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Indiana pharmacies are disappearing at an alarming rate and with them go a vital link to health care for many Hoosiers. These local fixtures that working families rely on for their medications could soon be just a memory, cutting off care for those in rural and underserved communities.
That’s not a future Hoosiers want, and it’s certainly not good for health care in Indiana. More than 500 pharmacies have closed in the last decade, including 100 in just the last two years, and more will follow unless we act now.
Thankfully, health care champions in the Indiana General Assembly have stepped up with Senate Bill 140, legislation that protects our local pharmacies and their patients who need access to care close to home.
SB 140 would build upon the previous good work of Indiana lawmakers to further rein in the anticompetitive practices of pharmacy benefit managers. These health care “middlemen” use their market domination to bully our community pharmacies for their own gain. The bill would require PBMs to adequately reimburse pharmacists for their services based on the average cost to purchase and dispense medications.
This is not a pill tax on patients or businesses as some have incorrectly claimed. The model is based on real cost data instead of an arbitrary price determined by PBMs after they’ve taken their profit. Similar reimbursement models have proven successful in many states by ensuring access to care for patients while not increasing costs. An additional 17 states are considering similar policies or expanding on these reforms, including our neighbor Kentucky.
PBMs exploit current law to undercut our community pharmacies. Medicaid has found that on average, it costs a pharmacy a little more than $10 to dispense a prescription while PBMs are only providing a $2 reimbursement. This means PBMs are reimbursing pharmacies for 20% of their actual costs, forcing them to lose money on a substantial percentage of prescriptions filled.
PBMs then charge health plans far more than they reimburse a pharmacy, pocketing the difference as profit using a practice called spread pricing. This in turn drives up costs for patients, employers and taxpayers. In Medicaid managed care alone, this has accounted for more than $300 million over the last few years. While pharmacies are struggling to stay open and patients can’t afford their prescriptions, big PBMs are increasing their profits and market dominance.
SB 140 also prevents unfair discrimination toward our community pharmacists and protects patient choice. The big PBMs own affiliated pharmacies, including mail order, that they use to steer patients away from local pharmacies. Patients are often forced to pay extra fees if they opt out of a PBM-owned pharmacy when they need a prescription filled.
Ultimately, patients end up paying the price when local pharmacies close, and they’re forced into using PBM-owned businesses far away from their homes. There are often delays in treatments and an increase in hospitalizations for preventable conditions. Pharmacists can be a lifeline for patients in rural and underserved communities where there is already a lack of providers.
Protecting our local pharmacies is key to improving public health. SB 140 will level the playing field for all pharmacies around the state and push back against PBM practices that raise costs and restrict care. PBM reform has garnered significant support, and similar reimbursement models are already working around the country.
Indiana lawmakers should get behind this effort and enact real change for Hoosier health care.•
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Covington is the executive vice president of the Indiana Pharmacy Association.
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