PBM Industry’s Anti-Competitive Practices Hurting Independent Pharmacies in Pittsburgh
By Consumers for Quality Care, on April 24, 2024
Independent pharmacies in the Pittsburgh metro area are struggling to stay in business, owing to the monopolistic practices of pharmacy benefit managers (PBMs), according to KDKA, the CBS affiliate in Pittsburgh.
Across the country, more than 300 independent pharmacies have permanently closed in the past three months. Nearly thirty Pennsylvania independent pharmacies have already closed this year, with nineteen of them in the western half of the state.
Independent pharmacies sign a contract with a PBM that then acts as the middleman between health plans and drug manufacturers. The PBM is responsible for negotiating prices with the manufacturers and setting reimbursement rates for the pharmacy.
Increasingly, PBMs are squeezing these independent pharmacies from both sides. Some independent owners noted that they get charged high and unpredictable fees by PBMs, while reimbursements are typically insufficient, not increasing in pace with their costs. Although they perceive these fees as unfair, independent pharmacies feel obligated to accept these high fees, often dispensing medicine at a loss in order to avoid losing access to a PBM’s network and their large consumer base.
Pittsburgh-area independent pharmacy owners like Hilltop Pharmacy’s Patrick Lavella and Medicine Shoppe’s Jamie Wyels often operate their business in the red, and profit margins are decreasing to such a point that the business appears to be unsustainable. “Our reimbursements, it’s a percentage that we’re getting paid so as those prices go up, the percentage we’re getting reimbursed is decreasing, so what we’re buying it for is not being covered,” Lavella said. “All we’re asking for is fair reimbursement, that’s all we want,” said Wyels.
State Rep. Jessica Benham, who calls these PBM practices “predatory,” is introducing legislation that would increase oversight meant to rein in the PBM industry.
If left unchecked, PBMs will continue to engage in anticompetitive business practices, forcing independent pharmacies to shut their doors and limiting how consumers access their medications. CQC urges lawmakers and regulators to continue scrutinizing PBM activities and take action to ensure access to affordable care for all consumers.
