There’s been a lot of talk lately about pharmacy benefit managers, or PBMs, the so-called “middlemen” who control much of the prescription drug marketplace. In comments just this week, President-elect Trump vowed in his second term to “knock out” the entities that manage prescription drug benefits for insurance companies, help determine which drugs are prescribed and what their prices will be and even operate their own retail and mail-order pharmacies.
While it’s an enormous and complicated issue, the role that PBMs play in today’s healthcare system affects every American, regardless of their socioeconomic status or place of residence. In rural Georgia especially, PBM practices could put patients at risk by threatening the ability of independent pharmacies to stay in business. That is because the nation’s largest PBMs are vertically integrated companies that own or are affiliated with their own pharmacies and often favor these large, nationwide chains over smaller, independent pharmacies.
Dr. David Bridges, director of Georgia’s Center for Rural Prosperity and Innovation, recently authored the report, Rural Pharmacies and Patients at Risk: PBM Practices Pose Risks to Independent Pharmacies, in which he details the role of independent pharmacies in rural healthcare and the effect PBM practices have on those pharmacies’ bottom line. The report’s contents paint a grim picture of the rural healthcare landscape.
“While all Georgians are impacted by the current situation, the risks that Georgians face depend on where you live and how your prescriptions are filled,” Bridges writes.
Out of Georgia’s 159 counties, six have no pharmacy at all, and another 42 are home to independent pharmacies only. These locally owned businesses are often the sole healthcare entity in the entire county, offering not only medication counseling and medical devices but also vaccinations and other services the larger corporate pharmacies do not offer. However, many are struggling to remain open to meet the healthcare needs of their communities because the costs of purchasing many prescription medications are higher than the amounts they are reimbursed by insurance companies and employers.
In other words, independent pharmacies are losing money every time they fill certain prescriptions, and the PBM contracts they are required to sign in order to market the medications in the first place prohibit the pharmacies from recouping their losses by charging higher copays or even discussing cash payments with their patients.
It’s a situation that’s been building for decades and one with which pharmacist Nikki Bryant is all too familiar. Bryant owns and operates two locations of Adams Family Pharmacy in Preston and Cuthbert.
“I can actually make more money selling a cup of coffee than I make on about 40 percent of the prescriptions I fill,” she says.
Bryant has resorted to selling not only coffee, but homemade cakes, hand-scooped ice cream, even Christmas trees to try to make up for the revenue she is losing on her two locations’ main attraction. Every morning at 6, the mother of two arrives at her Cuthbert store to prepare and sell hot breakfast items. The additional offerings not only offset the costs of the medications she dispenses, but also the expenses associated with dispensing them, like workers’ wages and utilities.
The story is the same at all six Chancy Drugs retail locations throughout rural Georgia. Hugh Chancy, a second-generation pharmacist and the company’s owner, has also been involved in the ongoing conflict with PBMs for decades as a statewide and national leader among independent pharmacies. Serving most recently as president of the National Community Pharmacists Association, Chancy regularly visited Capitol Hill, speaking with legislators and even testifying multiple times before Congressional committees about PBM practices that favor their own chain stores while hurting independent pharmacies and, ultimately, the patient.
When PBMs first emerged, back in the 1980s, they were a tremendous blessing to the pharmacies, Chancy recalls. Back then, when all transactions were manual, the internet didn’t exist, and instantaneous communication was unheard of, pharmacies filled prescriptions and sent handwritten reimbursement requests by mail. When his father ran Chancy Drugs, drugs were purchased and prescriptions filled without knowing whether the costs would be recouped.
As PBMs grew and leveraged their position with the drug manufacturers and insurers, however, the situation gradually changed. As a result of their expansion and subsequent vertical integration, PBMs’ power has increased exponentially over the past four decades. With the growth of the PBMs, prescription drug prices have also surged and not coincidentally, Chancy asserts.
As an example of how PBMs pad their bottom lines at the expense of pharmacies and consumers, Chancy explains how they’ve all but eliminated pharmacists’ option to fill prescriptions with less expensive generic alternatives by only reimbursing pharmacists for the brand name drugs. This is because the drug manufacturers pay the PBMs hefty rebates for pushing their brand name medications. And the pharmacists are forbidden by contract to discuss the situation, the drugs’ cost, or the patients’ option to pay cash.
“Our hands are tied,” he says. “If we tell a patient we can’t fill a script because we are actually losing money on it, [the PBM] will cancel our contract.”
A cancelled contract means the patient can no longer utilize that pharmacy’s services, because the pharmacy can no longer hope for reimbursement for the prescription filled. In rural counties with only one pharmacy—25 percent of Georgia—that means no access to medications for entire populations, many of whom are plagued by chronic disease and low income, an already deadly combination.
For pharmacists like Bryant and Chancy, who grew up in and are committed to the communities they serve, this makes the PBMs’ SOPs downright untenable. Both Bryant and Chancy have spent substantial time helping lawmakers understand the part PBMs are playing in the rising costs of healthcare, and both believe it’s time for more patients to understand and speak out, too.
“More people need to contact their state and federal lawmakers and let them know they’re tired of the games that are being played with their medications,” Chancy says. “The more people who speak up about drug prices and the hoops that physicians and pharmacists have to jump through to get them the drugs they need, the better.”
Bryant agrees, and adds that at the very least, reimbursement reform is essential in order to level the playing field and make it possible for independent pharmacies to continue operating, especially in underserved, rural areas. While activist leaders like Bryant and Chancy have accomplished much in educating lawmakers and capturing their attention, they are still adamant that laws must be passed at both the state and federal levels to begin reining in the PBM practices that are hurting patients most of all.
“They are manipulating the drug manufacturer, the pharmacy and the patient all in one move. It’s just grossly wrong,” Chancy says.
Grossly wrong, and grossly disproportionate, the Rural Center report asserts.
“PBM practices that negatively impact independently owned pharmacies will have a disproportionate impact in Georgia’s rural communities because rural communities are predominately served by independent pharmacies,” Bridges says. In fact, while the ratio of independently owned pharmacies to chain pharmacies statewide is .92:1, the ratio in counties with fewer than 15,000 residents is more than 6:1.
“The fact that rural communities rely so heavily on independent pharmacies means that rural people need to do just what Nikki and Hugh have suggested,” Bridges says. “It is time for rural Georgians to understand the role that pharmaceutical middlemen are playing in their access to healthcare and medicine and take an appropriate stand.”
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