Opinion | The U.S. pharmacy industry is crumbling. Here’s how to fix it.

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Canby Drug & Gifts, a pharmacy in rural Minnesota, is a paradox. He does a good business, but he is always on the verge of closing down.

“I’m one bad deal to close,” says owner Mark Whittier.

His pharmacy, one of the few in it The county, with more than 9,000 people, is an example of the struggles many independent pharmacies face. The store is a lifeline for customers, many of whom are on Medicaid or the state’s health-insurance program. However, profitability is now impossible due to the idiosyncratic way in which the United States distributes pharmaceutical drugs.

Without serious reform, businesses like Whittier’s could disappear.

The tectonic plates beneath retail pharmacies are shifting, and drugstores are collapsing. Total number of pharmacies It has been falling In the year As of 2015, however, the trend has been particularly pronounced in rural areas, which have lost 10 percent of their pharmacies in two decades.

are there Many reasons for thisLike many other businesses, pharmacies’ revenue is generated during the pandemic. Labor shortage, especially among pharmacists Looking for better pay and working conditions, more stressful jobs. Meanwhile, online retailers have offered new competition and large opioid settlements have beaten many chains.

But U.S. drug distribution has become more concentrated, giving more power to a few big players in the industry’s pursuit of profits. A small number of pharmacy benefit managers (PBMs) — Express Scripts, CVS Caremark and Optum Rx — act as middlemen between pharmacies and the insurance companies that pay for prescriptions. But each PBM operates a network of pharmacies and makes great efforts to direct customers to preferred retail stores.

That’s right: the same corporations that decide where Americans buy their drugs. They are running those. Drug stores.

This market dominance drove business away from independent stores. To make matters worse, PBMs are notorious for setting low-cost reimbursements, making it difficult for pharmacies to break even. Many PBMs impose contracts on independent pharmacies with unrealistic demands on how they dispense drugs and how their customers follow prescriptions. When pharmacies fail, they are Hit by big payments.

Together, these forces have expanded America’s “pharmacy deserts”—areas of the country that do not have easy access to storage—and this situation is likely to worsen. CVS and Walgreens He plans to continue pouring retail spaces In the following years. Rite Aid bankruptcy last month It is stored on another 150-plus shutters.

This can have a significant impact on the health of Americans. Especially among minorities. Long drives and arduous journeys on public transport make it difficult for patients to keep their medications with them. People should not have to spend an hour in a car or bus just to take insulin to treat diabetes.

Mail order services help solve the problem, but they don’t solve it. Retail stores are important for vaccinations, for example. And mail-order medications come without face-to-face instructions from pharmacists on how to take them. In addition, not all medications can be shipped; Some should be chilled or not shaken.

An elegant solution to these problems is to make it more profitable for pharmacies to serve low-income patients. This requires a heavy hand from the government.

One way to do this is to raise reimbursement rates for drugs covered by Medicaid or Medicare. Government programs usually pay less than private insurers. This saves taxpayers money, but means poorer communities – who are already suffering. High rates of health problems – They are less profitable for pharmacies. This makes low-income areas less attractive places to open pharmacies regardless of demand.

States can change the incentive structure and pay more for drug purchases through their grant programs. This would cost governments more, but would help stabilize independent pharmacies and keep them where they are most needed by chains.

States must also confront PBMs. These middlemen worked a cunning way to profit from the byzantine system of medicine at the expense of the pharmacies. PBMs negotiate discounts with drug manufacturers on behalf of payers — either insurance companies or state Medicaid programs. But what payers charge is often much higher than what they pay pharmacies. PBMs pocket the difference, or at least some of it.

There is no justification for this practice, especially in Medicaid. Blocking all taxpayer-funded programs would divert some of the drug rebates to pharmacies. Ohio, for example, discovered in 2018 that PBMs working with the state’s Medicaid program were bilking taxpayers more than $200 million in one year, so lawmakers banned the practice. Next year, pharmacy payments from PBMs 38 million dollars jumped.

Whittier said such reforms are “justice” for pharmacies. True, but they are also fair to Americans. A country where access to drugs is determined by zip code is economically – and morally – flawed.



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