Opening and operating a pharmacy is difficult enough on its own. In recent years, however, the grip of pharmacy benefit managers (PBMs) is making life even harder for independent pharmacists.

PBMs act as a middleman, managing prescription drug benefit programs. PBMs argue they can lower prescription costs by negotiating discounts with large drug companies. What’s often happening, however, is local pharmacies finding themselves squeezed out of the picture.

How PBMs impact pharmacies

One of the key connection points between PBMs and pharmacies is the rebate amount for different prescription drugs. In addition to negotiating billing prices with the insurance company, a PBM also determines how much a regular pharmacist will be reimbursed for filling a patient’s prescription.

However, according to one advocacy group, those reimbursement amounts can be paltry. In fact, in some cases, a pharmacy won’t even be reimbursed for the full cost they paid for the drug – meaning with each filled prescription, the pharmacy might be losing money.

In addition, PBMs have been accused of favoring pharmacies they own over independent pharmacies. One Business Insider report found CVS Caremark reimbursed CVS pharmacies in Arkansas at far higher rates than outside, mom-and-pop pharmacies. For example, CVS Caremark reimbursed CVS pharmacies $35.92 for Amoxicillin prescriptions – yet paid outside pharmacies just $12.21 for filling the same. Fentanyl patches netted a $400.65 reimbursement for CVS pharmacies, but just $75.74 for others.

The big picture

This type of behavior is happening across the country, including in Arizona. The state has laws meant to rein in some PBM behaviors, such as by limiting co-pay clawbacks.

That does not do much to help struggling local pharmacies however, who are often part of the fabric of a local community. In some cases, these pharmacies may want to enlist legal help to address the issue. One potential solution is to get the mom-and-pop pharmacies access to the same in-network benefits that the big pharmacies enjoy, a battle that requires specialized knowledge of the health care industry.

PBMs won’t disappear overnight. As lawmakers consider further regulations however, local pharmacies can take legal steps to help secure their financial future and avoid feeling the full squeeze.