Independents Prepare to Close Up Shop

October 17, 2019
Christine Blank

Many cite PBM fees as the primary cause in NCPA survey.

A majority of independent pharmacies say they may close their doors in the next two years, primarily due to PBM fees, according to a new survey.

Around 58% of independent pharmacists say they are somewhat likely or very likely to close their doors in the next two years if things don’t improve, according to the NCPA survey of 643 independent pharmacy owners.

Another 19% of community pharmacists surveyed said they aren’t sure they’ll be around by then. A nearly identical number (59%) rate the health of their business as somewhat poor or very poor.

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Sixty-three percent of local pharmacies say that back-door pharmacy DIR fees are their biggest problem. In addition, 22% say decreasing reimbursement is their top problem.

“Neighborhood pharmacies are being mugged in broad daylight and no one in Washington is doing anything about it,” said NCPA CEO B. Douglas Hoey in a statement. “If Congress or the administration don’t act soon, we’re going to see a wave of layoffs and store closures that will leave many patients stranded without access to a local pharmacist.”

Eighty-five percent of all prescriptions filled in the US are controlled by three PBMs and “together they exert monopoly-like control on pharmacies,” Hoey said. “And that’s how you end up with local pharmacies being forced to lose money on prescriptions. No business can survive that way, and based on this survey, many won’t.”

However, the Pharmaceutical Care Management Association countered NCPA’s comments on DIR fees. “Direct and indirect renumeration, or DIR, rewards pharmacies for improving patient care. In addition, PCMA supports DIR enhancements, including the use of transparent pharmacy quality metrics developed by independent standard-setting organizations,” said the organization in a statement provided to Drug Topics.

In addition, according to government data, the average salary for a pharmacist is about $123,000, which is 51% higher than other healthcare workers, PCMA says.

However, NCPA noted that between December 2012, the initial year of pharmacy DIR fees, and December 2017, the number of independent community pharmacies decreased by 4.9% from 23,029 to 21,909 independent community pharmacies.

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Between June 2018 and June 2019, 3.3% of all retail pharmacies closed their doors, according to IQVIA.

Forty-eight percent of independent pharmacy owners say they expect to reduce staff in the next year, while 31% will try to hang on to the employees they have currently. Only 5% think they’ll create new jobs. “Independent pharmacies, which outnumber any of the big box chain companies, employ hundreds of thousands of Americans and are often the only healthcare source for underserved communities,” NCPA says.

In the next 12 months, 77% of local pharmacists say they’ll be forced to try to cut costs by reducing the amount of money and support they give to community organizations. Thirty-six percent say they’ll reduce hours of operation, and 33% will cut services.

“Local pharmacies do a lot more for their community than dispense pills,” said Hoey. “These are small business owners who volunteer their time, donate to civic groups, employ their neighbors, and serve patients for whom, in many cases, the local pharmacist is the only healthcare provider around. The PBMs are forcing them to make some very unfortunate decisions, and potentially millions of people will be affected.”