Powerful pharmacy benefit managers are tasked with cutting costs, but their practices can undercut small pharmacies

PBMs increase profits when independent pharmacies
go out of business. (Adobe Stock photo)

The loss of independent pharmacies across the country has been a concern for rural residents, but who are the fabled PBMs, or pharmacy benefit managers, how do they operate and what do they gain when they force smaller pharmacies to close, ask Reed Abelson and Rebecca Robbins of The New York Times. "A New York Times investigation found PBMs, which employers and government programs hire to oversee prescription drug benefits, have been systematically underpaying small pharmacies, helping to drive hundreds out of business."

PBMs garner the power to underpay smaller pharmacies from "two main sources. First, the three biggest players — CVS Caremark, Express Scripts and Optum Rx — collectively process roughly 80 percent of prescriptions in the United States," Abelson and Robbins explain. "Second, they determine how much drugstores are reimbursed for medications that they provide to patients. . . . When local drugstores fold, the benefit managers often scoop up their customers, according to dozens of patients and pharmacists."

The process of how pharmacists purchase medicines, sell them to patients and receive reimbursements is undermined by PBMs who seek to add to their profits by undercutting smaller drugstores' drug reimbursements. The Times reports, "To take just one example: For a month’s supply of the blood thinner Eliquis, several pharmacists in different states said, the big three PBMs routinely paid them as much as $100 less than what it cost the pharmacies to buy the medication from a wholesaler.

"By contrast, the PBMs sometimes pay their own pharmacies more than what they pay local drugstores for the same medications. Independent pharmacies are powerless to fight back. As the unprofitable transactions pile up, some are unable to stay afloat. . . . [The closures] have disproportionately affected rural and low-income communities, creating so-called pharmacy deserts that make it harder for residents to get prescriptions and medical advice."

There is an inherent tension between PBMs and any pharmacy seeking drug reimbursements. The PBMs' purpose is to cut costs, which is accomplished by paying pharmacies less. Those savings can, "in turn, lower insurance premiums for workers and people covered by government programs like Medicare," Abelson and Robbins write. "But that apparent frugality often benefits the PBMs in ways that have nothing to do with their clients’ interests. . . .At the same time that PBMs are reimbursing pharmacies at rates below their costs, the benefit managers are often charging employers much higher prices and pocketing the difference, according to insurance paperwork reviewed by The Times."

Rural pharmacies have been forced into closure for years; now bigger chains are shuttering stores

A Walgreens pharmacy in Murphy, North Carolina,
pop. 1,600. (Wikipedia photo)

 

Over the past decade, rural, independent pharmacies faced shrinking profits and many closed. But now, even big chains are struggling to keep the current drugstore model profitable, reports Nathaniel Meyersohn of CNN News. "CVS is closing 900 stores. Walgreens announced it plans to close 1,200 stores, meaning 1 in 7 will disappear. . . .They are now shutting down because of shifting consumer habits, competition and changes in the pharmacy industry."

Both independent and larger drugstore chains blame some of their financial decline on pharmacy benefit managers, or PBMs, which negotiate rebates from drug manufacturers to insurers. "PBMs have been cutting reimbursement rates to boost their own profits, Elizabeth Anderson, an analyst at Evercore IRI," told CNN. "The pharmacy industry has complained that PBMs have too much control and can squeeze pharmacies. PBMs argue that they help keep drug prices down by negotiating with drug makers."

Walgreens added primary care clinics to try and bolster its bottom line, but the venture was unsuccessful. "Walgreens took a $5.2 billion stake in VillageMD, a primary care network, in 2021. But VillageMD has not been profitable for Walgreens, and Walgreens has tried to cut costs," Meyersohn writes. "The chain has been closing VillageMD locations and said over the summer it will divest from the company."

When the past 20 years of pharmacy availability for Americans is scrutinized, rural residents usually end up with fewer options and a longer drive for medication treatment, but the same can be true for poorer neighborhoods. Meyersohn reports, "Roughly one out of every eight pharmacies closed between 2009 and 2015, which disproportionately affected independent pharmacies and low-income neighborhoods, according to a study published in the Journal of the American Medical Association."

Opinion: Reporter's shield law needs to be extended to the federal level: 'The PRESS Act is needed now.'

Shield law protections by state (Graph by the Reporters Committee
for Freedom of the Press)

The New York Times editorial board offers a compelling piece on the importance of a reporter's shield law and why its protections need to be extended to the federal level. "Safeguarding the anonymity of reporters’ sources is essential . . . . It has been recognized by governments or courts in 49 states and the District of Columbia as a form of protection for journalists and news outlets against unfair or overbearing efforts by the government to ferret out their sources. . . There is nothing of the sort, however, on the federal level, where the need is arguably greatest."

A bipartisan bill representing those federal protections, known as the Protect Reporters From Exploitative State Spying Act, or PRESS Act, has already moved through the House of Representatives and is awaiting release by the Senate Judiciary Committee. The editorial board writes, "It would shield reporters from court-ordered disclosure of their sources of information, except in the rare cases in which disclosure is necessary to prevent an act of terrorism or imminent violence."

Freedom of speech and whistle-blowing protection remain essential parts of a healthy democracy. The editorial board adds, "Leaks and whistle-blowers have often proved essential to the public’s understanding of major events and the workings of government at all levels. There is nothing ideological about their usefulness; they can be just as effective in exposing the unwelcome truth about Democratic administrations as Republican ones. By protecting reporters from having to reveal their sources, the bill would ideally encourage more whistle-blowers to help shine a light on government abuses."

