The future of independent pharmacy hangs in the balance within the U.S.

Courtesy of Unsplash | Locally-owned pharmacies struggle to make ends meet as chain competition grows.

10/15/2020

Mohammad Sajjad | Staff Columnist

There was a time when independent pharmacies outnumbered their chain competitors. It’s difficult to imagine, considering that in Oakland alone, there is a CVS and Rite Aid within blocks of each other.

We have all been to a chain pharmacy at one point, whether it’s been to pick up a prescription or simply find a late-night snack when no other store was open. But when was the last time we’ve gone to an independent pharmacy?

Due to Pharmacy Benefit Managers (PBMs) and a lack of regulation regarding their practice, the opportunity to visit an independent pharmacy may be diminishing. In order for independent pharmacies to continue to thrive, there needs to be more regulation in terms of how they are reimbursed for their services, an issue that is currently being reviewed by the Supreme Court in Rutledge v. Pharmaceutical Care Management Association.

Unfortunately, the number of independent pharmacies in the United States has been declining. According to the National Community Pharmacists Association (NCPA) Digest, the number of independent pharmacies in the U.S. has decreased by almost 1,200 stores between 2011 and 2017. While it’s difficult to speak for all pharmacies, a major source of concern are reimbursement rates from PBMs.

PBMs are administrators hired on behalf of insurance companies that are responsible for determining how much money a pharmacy will receive for filling a prescription. For an independent pharmacy owner, the aim is to make a profit by receiving more money than what they purchase their drugs for.

Unfortunately, there has not been much regulation when it comes to PBM practice, leading them to reimburse pharmacies at a much lower rate. This can lead to a loss of profit, which can be detrimental to independent pharmacies considering that a vast majority of their revenue comes from filling prescriptions.

What is particularly frustrating is that PBMs will take money back from pharmacies weeks after a point of sale without them knowing. PBMs claim that this is to lower drug costs and any fees charged after a point of sale are based on a pharmacy’s performance, which includes how adherent their patients are to their medications. However, pharmacies still experience a loss of profit even if their patients are adherent to their medications.

States have attempted to pass legislation to regulate PBM practice. For example, Arkansas passed a law in 2015 that prohibited PBMs from reimbursing pharmacies at a rate lower than what they purchase drugs for. PBMs have argued that states do not have the right to regulate business reimbursements, even if it does lead to a loss of profit, according to federal law.

This conflict has resulted in Rutledge v. Pharmaceutical Care Management Association. On Oct. 6, the Supreme Court heard oral arguments regarding the case. Within the next year, the Supreme Court will decide whether or not states have the right to regulate PBM practice.

This case is crucial in determining the future of independent pharmacies in the United States. If the Supreme Court rules in favor of PBMs, independent pharmacies run the risk of being run out of business by unethical business practices.

Not only will this affect pharmacy owners, but it will also affect existing and potential customers. Patients who pick up their prescriptions at independent pharmacies know that customer service and personal touch is what sets these stores apart from chain pharmacies. Oftentimes, staff at independent pharmacies know their customers by name and are able to provide a wide variety of services given their flexibility.

In addition, it’s been shown that independent pharmacies have shorter wait times than their chain counterparts. Even if patients aren’t able to come to the store to pick up their medications, independent pharmacies often offer same-day delivery, a service that has existed at many stores prior to COVID-19.

While the future of independent pharmacy is still up in the air, please consider taking your business to a locally-owned pharmacy next time you need to pick up a medication. Their personal touch can make all the difference.