Kevin Walker: Rural pharmacies at risk without reform

By Kevin Walker

While health care access in rural communities declines across the United States, local community pharmacies continue to serve an essential role in connecting vulnerable patients to the services, resources and treatments they need to maintain their health and well-being.

I’ve been fortunate to serve as a pharmacist in communities where gaps in health care access are profound.

The most dominant among these pressures are Pharmacy Benefit Managers and their relentless pursuit of profits at the expense of patient access to quality pharmacy care. As lawmakers contemplate health care reforms that will make our system more effective, equitable and accessible, they should start by ensuring PBMs aren’t getting between patients and the health care professionals that serve them.

Only three PBMs broker more than three-quarters of the drug transactions nationally and use their extraordinary market power to deny patients their medications outright, bilk community pharmacists with excess fees and predatory contracting practices, and drive up the cost of medications for governments, employers and ultimately patients at the pharmacy counter.

Many pharmacists are familiar with the “cash-price conundrum,” which is where some patients would actually pay less for their medications if they paid strictly out-of-pocket, without using their insurance coverage. A Journal of the American Medical Association report analyzed 9.5 million Medicare Part D prescription claims and found that a patient’s copay was higher than the cash price for their medication in nearly 1 in 4 drugs. For 12 of the 20 most prescribed drugs, patients were overpaying by more than 33%.

Unfortunately, pharmacists who do point customers to lower out-of-pocket spending options have experienced retaliation from PBMs through excessive contracting fees, predatory audits or other administrative penalties, as some have testified to at congressional committee hearings. Pharmacists can also get dropped from plan networks altogether, driving their customers elsewhere.

In 2021, PBMs set new Generic Effective Rates, inflating the patient out-of-pocket costs for generic medications. Since PBMs are also negotiating discounts with their health plan clients list prices from drug manufacturers for these same medications, this allows them to exploit the difference the health plan client rates and rates negotiated separately with pharmacies to “legally” claw back extra dollars from pharmacies to maximize their own profits. This process is bankrupting local pharmacies while preying on patients in need of generic medicines – which constitute 90% of all drugs dispensed in the U.S.

In addition, other retroactive PBM fees, which, according to the National Community Pharmacists Association, have increased by 91,500% between 2010 and 2019, will transition to “the lowest effective price” at the point of sale. This is setting up a traumatic financial crisis from which many community pharmacies will not be able to recover. In the next 12 months, we will see the loss of community pharmacies, and pharmacy deserts will increase dramatically throughout the United States.

PBM business practices hurt patients who may already be struggling to afford medications, negatively impact the working conditions of the profession of pharmacy, and ultimately chip away at the viability of local pharmacies fighting to remain operable as independent small businesses. This network of professional health care providers is deeply invested in the communities it serves. If local pharmacies are erased from rural America, many patients will lose access to one of the most trusted professionals in any industry.

Fortunately, Congress has begun to hold PBMs accountable for their impact on rural health. Earlier this month, the U.S. Senate held a hearing to examine the dangerous levels of control PBMs have over drug distribution markets and “spread pricing” between how much they charge a client, like an employer, and how much they pay pharmacies. Sen. Maria Cantwell, who is chair of the Senate’s Commerce Committee, has joined Sen. Chuck Grassley, the committee’s ranking minority member, to introduce the Pharmacy Benefit Manager Transparency Act of 2023. Earlier this week, Rep. Cathy McMorris Rodgers heard about similar concerns in the House Energy & Commerce Committee.

While hearings are an important first step toward achieving true reform, they must be followed by structural policy changes to curb PBM influence. Local pharmacies will remain at risk of closure without stronger federal oversight to address manipulative PBM drug pricing schemes, and patients will ultimately suffer.

Dr. Kevin Walker, PharmD, is a Yakama Nation descendant, raised on the reservation in rural Eastern Washington and is part of multiple organizations striving to improve health care, especially in rural and Native care settings. He serves as president of RPhAlly, a pharmacy community striving to advocate for patients and advance the profession of pharmacy through support, education and opportunity creation. He lives in Spokane.