The Pharmacy Dilemma and How You Can Help

The opening of Connected Health in 2015 included an in-house pharmacy, which was a cornerstone of the Connected Health business plan. As a pharmacist, co-owner, Betty Rich, loved the idea of collaborating closely with physicians to create a seamless, proactive primary care practice. The goal was simple: provide convenience and transparency for patients. The physicians consult directly with the pharmacy to see what medications are on hand, determine pricing options (whether through insurance or cash), and the patient walks out with their prescription in hand, avoiding the dreaded extra stop at a pharmacy.

For a while, the dream worked. Connected Health patients love having a boutique pharmacy. However, as years pass, the pharmacy industry changed so drastically many independent pharmacies, including Connected Health, are barely hanging on. The culprit? Pharmacy Benefit Managers (PBMs), the middlemen between health insurers, drug manufacturers, and pharmacies. PBMs have accumulated substantial control over the pharmaceutical supply chain, making survival difficult for small, independent pharmacies like Connected Health.

The Struggles of Independent Pharmacies

Independent pharmacies are disappearing at an alarming rate. In 2023, over 300 pharmacies closed; almost one pharmacy a day shut their doors for good. Today, there are 2,200 fewer retail pharmacies than four years ago. The problem is only getting worse.

Independent pharmacies, like Connected Health, face a constant uphill battle, especially when it comes to brand-name drugs. The solution is beyond the abilities of privately owned pharmacies for a number of reasons.

1. Reimbursement Below Cost

PBMs dictate the reimbursement rates for filling prescriptions. Often, the PBM rates are below what pharmacies pay to acquire the medication. For example, a pharmacist will pay $100 for a medication only to receive $95 in reimbursement. If they fill 100 similar medications in a day, the business closes out at a $500 deficit, just to do the same the next day. Seemingly small losses add up quickly.

2. Unexplained Adjustments and Fees

PBMs frequently impose inconsistent fees, such as Direct and Indirect Remuneration (DIR) fees, while providing no transparency on how DIR fees are calculated or what specifically they are for. The massive unpredictability in cash flow creates added stress for business owners, as no one can run a successful company on the level of ambiguity caused by DIR fees.

3. Steering Patients Away

PBMs are often affiliated with large corporate pharmacy chains or mail-order services. Chain pharmacies actively steer patients away from independent pharmacies. PBM affiliations result in independent pharmacies losing lucrative prescriptions, and patients are pushed toward using chain pharmacies, sometimes against their best interest. The glaring conflict of interest is devastating to small businesses like the boutique pharmacy at Connected Health.

4. Lack of Transparency

The reimbursement process managed by PBMs remains notoriously opaque. Independent nor retail pharmacies receive insight into how rates are determined, which makes negotiating fairer terms impossible. This lack of transparency creates a major obstacle for businesses trying to stay afloat. While chain pharmacies are better equipped to navigate PBM systems than independents, pharmacists themselves rarely understand the full scope of how reimbursement rates and formularies are calculated. This lack of transparency leaves doctors, pharmacists, and patients confused about why certain medications are denied or why reimbursement levels are so inconsistent.

Brand-Name Drugs: A Financial Drain

To make matters worse, dispensing brand-name drugs has become a financial liability. New medications, like GLP-1s, hit the market at record-high prices without a generic option available for years. Small pharmacies are largely excluded from drug manufacturer rebate programs, making coupons for brand names exclusive to chain pharmacies. The exclusivity drives customers away from their community pharmacy for the perceived better deal. Small businesses are already paying sky-high prices for drugs, and PBMs reimburse at rates that are a far cry from covering expenses.

Connected Health was born of the desire for a personalized approach to medicine. Big chain pharmacies don’t know your name, where you work, or who your family is. Since PBMs dictate which medications insurance plans cover, even chain pharmacists frequently encounter situations where patients are denied coverage for certain drugs or are forced to switch medications based on PBM formularies rather than clinical need. In basic terms, someone who has never met you or seen your medical history dictates which medications you have access to under insurance. This is the farthest practice from the personalized care Connected Health is known for.

The Impact on Communities

Independent pharmacies are more than another business in the area; they are members of the community. Connected Health pharmacists know patients by name and care about their well-being, going the extra mile to ensure each person gets the care they need. When an independent pharmacy closes, the personalized care disappears, leaving patients with fewer options and fewer advocates, especially in rural or underserved areas.

Ways to Help Independent Local Pharmacies

A community pharmacy is only as strong as their community’s patronage. Support independent pharmacies and help them survive in a rapidly changing industry by:

Shopping at Local Pharmacies:

Choosing a local independent pharmacy means you, as a customer, receive better service, more accurate advice, and a more personalized healthcare experience.

Understanding the Challenges:

Sometimes, independent pharmacies may refer customers to chain stores for certain brand-name medications. This referral often comes as a financial necessity rather than a desire to direct business elsewhere.

Advocating for Reform:

PBM reform efforts are gaining momentum. Increased awareness of the financial struggles faced by independent pharmacies can contribute to regulatory changes, ultimately fostering a more level playing field for all pharmacies.

Go Local: Switch to the Connected Health Boutique Pharmacy

Connected Health takes pride in their approach to personalized, proactive, and preventative health solutions, like access to our in-house boutique pharmacy. If you’re ready to support your local, community pharmacy, call any of our awesome pharmacists—Betty, Christine, Cat, Carla, Judy—or our amazing pharmacy technician, Richard at 724-933-4320. We are proud to serve the community in which we live.

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