Baker City resident Lisa Raffety has rheumatoid arthritis and needs to get her medications refilled twice a month. Recently, that’s meant standing in line at a pharmacy for more than two hours.
“It hurts to stand for any length of time, to be on my feet, because it’s a hard cement floor,” Raffety said.
Raffety has had to get used to long waits after Bi-Mart closed its pharmacy counter last year, forcing its former patients to transfer about 1,500 prescriptions to the remaining three pharmacies in Baker County, which covers 3,000 square miles. Now lines in those pharmacies are so long, Raffety said people bring their dinners and eat them while waiting. Staff have to provide wheelchairs to people who can’t stand that long.
Last year, Oregon lost nearly 60 pharmacies at once after the Pacific Northwest retailer Bi-Mart got out of the pharmacy business. The company’s decision left thousands of Oregonians with prescriptions that needed to transfer elsewhere.
Some people went to other nearby pharmacies without much issue. But in rural areas where options were already limited, remaining pharmacies struggled to take on the extra workload.
If Raffety doesn’t take her medication every day, she can’t walk. She has tried changing her prescriptions to get them by mail, but complications with her insurance have made that difficult.
“I haven’t figured out when the best time to come and stand in line would be,” Raffety said. “I don’t want to know because I don’t want to do this anymore.”
During the COVID-19 pandemic, Americans started going to their local pharmacy for more than just prescriptions: They went for masks, COVID tests and vaccines. But even with that increased business, pharmacies big and small are closing their doors; a national trend that’s been accelerated by the pandemic.
Bi-Mart spokesman Don Leber said several factors went into the decision to close its pharmacies.
“We were really forced to make a decision we never wanted to make,” Leber said.
Leber said one factor was Oregon’s Corporate Activity Tax, which taxes companies based on their revenues, not their profits. Pharmacies have high revenues, but when they subtract the high costs of drugs and overhead, they end up with low profits.
Then there’s another, nationwide issue: increasing fees associated with insurance plans, which have risen substantially recently.
“Over the past probably six-plus years, these fees have risen to millions of dollars annually for us,” Leber said. “And now it’s becoming where it’s negative dollars against our total [profits] for Bi-Mart to be able to do business. And quite frankly, it got to the point that within the next three to five years that if we continue down this path, which obviously looks like it would, it would affect the ability for Bi-Mart to remain open as an 80-store retailer.”
The role of pharmaceutical “middlemen”
Pharmacist Rick Chester says his small independent pharmacy, Medicap Pharmacy in Talent, experienced an influx of new patients after the nearby Bi-Mart closed its pharmacy counter.
“It happened immediately,” he said. “Like, overnight.”
On top of that, other pharmacies were severely limiting their hours or closing their counters for weeks straight because of pandemic-related staffing shortages and pharmacist burnout. Chester says their patients started showing up at his doors, too.
“Everybody likes growth if they have a business, but if it happens within a month, that’s a pretty dramatic shift,” Chester said.
Running a pharmacy isn’t like a normal business, Chester said. Unpredictability can make it difficult to know which drugs to order, and how much. It’s also hard to know what pharmacies will be paid by patients’ insurance plans later down the line.
When pharmacies issue medicines through insurance or Medicare plans, they have to work through companies called pharmaceutical benefit managers, or PBMs.
After someone gets their medicine at a pharmacy through an insurance plan, the PBM is supposed to reimburse the pharmacy for the drug cost and some overhead. But in recent years, PBMs started decreasing the amount they reimburse when pharmacies don’t meet certain sales markers.
“They claw back money from pharmacies rather than paying them,” Chester said. “So for example, they tell me when I process a prescription that they’ll pay me $10, but they might claw back $3 or $4. So I end up ultimately with $6.”
PBMs’ sales markers, also called quality measures, can be complicated. For instance, a PBM might reimburse a pharmacy with more money if it dispenses a certain drug to diabetes patients. But, if a pharmacy slips up with one patient, it could face decreased reimbursements on all of its patients under that PBM.
“The rules are so vague and so inconsistent, they can kind of decide ‘Gee, we really weren’t making enough money, so we’ll say the pharmacy is inefficient and just throw some more costs on them,’” said Oregon Sen. Ron Wyden.
Wyden has called on Congress to increase its oversight of pharmaceutical benefit managers.
“The entire supply chain, it’s broken,” he said.
Some states have started regulating them on their own, including Oregon. Since 2019, the state has required PBMs to reimburse pharmacies at least for the price they paid for drugs. PBMs are also subject to state audit limits, and they aren’t allowed to retroactively take away money from pharmacies through fees — they must reimburse pharmacies for the initial agreed-on price.
