Pharmacists open up to state Senate committee about financial struggles at hearing

As an owner of four pharmacies and president of the Pennsylvania Pharmacist’s Association, Chris Antypas says he’s fed up.

“Think of the most stress you’ve ever experienced, multiply that by 1,000, and that may give you some insight into what it’s like to work in a community pharmacy as a pharmacy owner,” said Antypas, who also is president of Asti’s South Hills Pharmacy in Castle Shannon.

Over the past few years, Antypas has had a front-row seat to a precipitous increase in challenges for pharmacies like his, at both the small independent and medium-size chain level.

At a Pennsylvania Senate Democratic Policy Committee public hearing Monday, Antypas and other pharmacists and advocates expressed their frustrations, fears and pleas to state lawmakers, including Lindsey Williams, D-West View; Art Haywood, D-Montgomery/Philadelphia and Katie Muth, D-Chester/Montgomery/Berks.

The pharmacists shared stories of the obstacles they regularly encounter doing business and highlighted the many problems caused by the unequal relationship between pharmacies and the pharmacy benefit managers — known as PBMs — that set prescription pricing. Legislators asked questions and listened while the experts painted a picture of an industry on the brink.

Antypas said he fears the parts of his pharmacy business that make the most difference to underserved populations may soon no longer be feasible for him to continue.

“The business side of health care has basically choked providers out of business,” Antypas said. “The math just doesn’t add up. It doesn’t make sense for me to take care of these people.”

Pending legislation — House Bill 1993 in the state House and Senate Bill 1000 in the state Senate — would put benefit managers under more state scrutiny and limit certain practices that pose some of the greatest challenges to pharmacies. The panelists discussed the potential impact of the legislation and looked ahead to an uncertain future.

“This is a crisis. As pharmacies close, it’s going to happen quickly,” said Richard Ost, managing partner with Somerset Pharmacy in Philadelphia.

“This is not something that we can just put a little Band-Aid on right now and say let’s stop the bleeding. We’ve got to really look at the whole picture, because we’re not bleeding — we need stitches.”

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How pharmacy benefit managers work

Pharmacy benefit managers are third-­party intermediaries between drug manufacturers, pharmacies and insurance providers. They reimburse pharmacies for the prescriptions customers buy with insurance, but independent pharmacy owners increasingly contend the reimbursements are far less than the actual cost of medications.

Low reimbursements can cause pharmacies to lose money on each transaction, especially on new, expensive brand-name medications such as Ozempic.

Mainline Pharmacy, which closed nine of its 11 locations earlier this year, said it lost more than $350,000 on about 17,500 prescriptions filled at the beginning of 2024 because of low benefit manager reimbursements.

Pharmacies must enter into contracts with benefit managers to get reimbursed. They usually have little option than to accept the terms of these contracts with PBMs, even if they are disadvantageous to the pharmacy, because so many customers’ insurance companies rely on benefit managers to distribute and formulate reimbursements.

Rejecting a contract with a benefit manager could cost a retailer a large portion of its clientele, pharmacists have said, because they won’t be able to service the customers with insurance companies that work with that benefit manager.

Williams, who represents an area that includes New Kensington, compared the unequal relationship between benefit managers and pharmacies to company stores in old coal mining towns — but “on steroids, and with people’s lives at stake.”

“There’s a lot of power and control, and a lack of transparency,” she said.

Struggle to keep going

At the hearing, pharmacists detailed how these obstacles have made it hard for many locations to continue doing business.

“When looking at more expensive brand drugs, in many cases, the pharmacy is reimbursed below the cost of acquisition for that drug,” Ost said. “Therefore, many local community pharmacies and chain pharmacies no longer wish to carry expensive brand-name medication to avoid selling prescriptions at a loss.”

Nick Cicco, president of the Pennsylvania Association of Chain Drug Stores and vice president of pharmacy at Weis Markets, said a pharmacy manager recently asked if they should stop stocking brand-name medications because of how little pharmacies receive in reimbursements for them.

“This was really upsetting to me, because as a pharmacist, I, myself and all others take an oath to protect patients. Some of these brand-name medications are now the standards of care for cardiovascular and diabetic disease states,” Cicco said.

“Are we really getting to the point where we are considering denying patients care who need these therapies, in the hopes of keeping the lights on a little bit longer at a community pharmacy?”

“The bottom line — we’re at a crisis point,” Ost said. “Pharmacies are closing at a record place. Legislation is needed to protect our most vulnerable communities from becoming pharmacy deserts.”

Pharmacy deserts are areas where residents must travel long, inconvenient distances to access the nearest pharmacy.

Robert Frankil, executive director of the Philadelphia Association of Retail Druggists, said nearly 80 pharmacies have closed in Pennsylvania since Jan. 1.

“That’s a lot of Rite Aids — about 35 to 40 Rite Aids have closed — but we also have about 35 to 40 independently owned pharmacies that are closing too,” he said. “That’s what’s creating pharmacy deserts across the state, both in rural areas and in underserved urban areas.”

Haywood emphasized the outsized impact on patients whose local pharmacies may be teetering on the edge of collapse.

“This is a very challenging situation for our neighbors, who are in a position where they may or may not get prescriptions filled, and therefore will or will not have prevention to the health conditions that they have,” he said. “If we don’t prevent the conditions, then obviously we know that long term, individuals are going to get sicker, end up in the emergency room, and it could be worse.”

Legislation ahead

Senate Bill 1000 and House Bill 1993 would direct the state insurance department to develop a process for hearing and resolving pharmacy complaints about benefit managers.

The bills would ban certain practices in benefit manager contracts, including “patient steering,” in which a pharmacy benefit manager directs a patient to use a preferred pharmacy by approving only certain pharmacies and lowering copays for the pharmacies that the benefit manager prefers.

Another prohibited practice would be “spread pricing,” in which benefit managers reimburse a pharmacy for a prescription and then bill an insurer or an employer that provides health insurance a higher price for the same prescription.

Benefit managers also would have to be transparent about the amounts of rebates and payments they get from drug manufacturers as well as how they distribute them.

HB 1993 was referred to the Health committee April 3. SB 1000 has been in the Health and Human Services Committee since Jan. 8.

“I think it’s important to make sure we identify (benefit managers) as one of those major monopolies, that most of us don’t really know,” said Muth. “Both the Senate Bill 1000 and House Bill 1993 are very, very important.”

Frankil said benefit manager regulation needs to happen as soon as possible.

“We need something fast. This is going to help negotiations with contracts be a little more fair, but that doesn’t mean the contracts that exist right now are going to change right away,” he said. “The faster this happens, the better.”

Antypas said the biggest urgency is around addressing reimbursement payments that do not cover the costs for the pharmacy to buy the drugs.

He described an incident that happened at his pharmacy. A patient needed expensive seizure medications that no other pharmacy had available, but the drugs would have cost his pharmacy more money than they made back to provide. He provided the drugs anyway.

“If we don’t take the money out of our pockets, these patients have nowhere to turn to,” he said. “If you are unable to move the needle, you have the preview, you have seen the movie trailer for the story that is going to unfold. The first three months of this year (are) the movie trailer for the rest of this year and beyond. Because we are done.”