Local Pharmacies Pushed to Brink by Pharmacy Benefit "Monopolies" (PBMs), National Survey Shows

NCPA October 15, 2019

58 percent may close in next two years, says a national NCPA survey

Alexandria, VA - A substantial majority of independent pharmacies say they may close their doors in the next two years, and the main culprits are multi-billion-dollar corporate middlemen who are shaking them down for fees on medicines long after the point of sale, according to a new survey by the National Community Pharmacists Association (NCPA), released today.

"Neighborhood pharmacies are being mugged in broad daylight and no one in Washington is doing anything about it," said NCPA CEO B. Douglas Hoey. "If Congress or the administration don't act soon, we're going to see a wave of layoffs and store closures that will leave many patients stranded without access to a local pharmacist."

According to the survey, 58 percent of independent pharmacists say they are somewhat likely or very likely to close their doors in the next two years if things don't improve. Another 19 percent aren't sure they'll be around then. A nearly identical number (59 percent) rate the health of their business as somewhat poor or very poor.

"These are staggering numbers," said Hoey. "Local pharmacies are on the brink, and this should be a blaring siren for every policymaker in Washington who cares about these local businesses, the jobs they provide, and the patients they serve.

Their main problem, respondents say, are direct and indirect remuneration fees, known as DIR fees. The fees are imposed by pharmacy benefit managers (PBMs), which are large corporations in the middle of the pharmacy supply chain that are nevertheless invisible to most patients and policymakers. That's because they work behind the curtain for insurance plans, including Medicare and Medicaid, to negotiate which drugs will be covered, steer patients into pharmacies of their choosing, require drug makers to 'pay to play' to be covered by the plans, dictate how much pharmacies must charge for the drugs and, incredibly, PBMs also decide how much to claw back from pharmacies long after the point of sale.

Sixty-three (63) percent of local pharmacies say the back-door pharmacy DIR fees are their biggest problem. A substantial percentage (22 percent) say decreasing reimbursement is their top problem.

"Eighty-five percent of all prescriptions filled in the US are controlled by three PBMs. Together they exert monopoly like control on pharmacies," said Hoey. "And that's how you end up with local pharmacies being forced to lose money on prescriptions. No business can survive that way, and based on this survey, many won't."

Things are so dire that 48 percent of local pharmacies say they expect to reduce staff in the next year. Thirty-one (31) percent will try to hang onto the employees they have currently. Only five percent think they'll create new jobs. Independent pharmacies, which outnumber any of the big box chain companies, employ hundreds of thousands of Americans and are often the only healthcare source for underserved communities.

In the next 12 months, 77 percent of local pharmacists say they'll be forced to try to cut costs by reducing the amount of money and support they give to community organizations. Thirty-six (36) percent say they'll reduce hours of operation; thirty-three (33) percent will cut services.

"Local pharmacies do a lot more for their community than dispense pills," said Hoey. "These are small business owners who volunteer their time, donate to civic groups, employ their neighbors, and serve patients for whom, in many cases, the local pharmacist is the only healthcare provider around. The PBMs are forcing them to make some very unfortunate decisions, and potentially millions of people will be affected."

To view the full NCPA survey, click here. For more information about NCPA, please visit www.ncpanet.org.

Note: The NCPA Survey was sent to 5,000 pharmacy owners/managers and produced 643 responses. NCPA is the country's largest organization of independent pharmacy owners