For the unaware, a pharmacy benefit manager (PBM) is a company that manages prescription drug benefits for insurance plans, deciding which medications are covered and the cost. Created to negotiate prescription prices in order to reduce costs at the pharmacy, PBMs have ironically done the opposite, significantly driving up costs nationwide while shifting the blame onto community pharmacies and manufacturers. Operating in the shadows, PBMs shield 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 (FTC) and years of delayed deliberations, FTC commissioner Lina Khan launched an official probe, releasing an interesting interim report on the six major PBMs – noting these companies are “squeezing mainstreet pharmacies.” 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 1,200 stores due to a declining reimbursement model. If one of the largest chains, which dispenses 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 shows that an alarming 1,136 closures of independent and small to mid-sized pharmacy chains occurred since the beginning of 2024.
In Alabama, many community pharmacies have closed because of PBM practices. For instance, Pharmacy First shut down after many years of serving Huntsville, while Forestdale Pharmacy in central Alabama will cease operations on Oct. 31. These closures are more than 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 10 Alabamians live within five miles of a community pharmacy. We expect this number to drastically decline.
But there is cause for optimism as proposed federal legislation – The Pharmacists Fight Back Act – promises protections for community pharmacies with overwhelming support. This bill offers protections for community pharmacies, enabling them to operate more efficiently, halting closures, and ensuring PBMs are held accountable. Fortunately, many of Alabama’s legislators have co-sponsored this bipartisan bill; however, that is insufficient. We need broad backing from all members, both in our state and the nation.
H.R. 9096 was 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.
The views and opinions expressed here are those of the author and do not necessarily reflect the policy or position of 1819 News. To comment, please send an email with your name and contact information to Commentary@1819news.com.
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