MICHIGAN, USA — The Michigan Pharmacists Association said pharmacy closures across the state may become more frequent, as drug prices continue to rise, reimbursement rates fall and critical regulatory legislation fails to be enforced.
On Monday, Rite Aid announced the closure of a dozen stores across Michigan- a move researchers at the University of Pittsburgh said is not out of the ordinary. According to their reports, 23,000 pharmacies across the country have closed since 2014.
The Michigan Pharmacists Association is a professional society representing pharmacists across Michigan since 1883. Focusing on advocacy and training, the group testifies in the state legislature for laws protecting pharmacies across the state.
Eric Roath, the director of government affairs for the Association, said for his entire career, issues have stemmed from the middleman in pharmaceutical transactions: Pharmacy Benefit Managers.
Originally, PBMs vital job was allowing an instant transaction at the register. Since then, Roath said their job descriptions have expanded to negotiating rebates, giving the few companies more power.
Thursday, he said it's worse than ever.
"Honestly, things are pretty rough," Roath said. "Declining reimbursements on medications have just made it difficult for pharmacies to keep their doors open, or in the cases where they can stay open, they're having trouble keeping adequate staff."
PBMs are the entity that lies between a pharmacy and an insurance company. Roath said that while most customers believe insurance costs operate as a standard market transaction.
However, Roath said that is not always the case.
"PBMs dictate, one, whether or not you can actually go to the pharmacy of your choice, and then two, how those pharmacies get paid," Roath said. "What we're seeing right now in the current environment is most pharmacy benefit managers, while being unsuccessful and controlling drug costs and keeping costs low, are also escalating their profit margins by under-reimbursing the pharmacy."
The result, Roath said, is often the pharmacy's closure- being forced to shut down for doing the job they promised to do.
"The pharmacy bought a medication for $1 for a bottle, they may pay them 50 cents on that," Roath said. "That's why you're seeing more and more pharmacies go out of business, just because pharmacies are actually losing money when they're doing what they're supposed to do, and that's dispensing medications."
Roath said these issues have existed in the industry for decades, becoming extremely prevalent during the Covid-19 Pandemic. Now, Roath said PBMs have too much influence in the market, controlling prices for drugs while backing pharmacists into a corner.
"Top three PBMs in the country, CVS Caremark, Cigna and OptumRX, hold around 80% of market share. This creates an environment where there is very little negotiation that can be had on the part of pharmacies," Roath said. "Even the larger players, like your Rite Aids, like your Walgreens aren't successful in being able to negotiate better rates from these entities because they are so powerful and they have so much of the market share."
Roath said the solution lies in government regulation- cutting PBMs market influence from the source. A version of those laws went into effect- such as the Pharmacy Benefit Manager Licensure and Regulation Act.
Even though that bill went into effect in January, Roath said the rollout has been very slow and it's hardly enforced. Pharmacies who submit a complaint rarely see an outcome, Roath said.
"We have pharmacies every day submitting complaints to abuses that are blatantly prohibited in the laws that we have in the state of Michigan," Roath said. "Right now it's just not being enforced."
Roath also said the act is too little, too late.
"That only lays out basic operating principles for what is fair and right for a PBM to be doing in the marketplace. It doesn't do anything really regarding making sure reimbursement is adequate," Roath said.
Other states, like Arkansas and Oklahoma, have put protections in state statutes ensuring pharmacies remain solvent. Talks at the Federal level are ongoing regarding pharmacy protections, but Roath said there needs to be movement.
"It needs to happen," Roath said. "We need to see some of this momentum actually result in real laws that protect patients and help pharmacies stay open, and we need the FTC to step in and stop some of the illicit practices that are actually elevating drug costs for patients."
Roath explained how PBMs pressure pharmacies to compete with mail orders. Not only do PBMs determine rebate costs and what insurances work where, but they're also able to own and operate their own pharmacy stores which can compete directly with others in the market.
"You can see how that creates a conflict of interest," Roath said. "When PBMs also have the ability to determine which pharmacies you're going to use, they can say, hey, you're only going to use our pharmacies. And if they don't have a pharmacy in that community, they can say, well, you have to order all of your prescriptions in via mail from a pharmacy that we actually own."
Roath said that the association is focusing on ensuring the current state laws are regulated before attention turns to any new legislation. A federal push, Roath said, is what would get the ball rolling.
"Right now, we really need that federal piece to supplement the good work that we've already done at the state level," Roath said. "We need the existing laws to be enforced at the state level so we can decide what else needs to be fixed with the system."
As far as what the everyday person can do, Roath said being an advocate for Michigan pharmacies would help the most. If politicians visit, Roath said, bring up PBMs.
"When you're out when they're out there having these conversations and they say, Hey, how can I help make your life easier? Ask them what they're doing to rein in PBMs and their ability to increase prescription drug prices," Roath said. "The need of the average person to have their drug costs lower is almost universal, and PBMs are a huge part of this problem."
Roath highlighted how it's not an issue of government handouts but protecting West Michigan's right of choice.
"Ask them what they're doing to protect your choice in which pharmacy you can see. Ask for what they're doing," Roath said. "To protect your ability to have autonomy over your own healthcare and establish relationships with the providers that you choose."
13 ON YOUR SIDE has reached out to Rite Aid's corporate office to comment on the closures multiple times but has not heard anything back.
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