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USA, the survival of small pharmacies is at risk

2023-12-28 22:30:00, Kosova & Bota CNA

The drug supply system in the United States, from production in the factory to sale in the pharmacy, is complex and unclear. Congress and some states' local legislatures have proposed laws requiring transparency and reducing exorbitant prices. PBS correspondent Fred de Sam Lazaro recounts personal experience at his neighborhood pharmacy and that many small pharmacies complain that the current system is hurting them financially.

When I go to the neighborhood pharmacy to get the medicine, I have thought that the part of the medicine price that I pay myself, about $500, makes a reasonable profit for the pharmacy.

But, surprisingly, the employees ask me to go to another pharmacy in the future, because for this medicine, their pharmacy makes a loss.

"If you pay $578 for the medicine and only get $500 back, then that's not a sustainable model. This is the situation we are in now", says John Hoeschen, owner of the pharmacy "St. Paul Corner Drug”.

This traditional pharmacy has been here for 100 years. The owner is not sure how long it can last. He mainly blames the so-called intermediary companies (PBMs) that manage the drug insurance network. The latter are the main danger for Mr. Hoeschen's pharmacy. They are what determine which drugs are covered by insurance, the price assigned to the drug for the pharmacy, and the payment that the customer must make himself.

Brokerage companies were originally created to control rising drug insurance costs by creating and updating lists of drugs that are, or are not, covered by insurance.

Over time, these brokerages themselves have grown into multi-billion dollar businesses.

“They bill the insurance company Blue Cross $40, they give me $7. Where does the $33 go? To the intermediary company," says Mr. Hoeschen.

These intermediary companies have also entered the sales sector with their business. Instead of actually lowering drug prices, intermediary companies do the opposite, say representatives of manufacturing companies.

"They earn more from drugs with high prices. Producers already receive less than half of the price at which the medicine comes to the market", says Mr. Ubl.

But representatives of intermediary companies blame the producers and say that without these intermediary companies, the situation would be much worse.

"These companies have been successful in lowering the costs of drugs and making them available to millions and millions of Americans," he says.

The group of intermediary companies accuse drugmakers of raising prices and exploiting intellectual property laws to keep prices high, as happened with insulin when the companies were forced to lower the artificially high price themselves.

Mr. Ubl also responds to the case of insulin. He says that when prices started to fall, many brokerages asked their patients to stick with brands that hadn't cut prices, leaving patients with larger payments.

"This is because they made more profit from higher priced drugs. This is a classic example of why the system should be changed", says Mr. Ubl.

Dr. S. Vincent Rajkumar says that the system is so complex that very few people understand it and meanwhile prices only go up. He says that the tension will increase in the future.

"There was an outcry because of families losing children with type 1 diabetes to high insulin prices. Americans were outraged when they realized they could go to Canada and find the same medicine at a tenth of the price. An activist movement was created that brought about change," says Dr. Rajkumar.

But what does all this mean for the neighborhood pharmacy?

"I get letters every month from one of the big networks offering to buy my data, and customer cases, basically buy me outright," says Mr. Hoeschen.

He has tried to buy time by selling new products, such as nutritional supplements and offering vaccination services, in the hope that reforms at the federal and state level will bring some relief./ VOA