Independent Pharmacies Face Closures Amid PBM Scrutiny Over Drug Pricing Practices

For many Americans, the local pharmacy is more than a place to pick up prescriptions. It’s a community hub, a spot where pharmacists know their customers by name and offer advice on managing medications. Yet, these small businesses are vanishing. Across the country, independent pharmacies, especially in rural areas, are closing their doors, leaving some communities with no nearby access to essential drugs. At the heart of this issue lies a complex system involving Pharmacy Benefit Managers, or PBMs, which have drawn attention for their role in shaping drug prices and pharmacy operations.

PBMs act as middlemen between drug manufacturers, insurers, and pharmacies, managing prescription benefits for millions. They negotiate discounts, set reimbursement rates, and decide which drugs make it onto insurance plans. While they were designed to streamline costs, a bipartisan group of 39 state attorneys general recently argued that PBMs now hold too much power, often prioritizing profits over patients and small businesses. Their call for federal action to curb PBM influence has sparked a broader conversation about fairness in the pharmaceutical industry.

The numbers tell a stark story. Three PBMs—CVS Caremark, OptumRx, and Express Scripts—handle about 80% of the nation’s 6.6 billion annual prescriptions. These giants don’t just process claims; many own pharmacies, insurance companies, and even healthcare clinics. This web of ownership, known as vertical integration, allows PBMs to control multiple steps of the drug supply chain. For example, a PBM might own a pharmacy and steer patients there, sidelining independent competitors. Critics argue this setup reduces choice and drives up costs, as PBMs can set terms that favor their own businesses.

Independent pharmacists often face reimbursement rates that barely cover the cost of dispensing medications. Some report waiting months for payments, straining their cash flow. Over the past decade, about one in ten rural independent pharmacies has closed, and urban areas, particularly Black and Latino neighborhoods, have seen nearly 39% of independent pharmacies shutter since 2010. These closures create 'pharmacy deserts,' where people must travel long distances for prescriptions, a burden felt most by those in underserved areas. Yet, PBM trade groups counter that they negotiate savings that lower drug costs overall and offer programs to support rural pharmacies.

The debate over PBMs isn’t one-sided. Supporters of the current system, including industry representatives, point out that PBMs secure billions in rebates from drugmakers, which can reduce premiums for insured patients. They also promote generics, which are often cheaper. However, transparency remains a sticking point. Many question how much of those rebates actually reach consumers, as PBMs sometimes keep a portion as profit. Practices like spread pricing, where PBMs charge insurers more than they pay pharmacies, have fueled accusations of price gouging. The Federal Trade Commission estimates PBMs pocketed over $7 billion in excess revenue from specialty generics in recent years.

On the other side, pharmacists and patient advocates argue the system is rigged against small players. In states like Kansas and Alabama, independent pharmacies have staged temporary closures to protest PBM practices, highlighting how low reimbursements and restrictive contracts threaten their survival. Lawmakers have taken notice. States like Alabama have passed laws to ensure fairer payments to pharmacies, while Congress has seen a flurry of bipartisan proposals to ban PBMs from owning pharmacies or to mandate full rebate pass-throughs. Still, no major federal reform has crossed the finish line, leaving the issue in limbo.

The push to rein in PBMs reflects a broader concern about rising healthcare costs. About one in three Americans struggles to afford prescriptions, and over 20% have skipped doses due to price. The attorneys general argue that barring PBMs from owning pharmacies could level the playing field, fostering competition and protecting local drugstores. But passing such a law won’t be easy. The pharmaceutical industry wields significant influence, and PBMs argue that their integrated systems streamline care. Any reform will need to balance consumer access with the realities of a complex market.

For now, the decline of independent pharmacies continues to reshape communities. Each closure chips away at personal connections and local economies, leaving patients to navigate a system that feels increasingly out of reach. As lawmakers weigh solutions, the stakes are clear: finding a way to preserve access to care while ensuring fairness across the board. The conversation is far from over, and its outcome will likely affect how Americans get their medications for years to come.