For many years, northern and rural Pennsylvania has been served by Buchanan Brother’s Pharmacy. However, Rite Aid is purchasing three of their five locations this week.
Why is it closed? PBMs.
Abbreviation for pharmacy benefit manager: these businesses assist in negotiating prescription drug costs in the healthcare industry. They serve as an intermediary for insurance companies between pharmacies and drug makers.
PBMs particularly negotiate contracts with pharmacies to determine how much they will be compensated by an insurance company for particular drugs. The amount that was agreed may be less than what the drug’s pharmacy paid.
This is an illustration from a pharmacist at Buchanan Brothers Pharmacy of how this can function.
At $300, a drugstore purchases a prescription medication. A patient with insurance may be required to pay a $50 copay for that medication. Additionally, the insurance provider adds $200 to the copay—their agreed-upon amount—through the PBM.
The drugstore still lacks $50.
Insurance companies routinely underpay for prescription drugs through PBM discussions over the course of decades. The effects of this have been negative for neighborhood pharmacies like Buchanan Brothers.
Bigger chains, such as Rite-Aid and Walgreen, can rely on sales of non-drug items, such as food, housewares, and photo booths. Community pharmacies cannot generate a profit or remain in business if they are paying more for medicine than they are making. Community pharmacies primarily rely on pharmaceutical sales to support their operations.
During the course of just three full months in 2024, Pennsylvania saw the closure of almost 70 neighborhood pharmacies.
The legislators in the Commonwealth wish to buck the trend.
The PBM bargaining industry is subject to checks and balances because to House Bill 1993 and Senate Bill 1000. The insurance department of Pennsylvania could look into allegations that pharmacies aren’t getting paid enough. It would require transparency in the process, grant pharmaceutical corporations additional bargaining power, and include language enforcing the adjustments.
Dozens of pharmacy students wandered the corridors today as part of the Pennsylvania Pharmacy Association’s mass visit to the state capital to discuss the proposals with legislators.
The group stressed the value of neighborhood pharmacies, particularly in rural areas.
Rick Seipp, vice president of Value Drug Company and legislative chair of the Pennsylvania Pharmacy Association, stated, “In so many areas, there are so few pharmacies for such a wide geographic area, especially in the northern part of the state where there could be one pharmacy in the entire county.”
“Therefore, we want to make sure that those pharmacies stay there because that might be the only healthcare provider that someone can even regularly interact with,” Seipp stated.
Staff at community pharmacies tend to be more stable, which fosters ties between clients and employees.
Lake Erie College of Osteopathic Medicine student Natalie Klek described how the community pharmacy where she worked served more than 80 customers every day.
“It’s very sweet that some of our patients like to call us every day,” Klek remarked.
