

We need a brand name for the Pharmacy Benefit Managers (PBM). I suggest Medical Mafia. What are your thoughts or ideas?
I am a former consumer member of the Florida Board of Pharmacy.

Robert Chase
Robert Chase
4 months ago

How do PBMs get favorable circumstances when politicians trumpet holding the line on health care costs during campaigns? Smell a rosy relationship with politicians?

Mary
Mary
4 months ago

Walgreens or Walgreens Boot in to be on the list. Didn’t Walgreens buy partnership CVS…

Jeanine
Jeanine
4 months ago

My only “income” is my Social Security Disability, but my prescriptions never total more than $50-$65 per month. It does not make sense for anything more than part A & B and for reason I use GoodRx. Because I live in a small town there was only one pharmacy that took GoodRx. It was miserable using that pharmacy: doctors orders for med usually took a minimum of 24 hours to process, usually 2 days, unless doctor was able to get through to pharmacy with urgency; pharmacy actually answered their phone 3 or 4 times (out of 8 years of calls); had to reorder Rx at least 2 days in advance but would not allow to order more than 22 hours in advance so Every medication had to be started at least one day late. 2 out of 3 times the medication wasn’t even ready to be picked up by Their specified time, had to actually go to try and pick up medication usually 2 to 5 times before could actually receive it.
Then they put a small Target in town that has a CVS (that took GoodRx) I switched to Target CVS and have always been able to pick up medication when ordered and refills on time. It should be noted that this particular “CVS” was Not part of CVS Caremark but specifically part of the Target store. I am paying about $5-$7 more per month, but I would take that for the much better care.
Both pharmacies would be considered “neighborhood” pharmacies an the next closest (city) pharmacies would be either 60 miles south or 70 miles north.

Stephen Russell
Stephen Russell
4 months ago

Can we reform PBMs for Indie RX stores?
Needed

Dorothy
Dorothy
4 months ago

What can we do when our insurance coverage is through our retirement and doesn’t give us an option.

Bill
Bill
4 months ago

How do I identify a non PMB pharmacy? I live in small town Indiana and CVS is only pharm. in towm. But Columbus and Bloomington IN are nearby and might have some smaller local providers!

pete
pete
4 months ago

I try to buy local; this is my community: but for so much of my purchases there is no choice but on-line or remote. then we wonder why there is unemployment, homelessness, etc. To many cases of tails wagging the dog.

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