PBMs Push Independent Pharmacies Out of Business
By Consumers for Quality Care, on November 6, 2024
Independent and family-owned pharmacies across the country are struggling to stay in business because of the monopolistic practices of pharmacy benefit managers (PBMs), according to The New York Times.
PBMs operate under a veil of obscurity, allowing them to exert extraordinary power over the prices of prescription drugs, claiming to save consumers money while in reality padding their bottom lines and raising the cost of health care for everyone else.
In recent years, corporate health insurers have started acquiring, merging with, and building PBMs of their own, all in a gambit to grow their revenue. Now, the three largest PBMs are owned by health care behemoths – CVS Health, Cigna, and UnitedHealth Group. Together, they control 80 percent of the prescription drug market. This market power leaves independent pharmacies with little leverage to negotiate fair contracts with PBMs, allowing PBMs to abuse this leverage and charge independent pharmacies high fees while also forcing them to accept low rates for reimbursement.
PBMs have “chopped us off at the knees,” said Jon Jacobs, a pharmacist who earlier this year was forced to close his business because of how PBMs dominate the prescription-drug market.
Nearly 800 ZIP codes that had at least one pharmacy in 2015 now have none. The harmful impact of these closures is hard to overstate. Often, when independent pharmacies close, they leave “pharmacy deserts” in their place, forcing consumers to travel farther to get the medications that they need. Research shows that consumers are less likely to get their prescriptions consistently filled when their local pharmacy closes. As a result, they miss doses and have worse health outcomes. These impacts affect rural and low-income communities disproportionately.
Because of a lack of price transparency in the industry, it’s unclear whether PBMs create any savings from negotiated deals with pharmaceutical companies. Furthermore, even if savings are created, it remains unclear whether those savings are passed on to consumers or pocketed by the PBMs.
If left unchecked, PBMs will continue their anticompetitive practices, forcing independent pharmacies to shut their doors, limiting consumers’ access to medications. CQC urges lawmakers and regulators to continue scrutinizing PBMs and to take action to ensure access to affordable care for all consumers.
