The recent closure of local landmark Kemper Drug in Elk River was nothing short of a tragedy. A business that served its central-Minnesota community for more than 70 years disappeared, leaving the city without an independent pharmacy.
Kemper Drug’s closure and loss can be blamed on the corporate middlemen responsible for reimbursing pharmacies for the drugs they dispense, according to Kemper owner Deborah Leedahl, commenting in her hometown newspaper . The reference was to pharmacy benefit managers, or PBMs, who routinely pay pharmacies less than what it costs them to fill prescriptions. This had been chipping away at Kemper Drug’s profits for years, until one PBM removed the pharmacy from their network earlier this year. That was the final straw.
Three major companies control 80% of the prescription-drug market: Optum, ExpressScripts, and CVS Caremark. These companies leverage their dominance to engage in practices like “patient steering,” which is requiring patients to fill prescriptions at their pharmacies, even when it’s less convenient. “Spread pricing” is another tactic, whereby PBMs reimburse pharmacies like Kemper Drug an inadequate rate for dispensing certain drugs, which can lead to the pharmacies closing their doors.
According to a recent survey , Minnesota lost 30% of its independent pharmacies between 2010 and 2019, which is the most of any state. In a recent two-week period, at least six independent pharmacies closed in the state. This loss of local pharmacies has been especially hard on rural areas, where alternate options are few and very far between.
The pharmacy chains owned by the big three PBMs’ parent companies make up three of the four largest pharmacies in the country, according to 2021 data .
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Leedahl shared that, “It’s really sad (that PBMs) are pushing to take the options away from people. … I always believed in competing on service. I thought if we provided the best service and convenience that people would choose our pharmacy over the other options, and they do. That’s 100% true. It’s hard when people’s insurances mandate them to (select) something other than the pharmacy of their choice.”
Accessing medications is critical to ensure the best health outcomes for Minnesota patients and families. Local pharmacies with pharmacists who Minnesotans know and trust are a critical piece of health care, especially for rural communities. To better serve the communities we love, Minnesota’s pharmacies need help to level the playing field.
We need our leaders to support stiffer regulation and transparency requirements for PBMs to ensure the best care for patients. We must regulate “spread pricing,” “patient steering,” arbitrary fees, and other PBM practices that are impacting our independent pharmacies and raising costs for patients.
Policymakers must act now, before we lose more trusted local pharmacies and put patients in a more difficult spot.
Sarah K. Derr of Maple Grove, Minnesota, is a doctor of pharmacy and the executive director and CEO of the Minnesota Pharmacists Association ( mpha.org ).
The Trust Project
