In the heart of Montgomery, Alabama, a black wreath adorns the door of Adams Drugs, located just two blocks from the Statehouse. This somber symbol highlights the plight of many community pharmacies across the state that have closed or face the threat of closure. Over the past two years, numerous independent pharmacies in Alabama have shuttered their doors, as reported by the Alabama Independent Pharmacy Alliance. Pharmacy owners attribute these closures primarily to financial strains, as dispensing costs often outweigh reimbursements from pharmacy benefit managers (PBMs).
“We’re watching nearly one pharmacy close weekly because PBMs reimburse them so little for filling prescriptions,” explained Sen. Billy Beasley, a Democratic senator and former pharmacist. In response, Alabama joins other states in considering new regulations for PBMs, the intermediaries between health insurers, pharmaceutical companies, and pharmacies. Recently, the Alabama Senate approved legislation to enforce minimum reimbursement rates to benefit community pharmacists, passing the bill unanimously with a 32-0 vote. It now awaits evaluation in the Alabama House of Representatives.
Similar legislative efforts have been proposed in states like Mississippi and Arkansas, where both major retail chains and independent pharmacies contend with reimbursement challenges, rising costs, and overall adversity. While PBMs are positioned to use their purchasing clout to decrease consumer drug costs, independent pharmacists argue that PBM practices result in financial losses on approximately 20% of prescriptions.
“The crux of the issue lies in the fact that we’re not paid enough to cover the actual costs of prescription fulfillment, including labor,” stated Trent McLemore, a pharmacist at Star Discount Pharmacy. The proposed Alabama bill mandates that PBMs reimburse community pharmacies at rates equivalent to those of the Alabama Medicaid Agency. Furthermore, it seeks to ban “spread pricing,” where PBMs charge health plans more than they pay pharmacies for medications.
However, opponents contend that implementing the bill could inadvertently introduce a new fee of $10.64 per prescription due to the mandate to align with state Medicaid rates, which incorporate a $10.64 dispensing fee. They caution that this cost burden could eventually be transferred to consumers and businesses. Helena Duncan, president of the Business Council of Alabama, voiced concerns, noting that small businesses may have to either absorb the increase or shift it to employees via raised premiums – a move she deems unfair.
Republican Sen. Andrew Jones, one of the bill’s co-authors, remarked on Thursday that other states have witnessed reductions in drug prices. He emphasized the indispensable role local pharmacies play within their communities. “There is no big-box retailer that will open its doors in the middle of the night to provide the medication you need,” Jones asserted, underscoring the importance of protective measures for neighborhood pharmacies.