Why are Thousands of Pharmacies Closing?

 "PBMs negotiate discounts from drugmakers [sic] on behalf of insurers. PBMs also administer reimbursements from the system's payers - insurers, federal and state governments, and corporations - to providers, including pharmacies and clinics." Kerrigan added that "PBMs have made the system increasingly complex, enabling them to extract outsized revenue from it while crowding out the small mom-and-pop drugstores." There are around 60 companies competing to provide PBM services with three controlling 80% of the market.

The Senate passed the Pharmacy Benefit Manager Transparency Act of 2022 that prohibits arbitrary 'clawbacks' of payments made to pharmacies and making it illegal for PBMs to engage in 'pharmacy spread' pricing.

Because these discounts hurt drug makers' bottom line, the 340B program had to limit the number of Federally Qualified Healthcare Centers and qualified pharmacies.

My pharmacist shared that the 340B program is a major contributor to the rise in closures due to a decision in 2010 allowing the number of 340B pharmacies to expand exponentially.

According to Foley & Lardner LLP, in 2010, "The Department of Health and Human Services Health Resources & Services Administration issued guidance permitting 340B covered entities to contract with multiple pharmacies if certain conditions were met." Once that decision was made, "Walgreens went overnight from not having a single contracted pharmacy to having the largest 340B network in the country. They signed up their pharmacies with every possible FQHC plus any qualified hospital in the 340B program." This decision increased financial pressure on manufacturers to reduce their 340B pharmacies discounts.

CNN reported on the closures and declining employee morale and blamed it all on PBMs. CNN totally missed the less obvious 340B contribution that likely caused losses far exceeding those caused by PBMs. The 340B program is not all bad. It helped rescue the last two pharmacies in my rural Virginia county.

The county had two longstanding FQHCs in widely separated small towns and the 340B rules allowed each to contract with or purchase then reopen a previously closed pharmacy.

https://www.americanthinker.com/articles/2024/01/why_are_thousands_of_pharmacies_closing.html