PBM’s Anticompetitive Practices Have Forced One-Third of Pharmacies to Close Since 2010
By Consumers for Quality Care, on December 17, 2024
About one out of every three retail pharmacies have gone out of business since 2010 thanks in no small part to the pharmacy benefit manager (PBM) industry, according to research conducted by Health Affairs and reported by Healthcare Dive.
When pharmacies close, they create pharmacy deserts, forcing consumers to travel longer distances to obtain their medications. These closures disproportionally affect communities of color, consumers on Medicaid, and the uninsured.
Health care mergers initiated by large health care companies have caused consolidation in the PBM industry. The three largest PBMs are owned by some of the largest health care corporations – CVS Health, Cigna, and UnitedHealth Group – which collectively control 80 percent of the prescription drug market. Because of their size and influence, they exert extraordinary power over the price of medications, ultimately raising the costs of prescription drugs for consumers while pocketing a handsome share for themselves. The PBM industry continues to prosper because its role in the health care system is hard for consumers and policymakers to understand.
Consolidation in the PBM industry has accelerated the closures of independent pharmacies at a 2:1 ratio compared to retail pharmacies.
This market power leaves independent pharmacies with little leverage to negotiate fair contracts with PBMs. Knowing this, PBMs abuse their leverage, charging independent pharmacies high fees while also forcing them to accept low reimbursement rates. On the other hand, PBMs reimburse chain pharmacies, particularly those in their own pharmacy networks, at much higher rates than independent pharmacies. With their margins increasingly squeezed, independent pharmacies struggle to keep their doors open.
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.
