Ohio lost 20 largely rural pharmacies in early 2019. The Ritzman chain, a regional staple for decades, sold to CVS, which closed 16 stores. Instant pharmacy deserts, Ciaccia says.
The problem is reimbursement, particularly Medicaid and, to a lesser extent, Medicare Part D reimbursement, he says. Ohio has increased Medicaid spending by 20% in recent years, but the additional dollars have largely disappeared at the PBM level and never reached beneficiaries or pharmacies.
“CVS Caremark is noteworthy because it has a very obviously competing retail arm that benefits every time a competing pharmacy closes,” Ciaccia says. “But I can’t name a PBM that doesn’t have its own mail order or specialty pharmacy that profits from reduced retail competition. Community pharmacy closures are a benefit to the companies that price them out of the market by cutting reimbursement.”
Ohio’s state Auditor found that PBMs had extracted $244 million from the Ohio managed care Medicaid program using spread pricing, Ciaccia notes. After the then-Auditor Steve Yost was elected Attorney General in 2018, the state sued OptumRx for overcharges to the workers compensation program. Yost calls the suit the first raindrops in a storm coming to PBMs in Ohio. Similar reimbursement problems help create and expand urban pharmacy deserts. Pharmacies with a high proportion of patients on public insurance can’t afford to remain in business. And as independent owners move into retirement age, it is increasingly difficult to find buyers for low-profit stores.
At the same time, chains are closing less profitable outlets. Walgreens is closing 200 unprofitable U.S. pharmacies. CVS is closing 46 unprofitable stores and will close others as it reevaluates the 500 store leases that come up for renewal annually. Both chains are reducing new store openings.
“Good business moves for the chains,” Qato says, “and bad for patients and their health outcomes.”
Filling the Gaps
Pharmacy deserts don’t have to be forever. The latest J.D. Power survey of pharmacy customer satisfaction found that patients far and away prefer face-to-face pharmacy services to mail order or any other alternative. More thorough pharmacist discussions produce higher customer satisfaction and customers are happiest with independent pharmacies.
“Satisfaction is highest when you talk with a pharmacist or a technician in person versus over the phone or channels such as email, or chat,” says J.D. Power analyst Gregory Truex.
But those high satisfaction scores only apply to customers who can actually get to a pharmacy. That’s an invitation to expand into pharmacy deserts.
One possibility is new financial incentives for pharmacies in underserved areas. Federally Qualified Health Centers (FQHC) subsidize medical services, but most FQHCs are without a pharmacy. Qato recommends adding pharmacy services to the FQHC mandate.
The NCPA is pushing improved pharmacy access at both the state and federal levels. States from Oregon and California to Arkansas, Louisiana, and Virginia are requiring better pharmacy access, improved dispensing fees, stronger PBM oversight, and other patient- and pharmacist-positive changes in their Medicaid programs, says Ronna Hauser, NCPA vice president for policy and government affairs operations.
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