The Battle for Independent Pharmacies: A David and Goliath Story
The Struggle is Real
Independent pharmacies are facing an uphill battle as they try to survive in a market dominated by powerful pharmacy benefit managers (PBMs). These middlemen, who manage prescriptions written in the US, have been accused of creating higher costs and making it harder for patients to access medications.
The Problem with PBMs
PBMs are responsible for negotiating prices between drugmakers, pharmacies, and health insurers. They take a cut of the action, and their actions have been scrutinized by Congress, the Federal Trade Commission (FTC), and state legislatures. Critics argue that PBMs create higher costs by:
- Charging health insurance plans more for a medication than what they reimburse a pharmacy
- Taking money from drugmakers as a "rebate" to give their drugs preferential treatment on health plans’ lists of medications
- Favoring certain pharmacies with whom they have business ties, forcing independent stores to close
A Study in Georgia
A study by the American Pharmacy Cooperative analyzed the price differential paid to a north Georgia pharmacy and nearby chain stores. The results showed that chains were paid significantly more for many of the same medications: for example, $54 for the antidepressant bupropion, while a local family-owned pharmacy, Bell’s Family Pharmacy, received $5.54. For the blood pressure medication amlodipine, chain pharmacies received an average of $23.55, while Bell’s got $1.51.
The Consequences
The differences in Georgia are striking. "If you’re a pharmacist, you don’t have any control over which drugs you dispense and which you don’t," said Antonio Ciaccia, who runs Ohio-based consulting firm 3 Axis Advisors. The stress of dealing with PBMs has led to the closure of many independent pharmacies, including Bell’s Family Pharmacy in Tate, Georgia.
The FTC’s Lawsuit
In September, the FTC sued three of the largest PBMs – CVS Health’s Caremark, Cigna’s Express Scripts, and UnitedHealth Group’s Optum Rx – for creating a "perverse drug rebate system" that artificially inflates the price of insulin. The companies denied the allegations.
Conclusion
The battle for independent pharmacies is a David and Goliath story, where small businesses are pitted against powerful corporations. As the struggle continues, it is essential to remember the importance of transparency, accountability, and fair practices in the healthcare industry.
FAQs
Q: What are pharmacy benefit managers (PBMs)?
A: PBMs are middlemen who manage prescriptions written in the US, negotiating prices between drugmakers, pharmacies, and health insurers.
Q: How do PBMs make money?
A: PBMs take a cut of the action, charging health insurance plans more for a medication than what they reimburse a pharmacy, and taking money from drugmakers as a "rebate" to give their drugs preferential treatment on health plans’ lists of medications.
Q: Why are independent pharmacies struggling?
A: Independent pharmacies are struggling due to the high costs and lack of transparency in the PBM system, which favors larger chain pharmacies with business ties to PBMs.
Q: What can be done to help independent pharmacies?
A: Policymakers can pass legislation to increase transparency and accountability in the PBM system, ensuring that independent pharmacies receive fair reimbursement rates.
