A change meant to save patients money has community pharmacies shutting their doors and turning people away across the country. Pharmacies in rural or disadvantaged areas face the highest costs, and pharmacy deserts might start spreading.
First Walmart closed early last year in Southeast Albuquerque, then the Walgreens a couple blocks away, and now only three pharmacies are open in Albuquerque's International District, including the small, independent John’s Pharmacy.
“I don't know what it's going to be in the future,” said owner of John’s Pharmacy John Ma. “A lot of independent pharmacies are basically dying out.”
The Associated Press reports the International District has only .081 pharmacies per 1,000 people. Studies say anything less than .14 can be a problem.
Pharmacies around the country have taken a huge hit since a change earlier this year to how they get reimbursed for Medicare Part-D prescription drugs.
It was designed to lower costs for patients but has resulted in pharmacies making less profit, or sometimes even losing money when they fill some prescriptions.
Ma said John’s Pharmacy had previously stopped filling Tricare prescriptions, which is for active-duty service members, and might have to do the same with the Medicare prescriptions.
“It's hard to say right now because things are always changing every single year,” he said. “Right now we're getting reports, and it's like, ‘Hey, do you want to continue signing with this insurance contract? Because they have changed it.’”
He deals with entities called Pharmacy Benefit Managers— or “PBMs” — like OptumRX or Express Scripts, who act like middlemen between insurance companies and pharmacies. The reimbursements they have been sending for some Medicare prescriptions can pay out as little as 60% of what the actual drug costs, according to a recent report. And that does not count overhead like payroll or utilities.
Regardless of any losses, the PBMs require the pharmacies to fill them.
“So, what do we need to do to kind of help compensate for that?,” Ma asked. “Like, basically, we need to think outside the box, trying to transition over to more like a service-based pharmacy.”
That might mean providing vaccinations, or test-and-treat programs for COVID or flu. Other pharmacies have diversified even further.
Duran’s Central Pharmacy near Albuquerque’s Old Town originally opened in 1942 with a soda fountain attached. The shop now has a full restaurant, and sells everything from clothes to balloon magnets and chile.
Owner Mona Ghattas said those ventures help to absorb the costs of running the pharmacy, but they are not for everyone.
“I don't know if diversification can save some of the pharmacies that are struggling,” she said. “Because it requires, you know, a lot of time, resources, and know-how.”
In addition to the reimbursements themselves being low, the Pharmacy Benefit Managers also charge fees, and have their own pricing guides.
“The PBMs don't share that with us,” Ghattas said.
At a recent House Oversight Committee, President of Express Scripts Adam Kautzner said he agreed with concerns over pharmacy access, and that his company is taking action.
“Over the last year we have worked to enhance reimbursement to pharmacies serving these areas, created new pharmacy revenue streams through clinical services,” he said, “and we’ve regularly convened an advisory committee of independent pharmacists, led by former independent pharmacists.”
He argued the company is up front about pricing.
“Transparency is built into all of our pricing models,” Kautzner said, “including our principal revenue sources, arrangements with manufacturers and pharmacy claims data.”
But Jeremy Ma of John’s Pharmacy, the brother of owner John, said those claims do not get processed quickly enough.
“By the time we even see any of that money back, we have already filled two to three times for that patient already,” he said. “So, our money is tied up with the PBMs”
President of the New Mexico Pharmacist’s Association Ashley Seyfarth owns and runs her own pharmacy with two locations in Bloomfield and Aztec.
“We should not be having to run different businesses to subsidize the pharmacy,” she said. “The question really should be, ‘Why are the pharmacies being forced to front people's health care?’”
She said the solution lies in part in a federal bill stalled on the Senate floor.
The bill has widespread bipartisan support, but Seyfarth said it has not been able to pass because of other bills that have been attached to it when called on a full vote.
The bill has already passed the House and all Senate committees and now just needs a full Senate vote before going to the President's desk.
The law would change reimbursements to cover the cost of the drug and any overhead.
“So, there's actually no profit built into it for us. But, my gosh, that's better than what they're doing to us right now,” she said. “Because right now, when we fill a prescription, potentially we are underwater on that prescription anywhere from $35 to a couple hundred dollars. Then, on top of that, we are gag-ordered to fill it regardless of the loss.”
Just like John’s Pharmacy had to with Tricare prescriptions, Seyfarth’s Kare pharmacy has also dropped an entire sector of prescriptions before. She said the Pharmacy Benefit Managers who managed the prescriptions for the New Mexico Retiree Authority were reimbursing so low, they had to stop serving them.
“So we lost all those patients, and I know all those patients are really upset. I hear it all the time, and it was not an easy decision to make,” she said. “But essentially, if this bill does not pass and does not go through, potentially we're going to lose all of our Medicare population if they don't start providing contracts that fairly reimburse us.”
According to a survey by the National Community Pharmacists Association, more than two-thirds of independent pharmacists are considering closing altogether.
Support for this coverage comes from the W.K. Kellogg Foundation.
