Independent pharmacies across the country, from small towns to big cities, are struggling to stay afloat, and it’s not just due to the coronavirus pandemic. Perkins Drugs & Gift Shop in Gallatin, Tenn., abruptly shuttered both of its locations this summer after serving the area for 125 years. Rolet Pharmacy in Chicago was forced to close its doors for good this past August. The reason? Skyrocketing fees retroactively taken from pharmacies by corporations known as pharmacy benefit managers, or PBMs.
PBMs are the middlemen hired by health plan sponsors to administer prescription drug benefits. They often assess fees on pharmacy transactions after a patient has picked up and paid for a prescription — sometimes as many as six months after — without giving pharmacies even a ballpark estimate of how much they could expect to owe when the bill comes. These unpredictable fees are known as “direct and indirect remuneration” or “DIR” fees, and when applied to thousands of individual transactions, can add up to substantial sums and deny independent pharmacies the financial certainty needed to operate a small business.
To understand how DIR fees work, let’s say it’s Friday afternoon and your boss comes by your work station with your paycheck. You go ahead and deposit the paycheck, you make a mortgage payment, buy groceries, and other necessities. Several months go by, then your boss drops by your station again to tell you that you owe back a big chunk of that paycheck, even though the money has already been spent. Since you didn’t budget for this clawback, you either do not have the money to fund it, or you pay it and can no longer afford your other bills that are coming due.
This is essentially what PBMs are doing to independent pharmacies, over and over again, and it’s forcing them to close. Continue Reading