The fight between locally owned pharmacies and the national chains is a long-running story with no apparent end in sight. Much of the dispute involves pharmacy benefit managers or PBMs, which are the middlemen between pharmacies and insurers. They are supposed to work to keep drug prices low, but skeptics say they mostly dampen competition.
The Federal Trade Commission, which has criticized PBMs, says about 10% of rural America’s independent pharmacies closed between 2013 and 2022, partly because they have no real bargaining power. They get take-it-or-leave-it contract offers and pricing terms that are “opaque and unpredictable,” the comission says.
The local-owner lobby seemed to make progress at the N.C. General Assembly in placing restrictions on the PBM industry, of which four major companies control more than 70% of the national market, the FTC says. In April 2023, the N.C. House voted 114-0 for a bill that included limits on “spread pricing,” which critics say benefits the PBMs.
But N.C. Senate leadership, including President Pro Tem Phil Berger, sent the bill to the body’s Rules Committee, idling further action.
The delay enrages the state’s pharmacists who aren’t affiliated with CVS Health, UnitedHealthCare, Cigna and affiliates of Blue Cross Blue Shield, the four big PBM owners.
“The power and money of the $100-plus billion [PBM] behemoths that spout lies apparently carries more weight, for our Senate leaders, than patient needs, local community economies and small businesses,” Penny Shelton, executive director of the nearly 2,000-member N.C. Association of Pharmacists, said in August.
While most N.C. senators favor reform, she says, “The only concern we hear is ‘We’re concerned healthcare costs will go up,’ but there is evidence from other states that shows this is not the case.”
North Carolina U.S. Sen. Thom Tillis is among the co-sponsors of a bill in Congress that is similar to the proposed N.C. legislation. The American Medical Association also is pressing for more PBM scrutiny “as a check against possible anticompetitive harm,” Dr. Bruce Scott, the group’s president, said in August.
CVS opposes the bill because it will raise costs, spokesman Phil Blando says. The North Carolina bill “mandates a special $10.24 pharmacy tax on patients for every prescription at the pharmacy counter. The bill harms seniors and others with limited mobility by effectively banning lower-cost home delivery of prescriptions. This bill will not lower the cost for prescription drugs in North Carolina set by the manufacturers.”
Others who oppose more PBM regulation are pushing back. The Carolina Partnership for Reform, an advocacy group with ties to Berger, issued a commentary in mid-September slamming N.C. Rep. Wayne Sasser, a pharmacist in Albemarle. The Republican was a lead sponsor of the House legislation, but is retiring from the legislature this year.
Sasser helped lead “a grievance campaign against legislators who (rightfully) question” the terms of the N.C. bill, according to the partnership. It said the independent pharmacists “have lost their mind” and contended “unsavory tactics are being employed to push a reckless bill that would make North Carolina’s health care cost crisis even worse.”
Legislative rules make it hard to force action by the Rules Committee, so few expect the bill to move given Berger’s opposition.
Meanwhile, Shelton says more than 100 “community pharmacies” have closed in North Carolina over the past 18 months. She blames non-negotiable PBM contracts that “reimburse the pharmacy less than the pharmacy can buy the medication.” She didn’t say how many such businesses have opened in the same period. ■
