Many independent pharmacies in South Carolina say they’re on the verge of closing

GREENVILLE, SC (FOX Carolina) – Independent pharmacy owners in South Carolina say they are facing a crisis. Many are on the verge of closing and some have already closed. They blame middlemen in the system, called Pharmacy Benefit Managers, who make huge profits.

“It was a dream, just a dream,” said former pharmacy owner Odiri Igbeyi. “The community embraced it and the mayor was here for the grand opening.”

Igbeyi looks after Connected Health Pharmacy in Simpsonville.

“I haven’t been here on purpose for a long time,” Igbeyi said. “This is my first trip back. To see where the sign once stood. It’s heartbreaking.”

Igbeyi says he wants to share this personal touch with patients, many of whom he knows by name. He opened Connected Health Pharmacy in 2019 but closed three years later.

“I felt like our margins were shrinking day by day,” Igbeyi said.

Nearly 1 in 3 independent pharmacy owners say they are considering closing their doors this calendar year, according to the report. National Community Pharmacists Association.

“We lose money on every brand name prescription we dispense,” Igbeyi said.

Pharmacy owner Manish Chomal owns Reidville Road Pharmacy in Spartanburg. He also feels this distress.

“There are a lot of major challenges with pharmacy benefit managers giving lower reimbursement rates,” Chomal said.

Pharmacists say this is because of middlemen in the system. Here’s how it works.

The pharmacy purchases drugs from wholesalers. Let’s say it costs them $100. Then the patient buys that medicine. Most people have insurance, so a claim is made to insurance, but then another organization called pharmacy benefit managers comes into play. They help negotiate the price of the drug. They also take a cut from providing services, and PBMs then reimburse the pharmacy owner. But it turns out that insurance and PBMs are reimbursing pharmacy owners less than they paid out. So they can refund $80. This situation leaves the pharmacist in a deficit.

A breakdown of how it benefits pharmacies, health plans, and pharmacy managers.(WHNS – GRAY)

“We were still having to distribute medicines at a loss because of the contracts we were bound by,” Igbeyi said.

A pharmacy owner who wished to remain anonymous showed us these negative refunds. Examples include -$80, -$35, -$54, -$45. That’s not all. Pharmacists are also required to collect a dispensing fee for the labor of packaging medications. Dispensing fees reimbursed were often zero or just 5 cents, according to pharmacy receipts.

“The business can’t afford this negative chargeback, we won’t be here,” Chomal said.

A report prepared by American Pharmaceutical Cooperative Chain pharmacies receive higher reimbursement amounts than independent pharmacies. In some cases more than 2,000 percent to do the same job.

“They’re the ones making millions of dollars,” Chomal said.

Fox Carolina asked the three major PBMs why they give negative refunds. Two of them answered.

Express Scripts said, quote in part, that it has launched the “IndependentRX Initiative, which provides increased reimbursement to more than 700 rural pharmacies in the United States.”

“Local, independently owned pharmacies serve as vital partners in CVS Caremark pharmacy networks,” CVS Caremark said, quoting in part.

Neither explained why they reimbursed independent pharmacies less.

Federal Trade Commission Major insurance companies with large PBMs report profits have increased 133% over the past seven years. The report states that “total revenues exceed $1 trillion and equal 22 percent of national health expenditures.”

FTC Report - Pharmacy Benefit Managers: Powerful Middlemen Who Inflate Drug Costs... — FTC Report – Pharmacy Benefit Managers: Powerful Middlemen Who Inflate Drug Costs and Squeeze Main Street Pharmacies(Federal Trade Commission)

“We are proud of this pharmacy, we know everyone who walks through the door by name, we know their families, and they know us,” Chomal said.

These men worry that personal contact may soon disappear.

“If nothing is done to help local businesses and independent pharmacies, we will be a thing of the past a few years from now,” Igbeyi said.

Some states have passed laws to address this problem. Indiana has passed laws ensuring pharmacists receive fair reimbursement for medications. Kentucky has adopted a $10 minimum dispensing fee. South Carolina has not enacted any such legislation.

The full statements are below:

A spokesperson for Express Scripts said:
Express Scripts believes that independent pharmacies play a vital role in providing essential healthcare in local communities and is committed to supporting this role. Express Scripts has increased reimbursements to rural pharmacies and launched several initiatives to deepen our relationships with independent pharmacies by expanding access to vaccines, allowing pharmacists to practice at the highest level of their license and provide additional clinical services in states where they are legally permitted to do so. Providing medication administration services for injectable medications that treat mental health and substance use disorders, such as:

Between 2019 and June 2024, the number of independent pharmacies in Express Scripts’ commercial network of 64,000 pharmacies increased by 20%, including a 12% increase in South Carolina, and overall, Express Scripts has contracts with thousands of independent pharmacies.
In spring 2023, Express Scripts launched: IndependentRx Initiativeproviding increased reimbursement to more than 700 rural pharmacies in the United States.

CVS Maintenance Sign:

The net number of independent pharmacies in South Carolina has increased over the past five years, while the number of chain pharmacies in the state has decreased, according to data from the National Council of Prescription Drug Programs (NCPDP), the agency that sets standards for pharmacy care. .
South Carolina’s employers, health plans and state government choose to hire PBMs because they know we lower the cost of prescription drugs for South Carolina’s working families, seniors and disabled people. Without PBMs, South Carolinians would be at the mercy of what pharmaceutical companies charge.
Local, independent pharmacies serve as vital partners in CVS Caremark pharmacy networks, representing more than 40 percent of our in-network pharmacies, and we collectively reimburse independent pharmacies more than chain pharmacies.
In contract negotiations with PBMs, most independent pharmacies are represented by large Pharmacy Services Administrative Organizations (PSAOs) that contract on their behalf. PSAOs represent more independent pharmacies than the combined number of CVS Pharmacy and Walgreens stores.