A pharmacist places medications in packaging for a patient at Smith Pharmacy in Little Chute. PC: Fox 11 Online
GREEN BAY, WI (WTAQ-WLUK) — Pharmacies across the nation have been closing at a fast rate, with independent pharmacies — including some here in Northeast Wisconsin — being hit the hardest.
At the end of the month, Streu’s Pharmacy in Green Bay will shutter its pharmaceutical operations.
“One patient said, ‘I’ve been with this pharmacy for over 50 years. I have never gone to another pharmacy in my adult life.’ That was heartbreaking to know that now, they have to figure out somewhere else to get their service,” says Nicole Schreiner, the CEO of and a pharmacist at Streu’s.
Schreiner announced the closure of Streu’s retail side of the business last month, saying they will be focusing on their long-term care services. That decision is solely due to what’s called pharmacy benefit managers, or PBMs. It’s something that most people outside of the medical field know little-to-nothing about.
“The whole purpose was for [PBMs] to help insurance groups manage the medication portion of their insurance benefit that they were offering patients to control costs,” Schreiner explains about the original role of PBMs when they were created in the 60s and 70s.
While intended to manage claims and costs, PBMs have now accumulated immense power and become judgment makers about drug claims, patient access and pricing.
“If you’re gonna be a player in the pharmacy, you are forced to work with PBMs. There’s no way you cannot,” says Nic Smith, owner of Smith Pharmacy in Little Chute. “If you’re gonna bill insurance, they are what control the whole process. They see all the data, they see all the claims and they control reimbursement. They even control where the prescription goes.”
Smith Pharmacy is in the process of an expansion, but Smith says that’s because they are one of the largest-volume pharmacies in the nation.
“Now, that doesn’t mean that we’re making lots of profit by any stretch,” he says. Due to the large volume, and to providing many other services aside from retail pharmacy, which is what is impacted by PBMs, and because they have more staff, they simply need more space.
The American Medical Association says four main PBM companies control more than 70% of the market, nearly monopolizing it. Schreiner says they’re taking full advantage, too.
“There are numerous studies that even show that they are actually costing health plans more money than saving them money, and that’s because they get rebates on branded products when there are cheaper generic alternative products available,” she says.
“Then they started having their own pharmacies, and now they’re even having their own providers. So now, you’re seeing them kind of push people towards their own pharmacies, try to cut us out of the equation,” Smith adds.
CVS Pharmacy is an example of a pharmacy that is owned by PBMs.
Smith and Schreiner say their local pharmacies, and almost everyone else, are forced into cut-throat, take-it-or-leave-it contracts by and with PBMs. Attempts to negotiate with them have failed, Schreiner says. Those contracts include nearly non-existent reimbursement rates for when pharmacies dispense a drug to a patient.
“We’re getting reimbursed below cost. We, on one drug alone last year, we lost over $250,000,” Smith says. “On one drug alone. And there’s nothing you can really do about it.”
Some pharmacies have resorted to no longer carrying more expensive medications, like GLP-1s, for example, to avoid such big reimbursement losses.
At Smith’s new pharmacy location, he plans to open a sterile lab in order to allow his staff to be able to create certain medications themselves, instead of relying on expensive name brands and to avoid PBM reimbursement losses.
“We have not refused to fill anything based on reimbursements, but that number of prescriptions that are filled for a loss just continues to grow, and I don’t know how much longer we can do it,” Smith says.
If it costs them $100 to dispense a drug, PBMs are sometimes paying pharmacies back as little as $4. That’s what has driven Streu’s to close its retail pharmacy operation.
“It’s just become very, very difficult,” she says. “So not only are you losing money on that prescription, you are also not being able to have money to keep your lights on, pay your heating bills, pay your employees, which are all these fixed expenses that go in addition to being able to run a viable company.”
We couldn’t figure out a way to make it make financial sense.
This predicament is driving the closure of thousands of other pharmacies across the country too, especially independent ones. It’s also stopping new pharmacies from opening.
“We’re not looking to get rich. We don’t ask to get rich. All we want is a fair reimbursement. Reimbursements at cost, plus 10%. That’s all we’re asking,” Smith says.
Both pharmacists explain that pharmacy closures, both local and national, create access gaps.
“Patients are not going to be able to find a pharmacy to get their prescriptions filled,” Schreiner says. “And if they get required to use mail-order pharmacies, which are frequently owned by these PBMs, there’s going to be delays and the potential of delaying therapy. And in my opinion, a lot of potential for drug interactions [could happen] because you’re going to use a mail-order pharmacy for some of your chronic medications.”
“When you have a need for an antibiotic or a pain medication from the emergency room, now that local pharmacy, if you can even find one, is not going to have the whole patient’s profile and have the whole story about how to fill these medications for patients,” she adds.
“Honestly, that’s my biggest fear,” Smith says. “I don’t think people realize what a difference [independent pharmacies] can make. I’ll come in late at night for a late-night hospice delivery. If someone’s dying, I’ll come in at midnight, get a call, package the morphine, bring it to the home and bring it to the patient’s house. We do a lot of little things behind the scenes that people don’t know about, that a large PBM won’t do, obviously.”
The only way to change the current model is through legislation. Legislation to control or regulate PBMs to support local pharmacies has been proposed in Wisconsin, but has failed several times to pass.
Smith and Schreiner encourage people to contact their local lawmakers about the issue if they want to support local pharmacies.
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