Analyzing the reasons behind Rochester area drugstore closures

Rochester, New York – With five Walgreens pharmacies closing this month, friendly encounters with consumers are becoming less frequent in the Rochester area.

Dave Seelman, proprietor of the independent Irondequoit Pharmacy, stated, “It’s a challenging point in time in community pharmacy.”

Seelman claims that pharmacy benefit managers, or PBMs, are to blame for the difficulty.

A PBM is defined as an intermediary that collaborates with the pharmacy and insurance provider to process prescription reimbursement payouts.

“Over the past few years, there have been many challenges because we’re getting reimbursed below cost for the medications that we’re ordering,” Seelman said.

Vincent Chiffy, chair of the FixRx Committee for the Pharmacist Society of the State of New York, stated, “They claim to be saving patients money.” “But in reality, they’re charging the health care system more money than they’re paying medications to pharmacies.”

According to Chiffy, big box pharmacies like Walgreens and CVS as well as smaller independent pharmacies are also impacted by below-cost drug reimbursement rates.

“The health care system is harmed whenever a pharmacy closes,” Chiffy stated. “Pharmacists are the most accessible health care providers right now in the health care field.”

According to Seelman, among other problems, pharmacists are occasionally paid less than $1 for a prescription.

One of their tactics, he said, is to insist on a brand-name drug even when a less costly generic is available, and then they will get reimbursements from the producer. “Ultimately, that increases total health care costs.”

“I think you’re going to see a lot of pharmacists unemployed as these chains close because there isn’t really a place for them to go,” Chiffy stated.

“It puts us in sort of a challenging position,” mentioned Seelman. “I became a pharmacist because I want to help people, but I also have a business to run.”

Legislation to ensure that pharmacies are not paid less than the cost of a prescription is being pushed for in the upcoming session of the New York State legislature.

A spokesperson for Express Scripts responded:

1. Our job is to help the millions of Americans we serve get the medicines they need at the lowest possible cost, and we do that by negotiating with the pharmaceutical companies that set the price of the medicine, and the pharmacies that dispense the prescription. There is an inherent tension between the interests of retail pharmacies and the employers, unions, and other entities that offer prescription drug benefits. Retail pharmacies want to be reimbursed more for the prescriptions they dispense, and plan sponsors want lower prescription drug costs for their members. If we agreed to demands for higher reimbursement rates by retail pharmacies, this would result in higher healthcare costs for Americans. We must balance the demands of our pharmacy partners while continuing to drive lower drug costs for the Americans we serve.

2. We deeply value our relationships with our retail pharmacy partners, who ensure that the people we serve can get their medicines quickly and conveniently. Express Scripts’ national network of more than 64,000 retail pharmacies provides broad access to participating members. Within that network, most pharmacies are independent pharmacies (35%) and the number of independent pharmacies has increased by 20% between 2019 and 2024. Since 2019, we have expanded the number of New York independent pharmacies in our network by 23%, and more than 90% of our customers’ prescriptions are filled at retail pharmacies.

3. An analysis of data produced by three of pharmacy benefit managers across all drugs shows that the reimbursement rates paid to independent pharmacies are generally higher than reimbursement rates paid to chain pharmacies across both brand and generic medications. Independent pharmacies are paid approximately 4% more than non-affiliated chains for brand medicines and approximately 24% more than non-affiliated chains for generics.

Phillip Blando, a spokesperson for CVS Caremark said:

Local, independently owned pharmacies serve as vital partners in CVS Caremark pharmacy networks, representing more than 40% percent of our in-network pharmacies. It is also important to note that pharmacy reimbursements are negotiated with large Pharmacy Services Administrative Organizations (PSAOs) that represent independent pharmacies and advocate on their behalf. PSAOs represent more independent pharmacies than the total number of CVS Pharmacy and Walgreens stores combined.

To help address concerns, we are introducing two important innovative solutions — our community pharmacy is launching CVS CostVantage, and our pharmacy benefits management (PBM) business recently introduced TrueCost. Together, these offerings are an important step forward to bring greater transparency and clarity to a complex health care system.