While most businesses purchase inventory and recoup those costs when they sell product to customers, the prescription drug distribution system is different. Pharmacies have no say in what patients pay for drugs, and recoup their costs through reimbursements they receive from PBMs.
The PBMs decide how much pharmacies are reimbursed for the drugs they dispense, and can change those rates as often as they want without warning. In recent years, reimbursement rates have steadily declined, with pharmacies often recouping less than what they paid for drugs.
From the start of 2017 to the end of 2018, New York Medicaid PBMs cut pharmacy reimbursements a stunning 83%. In Q4 2017, PBMs paid pharmacies less than what it cost them to dispense the drugs 99% of the time, and less than what it cost them to acquire the drugs 46% of the time.
According to a survey of New York’s independent pharmacy owners in January 2019, abusive PBM practices are taking a serious toll on the small businesses. In addition to the 68% of respondents who laid off employees or reduced hours in 2018 as a result of declining reimbursements, a remarkable 95% are considering doing so in 2019.
Unfortunately, pharmacies are beholden to PBMs, which control access to both patients and revenue.
2New York City Pharmacists Society. (2019). Survey of NY Independent Pharmacists on PBM Impacts. New York, NY.