But Oregon doesn’t require PBMs to reimburse pharmacies for the cost of doing business — like covering pharmacists’ and staff salaries, the most expensive part of running a pharmacy.
“This is the most fundamental problem, as pharmacies cannot afford to hire enough staff for appropriate care to patients or to meet public demand for services,” said Kevin Russell, the Central Oregon director for the Oregon State Pharmacy Association. “If pharmacies push back, PBMs are fine with pharmacies not being in their network or even going out of business.”
Many PBMs also own mail-order prescription businesses. By having their customers receive their medications directly through the mail, they save money by not having to work through retail pharmacies. Meanwhile, just three PBM corporations control about 75% of the market — Express Scripts, CVS Health and OptumRx of UnitedHealth Group — which also have business ties to chain retail pharmacies, like CVS.
Russell said it’s in PBMs’ best interest to have retail pharmacies close, so more customers turn to mailed medication — and they’re using their lobbying and market power to make that happen.
“This type of conflict of interest and use of market power to bankrupt competition should be illegal,” Russell said. “Yet, they get away with it as federally they fall outside of many laws which apply to consumer businesses or insurers. The government seems to have little will to prosecute them for anti-trust violations.”
Oregon’s law forbids PBMs from making patients use only mail-order services. Patients in Oregon must have the option to go to their local pharmacy. But if more pharmacies close, then those options are limited.
Representatives of the top three major PBMs didn’t respond to requests for comment. Greg Lopes of the Pharmaceutical Care Management Association — a trade association representing PBMs — said he doesn’t believe PBMs are a major contributor to pharmacy closures.
“Independent pharmacies [and] retail pharmacies are essential to our health care system,” Lopes said. “PBMs absolutely need pharmacies to exist, and any accusation that PBMs are attempting or trying to put pharmacies out of business is just not based in fact.”
By negotiating contracts with pharmacies, Lopes said PBMs help insurers save money, which they can then pass down to patients by lowering monthly premiums. Still, there’s no guarantee that insurance companies will actually lower their premiums, nor is that information tracked or published publicly.
The impacts on rural communities
When his email inbox became flooded with complaints about long pharmacy lines, Baker County Commissioner Mark Bennett worked with his colleagues on an unusual solution: Why not hire young people to stand in line for those who can’t?
“We were trying to figure out a way we could hire high school students or someone to stand in line, but we couldn’t figure out how to deal equitably,” Bennett said.
County staff didn’t think it would be fair if someone stood in line for, say, two hours to get their medications, only to have a county-hired teenager get to the counter in front of them with a long list of other people’s prescriptions. They ultimately ditched the idea.
“Instead we have been sending county employees over to stand in line for those folks that are in quarantine or otherwise can’t be out in public,” Bennett said. “It’s a big challenge.”
Pharmacy options were already tight in this large, rural area before Bi-Mart closed its pharmacy counter last year. Now, residents say the problem is untenable.
“They’re not even answering their phones,” said resident Millie Larson. “You can’t call the pharmacist and ask them a simple question, like, ‘Is my refill ready?’ You have to [get the] answer by waiting in line for 2-and-a-half hours.”
Larson has a flexible work schedule, so she can more easily deal with the wait times when she gets her refills about twice a month. But many of her friends and family can’t make it work, so she picks up their medicines for them. As long as they have permission, people are generally allowed to pick up prescriptions for other people.
“They were really excited that I was able to do that for them,” Larson said. “I was just like, ‘Why not? If I can do it, then might as well help others that can’t.”
She’s worried about how much longer this will last. Larson has been waiting in lines for people since November; by February, the wait times were still amounting to more than an hour.
The problem is, things have gotten too complicated, said Doug Hoey, chief executive officer of the National Community Pharmacists Association.
“One thing we can do is, we can make the payment model for pharmacies and for patients more transparent, more straightforward,” Hoey said. “Because right now it’s just a guessing game for most patients when they go into a pharmacy. And it certainly is for the pharmacy itself what they’re going to be paid.”
Hoey wants to cut out the middlemen. Instead, patients should pay pharmacies the actual cost of the drug — whether it’s $5 or $1,000 — then a flat fee on top of that to cover the costs of the pharmacy’s overhead. That fee could range between $10 and $12.
“That helps [pharmacies] pay for the employees, that gives them some predictability,” Hoey said. “So it’s transparent for consumers and for the pharmacy.”
Hoey said if there isn’t any change — either some more regulation of the pharmacy payment market, or an entire overhaul of the system — pharmacies will continue to close, and people in rural areas will likely be hardest hit.