[Fox Business] Independent pharmacies fear closures amid financial strain
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A growing number of independent pharmacists are worried about having to close their doors as they grapple with financial and operational pressures.
Tony Minniti, an independent pharmacist in Camden, New Jersey, has been concerned for years about the future of his business.
Minniti started his career at age 14 when he went to work at his grandfather’s pharmacy in Camden, which he says gave him a unique ability to watch the transformational period for the community pharmacy profession.
Bell Pharmacy has been a staple of the community since it opened in the Parkside section of Camden in 1931. By 1997, Minniti’s family took over the business, and today he runs operations alongside his sister, Marian Morton.
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“Our core mission will always be as a neighborhood pharmacy that is owned and operated by owners who are family first and pharmacists second,” Minniti said. “We view our embrace of the old-fashioned model as a central pillar of our success as we enter what I consider to be the new golden age of pharmacy.”
Over the years, Minniti has watched the industry change, especially after the creation of pharmacy benefit managers, otherwise known as PBMs, in the 1960s.
The Pharmacists Society of the State of New York describes pharmacy benefit managers as intermediaries hired by health plans, big employers, unions and government groups to handle prescription drug benefits, controlling nearly 80% of the market through companies like CVS Caremark, Express Scripts and OptumRx.
Pharmacy benefit managers negotiate drug prices and set reimbursement rates, but they also own their own pharmacies and online mail order services. Pharmacy benefit managers make money as they negotiate drug prices with manufacturers, decide how much to charge insurance companies and how much to pay pharmacies. But, pharmacy benefit managers collect a higher profit when patients are required to use these or their mail-order services, according to the Pharmacists Society of the State of New York.
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Independent pharmacists often claim that pharmacy benefit managers are to blame for their financial struggles as they reduce reimbursement rates for medications, making it difficult to cover operational costs.
However, pharmacy benefit managers contend that they negotiate drug prices to lower costs for consumers and include independent pharmacies in their networks, sometimes reimbursing them at higher rates than retail chains.
“Pharmacy is unique in that we don’t set our prices. We can charge whatever we want, but the [pharmacy benefit managers] have fixed the reimbursements at levels that make it nearly impossible to cover operating costs associated with any pharmacy,” Minniti said.
He said that pharmacy benefit managers offer “take it or leave it” contracts, which hinders their ability to fairly negotiate more reasonable rates.
“What you’ve seen is this all-out assault on our business,” he said.
Minniti’s concerns are echoed by another independent pharmacist in Kentucky, who said he could lose two of his six stores. The pharmacist spoke to FOX Business on the condition of anonymity in fear of retaliation from pharmacy benefit managers.
The Kentucky-based pharmacist said 150 separate prescriptions filled at one of his six locations on one day were reimbursed at rates below their purchase cost. He said this happens frequently in the industry and “that it’s leading to closures and other issues like paying employees and paying our wholesaler’s bills.”
The Pharmaceutical Care Management Association (PCMA), which represents pharmacy benefit managers, has said PBMs aren’t to blame for the challenges faced by retail businesses in rural America. Rather, issues stem from “changes in consumer behavior, new types of business competition, and evolution of their market,” the PCMA told FOX Business.
The group said that pharmacy benefit managers reimburse independent pharmacies at higher rates than the retail chain pharmacies “because it is so important to have these access points for patients.”
The group also maintains that higher mandated reimbursement rates and dispensing fees to pharmacies amount to a tax on consumers and employers, requiring them to pay more for prescription drugs.”
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Express Scripts said that demands for higher reimbursement rates by retail pharmacies would lead to higher health care costs.
“There is an inherent tension between the interests of retail pharmacies and the employers, unions, and other entities that offer prescription drug benefits,” Express Scripts said, adding that retail pharmacies want to be reimbursed more for the prescriptions they dispense but plan sponsors want lower prescription drug costs for their members.
“We must balance the demands of our pharmacy partners while continuing to drive lower drug costs for the Americans we serve,” Express Scripts said.
UnitedHealth Group’s OptumRx told FOX Business that it reimburses its participating network pharmacies at competitive rates, aiming to fairly compensate pharmacies while also ensuring a cost-effective benefit for its plan customers and members.
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