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Independent Pharmacies are Closing. You Can Blame Health Insurance Companies.

More than 300 community pharmacies closed in the last year alone. It has a lot to do with big health insurance companies and their drug businesses called pharmacy benefit managers.

Think about the town you live in. And ask yourself: “Is my town’s independent pharmacy still open? Or has a CVS or Walgreens taken its place?”

That’s the case for many towns in the United States. And it has a lot to do with big health insurance companies and their drug businesses called pharmacy benefit managers.

Health insurance companies and their drug businesses, led by UnitedHealth’s Optum, Cigna’s Express Scripts, and CVS’s Caremark, have launched a full-blown onslaught against independent pharmacies to eliminate their competition on Main Street America.

With more than 300 community pharmacies closing in the last year alone, it seems like it’s working.  

With independents withering away, health insurers are able to steer patients to their own pharmacies, mail-order operations, and big investor-owned corporations like CVS and in Cigna’s case, Walgreens. Walgreens, by the way, scooped Cigna’s Evernorth CEO Tim Wentworth to lead the company last year – teeing themselves up to be even bigger players in this market.

In the void left by independent pharmacies, health insurers and PBMs create vertical monopolies in many areas – making drug prices even more opaque, resulting in higher costs to ordinary Americans. And while insurers have largely gotten away with this scheme for some time, it does seem like the tides are changing.

Last year, Republican Ohio Attorney General Dave Yost filed a lawsuit against Cigna’s Express Scripts and Prime Therapeutics for their PBM practices. In the press release, Yost said:

PBMs are modern gangsters…scheming in the shadows to control drug prices on all sides of the market.

There is also growing momentum for bipartisan PBM legislation in Congress. Senate Finance Committee Chairman Ron Wyden and Ranking Member Mike Crapo’s bipartisan PBM reform package passed the Senate Finance Committee 26-0 last year. In a joint letter to their colleagues asking for better scrutiny of health insurers and their pharmacy benefit activities, they wrote: 

Despite years of public urging from policymakers and patient advocates, most PBMs continue to charge Americans high cost-sharing for drugs, often as a percentage of inflated sticker prices, even for medications with sizable rebates and other discounts. As a result, in some cases, patients may pay more out-of-pocket than their PBMs or insurers for a given prescription.

At a press conference in March 2024, Wyden said: “The time for PBM reform was actually yesterday.”

Down the street from Capitol Hill, PBMs have also provoked the ire of the Biden Administration. The White House and the Center for Medicare and Medicaid Services have set new rules to rein in some of the worst practices of insurance companies and their PBMs. The move has been lauded as a victory for independent pharmacists.

Author: Joey Rettino

For more on how big health insurers and their PBMs are threatening independent pharmacy and Americans’ bank accounts, read Matthew Cunningham-Cook’s piece in HEALTH CARE un-covered from earlier this year. 

Medicare Advantage is harming seniors—read the groundbreaking new report from Physicians for a National Health Program and check out our webinar featuring Sen. Elizabeth Warren.

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