ICYMI: The powerful companies driving local drugstores out of business

The New York Times recently reported on abusive practices large PBMs use to drive local pharmacies out of business all while harming patients.

This trend is increasingly fueled by vertical integration among pharmacy middlemen where the same company owns the PBM, insurer, pharmacies and more. As the Times reported, PBMs steer patients to pharmacies they own and pay themselves higher rates than they pay local community pharmacies.

Here is what you need to know about the devastating impact this is having on local communities:

PBMs shutdown pharmacies in every state

• PBMs have disproportionately affected rural and low-income communities. This has resulted in pharmacy deserts across the nation, making it harder for vulnerable patients to access critical treatment and care.
• The Times found that, “nearly 800 ZIP codes that had at least one pharmacy in mid-2015 now have none.”

PBMs force patients to use the pharmacies they own

• PBMs, “push and in some cases require patients to stop filling certain prescriptions at local drugstores and to instead fill them via the benefit managers’ mail-order pharmacies,” according to the Times.
• This echoes the Federal Trade Commission (FTC) interim report, which found a PBM executive admitting, “we’ve created plan designs to aggressively steer customers to home delivery where the drug cost is ~200 times higher.”

PBMs charge more at their pharmacies

• The Times quoted a study that found, “the markup that PBMs were charging on brand-name drugs was 35 times higher when the drugs were sold through their own mail-order pharmacies than when the drugs were sold by independent drugstores.”
• It went on to report, “PBMs frequently pay the pharmacies at rates that do not cover the costs of the drugs, according to more than 100 pharmacists around the country and dozens of examples of insurance paperwork and legal documents.”

PBMs may harm patients’ outcomes and adherence

• The Times highlighted research showing that, “after pharmacies close, their older customers are less likely to consistently fill their prescriptions and end up missing doses.”
• When Darrington, WA lost it’s only drug store, “one doctor said he had seen more complications like sepsis or pneumonia because of delays in filling antibiotic prescriptions,” according to the Times.

PBMs respond with callous indifference

In stark contrast to the mounting evidence against PBMs, these middlemen continue to refuse to acknowledge the problem. One PBM executive told the Times, “I think today you would argue that there are more pharmacies than we probably need."

Why this matters

The new report builds on previous reporting from the Times that shows PBMs are driving up drug costs for millions of people, employers, and government.

Policymakers can stop PBMs from squeezing both patients and pharmacies by passing comprehensive PBM reform. That includes greater transparency and access to data on the business practices of these powerful middlemen, requiring PBMs to share savings directly with patients, and delinking PBM compensation from the list price of medicines.