For those who are not aware, a pharmacy benefit manager is a company that manages prescription drug benefits for insurance plans, deciding which medications are covered and the cost. PBMs were created to negotiate prices of prescriptions in order to reduce costs at the pharmacy.
Ironically, since their inception, PBMs have done the opposite – significantly driving up costs nationwide while shifting the blame onto community pharmacies and manufacturers. PBMs have operated in the shadows, shielding their misdeeds through backend business practices that exploit insurers and pharmacies.
However, PBMs have recently attracted significant attention, placing them in the spotlight and subjecting them to increased scrutiny.
Through several formal complaints to the Federal Trade Commission and years of delayed deliberations, FTC Chair Lina Khan launched an official probe and released an interesting interim report on the six major PBMs – noting these companies are “squeezing mainstreet pharmacies.” The three major PBMs currently control over 80% of the market. This vertically integrated and concentrated market structure has allowed PBMs to profit at the expense of patients and independent pharmacists.
This issue is now more public than ever, yet the practices of these PBMs have gone unchallenged. They continue to profit from spread pricing rebates and persist in reimbursing pharmacies below their costs for medications. Most recently, Walgreens, announced the closing of 1200 stores due to a declining reimbursement model. This begs the question – If one of the largest chains, who dispense millions of prescriptions annually, cannot find a profitable route to dispense medications – how can our locally-owned pharmacies survive?
In short – they won’t.
In fact, research has been conducted to assess the impact of closures of independent pharmacies. An alarming 1,136 closures of independents and small to mid-sized chains since the beginning of 2024.
In Alabama, many community pharmacies have closed as a result of PBM practices. For instance, Pharmacy First shut down after many years of serving Huntsville, while Forestdale Pharmacy in central Alabama will cease operations Oct. 31. These closures are more than just a business issue; they directly affect patients, especially in rural or underserved areas. Fewer pharmacies mean longer travel times for prescriptions, reduced access to medications, and potentially worse outcomes. Nine out of ten Alabamians live within 5 miles of a community pharmacy. We expect this number to drastically decline.
However, I am optimistic. Federal legislation has been proposed to offer protections for community pharmacies with overwhelming support.
Insert H.R. 9096 – The Pharmacists Fight Back Act. This bill will offer protections for community pharmacies, enabling them to operate more efficiently, halting closures, and ensuring PBMs are held accountable. Fortunately, many legislators in Alabama have cosponsored this bill with bipartisan support; however, that is insufficient. We need broad backing from all members, both in our state and the nation.
Here’s my request for you: H.R. 9096 has only been introduced in Congress, but will need increased bipartisan support to pass. A grassroots movement of patients, pharmacists, and employers must contact legislators and advocate support of this bill. Contact your legislator today! If legislation like the Pharmacists Fight Back Act fails to pass, it may be just too late to save your local pharmacy.
Jeremy Cates is with Hazel Green Pharmacy in North Alabama.
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