With shoppers already trusting their primary grocery store as an ally in health, pharmacies are another way for retailers to support consumers by enhancing the proposition of total store wellness.

Pharmacy Benefits Managers: The Need for Reform

Despite their essential role, supermarket pharmacies are struggling to stay in business due to the anticompetitive practices of pharmacy benefit managers (PBMs). PBMs are for-profit companies that manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers, and other payers.

PBMs’ practices often lead to patients paying more for prescription medications and supermarket pharmacies having to close their doors. Some supermarkets have had to sell their pharmacies while others have had to shutter, resulting in 2,200 pharmacies closing in 2019 alone and leading to significantly reduced access for consumers. Following are a few of the many anticompetitive practices that need to be reformed:

  • Direct and Indirect Remuneration (DIR) Fees: Pharmacies dispense medications and are reimbursed by their patients’ health care plans, only to have a portion of that reimbursement clawed back by PBMs weeks or even months after the transaction. Because pharmacy DIR fees are unpredictable and typically unrelated to a pharmacy's performance, it’s impossible for pharmacies to anticipate these fees. According to the federal government, pharmacy DIR fees have grown by 107,000% between 2010 and 2020.
  • Spread Pricing: PBMs reimburse pharmacies less on claims for prescription drugs than what the PBMs charge health plans; PBMs then pocket that “spread” as a source of revenue.
  • Audits & “Quality Measures”: PBMs frequently force pharmacies to undergo expensive and time-consuming audits to make sure that they are meeting contractual requirements set by the PBMs. They then penalize pharmacies based on these uncontrollable “quality measures.”
Action Must Be Taken:

PBMs have been allowed to operate without oversight. Pharmacy DIR reform, a ban on spread pricing, and increased PBM oversight and transparency reforms are necessary to help curb existing and prevent future abusive practices. Action must be taken to control consumers’ costs and preserve their access to supermarket pharmacies. The Supreme Court’s unanimous decision in the case of Rutledge v. Pharmaceutical Care Management Association – which reaffirmed the states’ right to regulate PBMs – provides a strong vote of confidence to achieve greater oversight of PBMs.

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