During a Senate Judiciary Committee hearing on Tuesday, Sen. Katie Britt (R-AL) talked about how pharmacy benefit management growth affects independent pharmacies.
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00:00Chairman. Senator Briggs. Thank you Mr. Chairman. Mr. McDonough or Dr. McDonough, as an independent
00:07pharmacist operating in a community setting, you are not just a health care provider and part of
00:13that ecosystem, you're also running a small business. We've seen over 6,500 independent
00:20pharmacies close their doors since 2010 and in Alabama we looked at the reliable data between
00:262015 and 2018. We had over 225 closer doors. That goes to a rate of about one per month. When you're
00:35dealing with a state like Alabama, when in our rural communities local independent pharmacies is often
00:40the only health care provider within 20 or 30 miles, this is absolutely completely unacceptable.
00:47When PBMs impose retroactive clawbacks, DIR fees, and below-cost reimbursement rates,
00:53they're not just squeezing your bottom line, they are pushing out entire communities towards
00:59pharmacy deserts. Based on what you've seen, are current PBM practices accelerating the loss of rural
01:06pharmacies and what does that mean for basic access to medications and clinical services in places like
01:13rural Alabama? Yeah, I would definitely say, excuse me, that it has been accelerating. If you look at
01:20just some of the past information that we've had within our own pharmacy and looking at how much
01:26we lost and I'll use the pharmacy that we just closed, you know, two years ago we were at a negative
01:33$95,000 as our net amount that we made. Last year was a negative $75,000. Then we dug into the data,
01:4225% of all the prescription claims that we filled were lower than zero.
01:48Unbelievable. So it's negative. A third of the prescriptions were zero to $5. What does that mean?
01:55Well, if we look at cost of dispensing, you talk about being a small business. I hire people. In my
02:02corporation, in our corporation, we have, you know, 70 to 80 employees. I take it very seriously, you know,
02:11when we have to think about closing something because I'm affecting people's potential livelihoods.
02:16I've also seen how community pharmacies, when they close up, how the community misses them.
02:22Absolutely. Because they may be the only health care provider, as you said, that they have access to.
02:28And these are not just community pharmacies. These are people who are trusted within the community,
02:34who contribute back to the community. These are the people who get the calls after hours and actually will
02:40take a drug to a patient at their home. That's what's missing. And we're going to be losing more
02:46and more. So as long as we keep debating about this, because people have asked me,
02:51do you think we're gonna see more closures? I'm like, absolutely.
02:54There is a relationship aspect in our rural communities that cannot be matched. When you're
02:58looking at creating opportunity, that opportunity for the American dream, you can't draw in that
03:03opportunity without access to care, without access to pharmacies. No one is going to come and locate a plant and
03:09create good playing jobs or decide to expand in a place that has a pharmacy desert. We know that
03:15that is true. And so looking at this in a place like Alabama, where 55 out of 67 of our communities
03:21are rural communities, they deserve better. And so when we're looking at all of this, and I think
03:27Mr. Scott made clear this morning, most employers do rely on PBMs to manage cost. But still, as the
03:34PBM debate rolls on, I'm struck by how the patient and employers, the ones who are actually paying the
03:41bills, seem to be the least empowered voices in the entire system. Employer-sponsored health care
03:48insurance remains the primary source of health coverage in America. So more than 164 million
03:54Americans obtain coverage through an employer. Dr. Sood, why do most employers accept a model where
04:02intermediaries are incentivized by the size of the rebate rather than the value of the drug to the
04:08patient? Dr. So I think the challenge is employers don't have a lot of choice. 80% of the market is
04:16controlled by the big three PBMs. And, you know, that scale is important in leveraging
04:23discounts from manufacturers. But I think employers would prefer a model where there was a direct price
04:34reduction and no rebates. Because then I can make sure that I've got the money, right? Like, rather than-
04:41So are those the structural reforms that you believe are needed? Or what else do you think is needed for
04:46more visibility, bargaining power, and value for our dollar? Dr. So I think what is needed is greater
04:53transparency so that we know or employers can know whether they're getting a good deal or not.
05:00And we need a fiduciary responsibility for PBMs that if they don't act in the best interest of
05:07plan members or employees, we can address that in the courts. And one final question. Dr. Kutcher,
05:13do you believe that rebate driven formula design and utilization tools reflect sound clinical
05:19judgment? Dr. Oftentimes, no. Oftentimes, we are trying to fight for medications that are
05:27nationally guideline accepted that we are still fighting for. Thank you.