Bissell Pharmacy owner Ed Karvosky and Bob Hebert.
Contributed photoSmall town independent pharmacies are struggling to survive in Connecticut and the nation. Earlier this year, Lang’s Pharmacy closed both of their locations in Wilton and Weston “after years of struggling with unfair business practices by the insurance providers/pharmacy benefit managers (PBM’s)” and numerous other independent pharmacies, throughout the state, have followed suit in recent years. What’s going on?
It appears there’s been a fundamental change in the business and regulatory environment within which independent pharmacies operate. One of the unfortunate side effects of the Affordable Care Act (ACA) has been the rapid consolidation and corporatization of our healthcare system. This phenomenon can readily be seen in the hospital sector, where mergers, often in the name of cost savings, have led to patients paying more.
What is less well known, or more accurately unknown, is the consolidation on the pharmacy side. Pharmacy benefit managers got their start as simple processors for prescription claim transactions between the pharmacy and the insurance company and as negotiators for better prices from manufacturers. But, through consolidation, just three PBMs now control almost 80 percent of the market. What has emerged is not pretty.
They are now the goliath middlemen that are shaking down drug manufacturers, insurance companies, independent pharmacies, and the patient, and no one knows because everything is concealed behind secret contracts. Egregious PBM business practices, harmful to independent pharmacies, have recently been exposed.
In Ohio, now Attorney General Dave Yost found PBMs engaging in “spread pricing” where they would underpay the independent pharmacy and then turn around and overcharge the state Medicaid system for the same drug. “Being that PBMs also own their own pharmacies, this essentially amounts to one pharmacy company reaching into the pockets of competitors, pulling out cash, and putting it right into their own.” Florida, New York, Massachusetts, Kentucky, West Virginia, and Pennsylvania all have found similar problems. Arkansas will be headed to the U.S. Supreme court sometime this year to defend its law preventing PBMs from underpaying pharmacies.
Bob Hebert, a longtime customer of Bissell Pharmacy, recently talked with owner Ed Karvosky about his experience. Ed confirmed his pharmacy is under pressure because of unfair PBM business practices.
Ed stated, “All I want is fair reimbursement.” Ed also told Bob he had lost some longtime customers because his pharmacy was excluded from certain networks, or because the customers were forced to use mail order. Also, retroactive chargebacks from the PBMs make managing cash flow extremely challenging. But, Ed credited his loyal customer base and gift shop as saving graces.
Bob commented he is “concerned about the unfair financial pressure being exerted on independent pharmacies. These small businesses are a vital part of small towns throughout Connecticut and serve a critical public health role, especially now during a pandemic. This is the type of bipartisan issue I want to want to fight for in Hartford.”