In the past decade, independent drugstores have been vanishing, especially in low-income, minority, and rural communities, in part due to pharmacy benefit managers (PBMs) having rigged the system in favor of their own pharmacies. By steering patients to in-house pharmacies and squeezing independent pharmacies with hidden fees, PBMs are driving local pharmacies out of business. This loss of competition hits vulnerable communities hardest—places already facing healthcare deserts—and patients deserve a solution.
PBMs sit between insurers, drug manufacturers, and pharmacies. Many PBMs are even owned by or partnered with major pharmacy chains. This vertical integration offers an opportunity for greater efficiency, but that can only take place in a competitive market.
In practice, PBMs steer patients away from independent pharmacies by using “preferred networks”—pharmacies where patients pay lower copays—to direct customers to those stores. According to a recent study, only 0.8 percent of independent pharmacies were preferred by PBMs for Medicare Part D in 2023, compared to 70 percent of chain pharmacies. Pharmacies left off preferred networks are more likely to close than those that are included. This undercuts independent pharmacies’ volume and profits.
Justin Leventhal is a senior policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on X @ConsumerPal.