Corporate middlemen are pushing California’s pharmacies to the brink

Pharmacy benefit managers play a pivotal role in negotiating the prices for prescription drugs, but many officials believe their tactics warrant reform. Below, a community pharmacy owner argues these middlemen need to be reined in. The opposing view: A pharmacist says California lawmakers should proceed with caution as they consider new restrictions.

When I opened Ten Acres Pharmacy in Sacramento during the early months of the pandemic, I wasn’t thinking about profits or policy. I was thinking about people. Our community needed a trusted place to ask questions, get tested, vaccinated and feel cared for, especially when health care felt out of reach or overwhelming.

Just five years later, I closed my pharmacy. It kills me to say that it no longer made financial sense to keep serving patients. While rising costs and inflation certainly played a role, the driving factor is harder to explain and much more troubling.

As an independent pharmacy, we paid out-of-pocket to stock the essential medications our patients needed, with the understanding that we’d be reimbursed for our costs. Unfortunately, we were routinely reimbursed by pharmacy benefit managers for less than what we paid — not just pennies less, but hundreds of dollars less.

I’ve taken $150 losses on a single prescription, and I’ve counted it a good day when I’ve made $1 on a $5 tube of cream. This is not a sustainable way to do business, nor is it a sustainable way to deliver care.

Independent pharmacies are closing across California and nationwide at an alarming rate. Chain pharmacies aren’t far behind. Rite Aid and Walgreens have both announced widespread closures, forcing more communities to become pharmacy deserts. Patients, particularly those in predominantly Black, Latino and rural neighborhoods, are being left behind. Lifelines are being cut.

If California doesn’t reform how pharmacy benefit managers operate, these powerful and largely unregulated middlemen will keep a chokehold on the way prescriptions are priced and reimbursed.

Pharmacy benefit managers dictate how much pharmacies are paid, which medications patients can access and whether community pharmacies can afford to stay open. Year after year, they’ve found new ways to cut costs on the backs of small pharmacies, while boosting their profits.

It’s not just me saying this. It has been proven time and again, including by the Federal Trade Commission. Meanwhile, my staff and I are left to explain to patients — people we’ve known for years — that we can’t fill their prescription because we’d lose too much money on it.

I didn’t open a pharmacy to turn people away, but that’s what pharmacy benefit managers are essentially forcing me to do. It’s heartbreaking and it’s wrong.

I’m urging Gov. Gavin Newsom and the California Legislature to stand firmly behind Senate Bill 41. This bill would bring much-needed transparency to pharmacy benefit managers’ practices, stop their most exploitative reimbursement schemes and give community pharmacies a fighting chance.

When Newsom vetoed a similar bill last year, he said he believed pharmacy benefit managers must be held accountable but he wanted more data. We don’t need more data. We know what we need to do. The pharmacy benefits bill is our chance to get it right, and it couldn’t be more urgent.

If we don’t act now, the map of California’s pharmacies will keep losing pins.

Some may argue that the future of pharmacy is online, but I’ve seen firsthand what’s lost when care is outsourced to algorithms. The elderly patient who relies on us to explain her new blood pressure medication doesn’t take it as prescribed. The mom who walks in worried about side effects no longer feels reassured. The man picking up his first prescription for diabetes can’t talk through the next steps after a scary diagnosis.

These are not just patient-provider interactions; they are human moments. This is what health care looks like in a community. These pharmacies might be the only accessible option for people without a car, a computer or the time to wait for mail-order medication.

I shut my doors, but I’m speaking up in hopes that I can help prevent my peers from closing theirs. California has a chance to be a leader in protecting access, fairness and community-based care. The pharmacy bill is a necessary step. Our community pharmacies are counting on it.