Only PBM reform can save PA pharmacies from closure crisis
We haven’t even crossed the midway point of 2024, and more than 140 pharmacies have closed in Pennsylvania since we began the year, and many local jobs have been lost. Sadly, there aren’t any signs this trend will slow down until Pennsylvania enacts comprehensive pharmacy benefit manager (PBM) reform. The good news is there’s plenty of bipartisan support in Harrisburg to get this done.
PBMs were supposed to be the middleman who drove down costs from drug companies to provide savings for pharmacies. Because of their bulk negotiating power, PBMs negotiated millions in savings, but they gutted reimbursements and kept the money that should’ve been passed on to pharmacists in the form of higher drug reimbursements. It may shock you to learn that just three PBMs control over 80% of all prescriptions, while offering non-negotiable, take-it-or-leave-it contracts. This forces pharmacists to accept contract rates at a loss just to be able to serve their patients.
That should worry every Pennsylvanian who relies on their community pharmacy for prescriptions and health care needs. It doesn’t matter if they’re independent or chain pharmacies or whether they’re located in a rural, small-town, suburban or inner-city setting. Pharmacies are closing rapidly because of PBMs, and the numbers remaining are shocking in 21st-century Pennsylvania.
It’s so bad Gov. Josh Shapiro called for PBM reform legislation in his February budget address.
No less than 21 of Pennsylvania’s 67 counties already have fewer than 10 pharmacies. Two counties, Forest and Fulton, only have two each, while Cameron and Sullivan counties have a single pharmacy serving their entire population. In Erie County, Albion residents have had to drive 10 miles or more to the closest pharmacy after one closed in January.
Seemingly every day, there are new headlines about pharmacy closures in places like Johnstown, Punxsutawney, Coudersport, Hempfield Township, State College, Allentown, Bethlehem, Carlisle and so many more.
Predictably, most of the remaining pharmacies can be found in high-density areas like Pittsburgh and Philadelphia.
But Philadelphia’s inner-city neighborhoods are dealing with closures that leave citizens without access to medicine in places like Kensington or North Philadelphia.
Pharmacists in Pittsburgh were losing up to $113 for every prescription of a COVID-19 drug, Paxlovid. Such setbacks in payment for the drug purchases and less for their overhead result in many pharmacies deciding to no longer carry brand name drugs, forcing patients to get their prescriptions filled elsewhere.
Fortunately, the Pennsylvania General Assembly is considering two bills with strong bipartisan support. Senate Bill 1000 and House Bill 1993 both would provide the reform measures long sought by pharmacists.
At the top of the list is stopping price gouging by making sure pharmacists are reimbursed for the actual cost of buying and dispensing drugs, and not by some secret formula determined by PBMs. Secrecy is a big problem, and the legislation includes a number of critical transparency measures. It empowers the Department of Insurance to audit PBM and pharmacy contracts. The legislation also would develop a complaint resolution process for pharmacies and set reasonable fixed amounts for PBM claims process and fees.
Other important reforms include the elimination of spread pricing, which occurs when PBMs charge a health plan a higher price for medicine than what they reimburse pharmacies and then keep the difference or “spread.” It also would end “patient steering” to pharmacies owned by PBMs. A reprehensible practice, PBMs force patients to use their pharmacies or pay more for drugs at independent or chain pharmacies not considered to be “in-network.”
Looking at the whole picture, it’s easy to see why the Shapiro administration and large numbers of legislators from both parties support PBM reform. The situation is dire: A recent survey by the National Community Pharmacists Association found that 42% of pharmacists across America took out a line of credit to help pay their bills, and 70% had to use their personal savings.
Unfortunately, PBMs aren’t held accountable for their use of misinformation to protect their financial interests and pricing practices that often lack transparency. They challenge the necessity to pay pharmacies a fair rate, alleging that this would be a financial burden for the state. Fortunately, there are many other states, including Ohio, that have held PBMs accountable and are now reaping significant savings.
Meanwhile, Pennsylvania has lost more than 140 pharmacies in less than six months. That number is going to continue to climb because of the reckless profiteering of PBMs at the expense of pharmacists, their employees and communities. The timing couldn’t be more critical as more and more Pennsylvania families lose access to their pharmacists.
Chris Antypas is board president of the Pennsylvania Pharmacists Association and owner of Asti’s South Hills Pharmacy in Pittsburgh.