Some members of the House having been "targets of sharp investigative reporting or frequent critics of the news media," the editorial board adds. Still, every member has "supported swift passage of the PRESS bill. . . Nothing in the PRESS Act would prevent the government from prosecuting leakers, and the government has vast powers to monitor its officials without demanding that reporters divulge the information they seek. . . . The PRESS Act is needed now."

Rural Main Street businesses have struggled, but some entrepreneurs have taken on the challenge with success

Over the past two decades, rural Main Street rehabs have proved challenging to create and sustain, but some entrepreneurs have seen "the blight as an enticement — not a deterrent," reports Lori Ioannou of The Wall Street Journal. "Many Main Streets are riddled with shuttered storefronts and struggling businesses. Here is a look at three entrepreneurs who challenged the odds on Main Street, and how they fared."

Harvey and his "Delta Dirt" family

Harvey Williams Jr. moved his family from the big city of Dallas to rural Helena-West Helena, Ark., where he grew up. Williams was an agricultural engineer, and as he explored business potentials in his hometown "he was inspired to create Delta Dirt Distillery at 430 Cherry St., making sweet-potato vodka from produce harvested on his family’s farm," Ioannou writes. "The distillery opened in April 2021, and locals began spreading the word on social media. . . . The distillery has become a tourist attraction, and many also take a tour of the Williams farm to learn about the history of Black farmers in America."

While on vacation, Jennifer Jones and her husband Brian fell in love with Big Stone Gap, a former coal town of about 5,300 people "nestled in the Appalachian Mountains," Ioannou reports. The couple closed their California business and moved to the western Virginia town. "In April 2022, they bought a struggling vegan pizzeria and its building on 215 Wood Avenue East. At the time, Wood Ave. East was a shadow of its former glory, lined with failed and struggling businesses."

The Jones family helped revive Big Stone Gap's
Main Street businesses.

The Jones' efforts were rewarded by an outpouring of community support. "The town manager and other local small-business owners and residents pitched in to help get the business up and running," Ioannou writes. "For their part, the Joneses have supported community events and hosted local festivals that have helped market the business. That pay-it-forward mentality among civic leaders and small-business owners has ignited a small-business revival in Big Stone Gap."

Not every Main Street venture is a success. For Bill Waterhouse and his partner, Sonja Olbert, being able to pursue their passions and help their small community meant adapting. Read their story here.

Quick hits: Small-town murder mysteries; slower mail for rural residents; a new hearing aid; Halloween night skies

Rossif Sutherland and Kristin Kreuk star in the new Global/FOX series 'Murder in a Small Town.' (Global TVvia IMDb photo/The Daily Yonder)

There's nothing quite like small-town murder tales to get people glued to their television screens week after week. "The latest TV series on FOX puts its own spin on a genre that has stood the test of time," reports Keith Roysdon of The Daily Yonder. "We haven’t yet reached the point where it’s become obvious that something is very, very wrong in the town of Gibsons . . . . 'Murder in a Small Town' is good, dependable murder-of-the-week television, probably not dissimilar to how 'Murder, She Wrote' was perceived for most of its run."

In Lancaster County, Penn., Democrats see an opportunity even though the county typically votes Republican, "the demographics are shifting here and throughout the state," report Campbell Robertson and Robert Gebeloff of The New York Times. "Pennsylvania is arguably the most pivotal state in the election, carrying 19 electoral votes, the most of the so-called swing states. After voting for the Democrat in every presidential election going back to 1992, the state went for Donald J. Trump in 2016 by less than a percentage point. Joe Biden won in 2020, by a little over a percentage point."

Jim and Sharon Erwin enjoy the natural beauty of
 Gunnison, Colo. (Photo by Jim Erwin via WSJ)

As baby boomers head into retirement, some choose to resettle in rural places for reasons that range from cutting costs to living closer to natural attractions. "The move to remote mountain and lake areas is helping reverse a long decline in the rural population. From April 2020 to July 2023, the rural counties retirees flocked to grew 4% versus less than 1% for rural America as a whole," report Anne Tergesen and Veronica Dagher of The Wall Street Journal. 

If slower is cheaper, is that OK? That depends. "The U.S. Postal Service is moving forward with a plan to slow down delivery for a relatively small portion of mail, telling its regulator the changes would save nearly $4 billion annually and better reflect the evolving nature of mail usage," reports Eric Katz of Route Fifty. Advocates for rural residents say the change will disproportionately affect mail delivery and pickup in more remote areas. Liz Carey of The Daily Yonder reports, "The plan would eliminate evening mail pickup in rural and remote areas, which could affect delivery times for areas that are more than 50 miles from a large USPS regional processing facility."

Apple's AirPods Pro 2 with hearing aid feature
(Apple photo via Wired)

Over-the-counter hearing aids seemed like a "cheaper and more accessible [solution] for people with mild to moderate hearing loss. Instead, people are returning them at high rates," reports Julie Jargon of The Wall Street Journal. "Doctors lauded the move as a solution for over 20 million American adults who have hearing loss that isn’t severe enough to warrant expensive prescription devices. In reality, many go for $1,500 to $2,000 . . . . The struggles come as Apple prepares to release a potential game-changer — a software update that will turn its popular, $249 AirPods Pro 2 into hearing aids."

This year's spooky season will be topped off by rarely-seen cosmic visitors. "In the days leading up to Halloween, Tsuchinshan-ATLAS, also known as Comet C/2023 A3, will be at its brightest, and likely visible to the naked eye. . . just look to the western sky shortly after sunset. As the days pass, the comet will get fainter and move to a higher part of the sky," reports James Wray for The Conversation. "The second comet, C/2024 S1 (ATLAS), should be visible around the end of October. The comet will pass closest to Earth on Oct. 24 – look low in the eastern sky just before sunrise. Then, after swinging around the Sun, the comet may reappear in the western night sky right around Halloween."