You’ve probably heard this story before: a local business, owned for decades by a family that has been deeply involved with the community, closes its doors due to being muscled out by a national big box store. With their enormous market share and unfair regulations or advantages afforded by the federal government, the national chain pushes its smaller competition out, and the local economy loses a little bit more color than it had before.
Stories like this are all too common for locally owned, independent pharmacies. They face dire situations related to costs and rebates for drugs that national Pharmacy Benefit Managers, PBMs, simply do not. PBMs continue to benefit from a system initially established to help patients and the costs associated with their lifesaving drugs. Costly loopholes and a significant lack of accountability has led to a system that benefits only the middleman, not those that feel the strain of a system that gets more expensive by the day.
Originally, PBMs were designed to manage benefits and negotiate drug prices between the manufacturers and the pharmacies that distribute them, all with the intent of benefiting the patients. In practice, PBMs have been able to swallow up these savings to line their own pockets – skimming off the top while prioritizing medications that benefit them financially, not the patients. This creates artificial barriers to lifesaving medications, high out-of-pocket costs and a serious lack of transparency. Patients get left in the dark about one of the most important aspects of their lives.
These negative impacts extend to locally owned and operated pharmacies, but also to the economy as a whole as well. PBMs are notorious for reimbursing independent pharmacies for less than the acquisition cost of the drugs –sometimes weeks or months after the acquisition was made. This leads to a budget shortfall and undue stress on the local business. PBMs also retroactively charge fees to pharmacies under Medicare Part D, making it simply impossible for independent pharmacies to effectively forecast their revenue. If a business owner is unsure of fees or costs associated with sales that may sometimes come months after completion, that throws their whole operation into chaos.
These predatory practices have led to closures of independent pharmacies across the country, and the American public is tired of not only paying exorbitant out-of-pocket costs for necessities but also losing access to their local health care providers that have existed for decades. While PBMs are generating record profits ($7.3 billion in revenue in just five years, says the Federal Trade Commission), one in three retail pharmacies have closed since 2010. These costs are not being shared with the public, and it is time for our elected officials to take a stand for the patients across the country.
Fortunately, things are being done here in Alabama to combat these practices and to support these fixtures of our communities. The Alabama Legislature passed S. 252, the Alabama Community Pharmacy Relief Act in April 2025, requiring PBMs to reimburse at the same rate as Medicaid. This eliminates one of the costly loopholes that put local pharmacies at a disadvantage for years. The law also increases transparency and accountability within the PBM system, ensuring financial stability for independent community pharmacies, and preserves patients’ access to affordable, local medication services.
However, more needs to be done at the national level, and there are several pieces of important legislation in both the House and the Senate that aim to address this issue once and for all, with support from both parties. Strong bipartisan backing of this legislation shows that this issue is not a matter of political posturing – it’s about fixing a broken system and protecting patients, employers and independent pharmacists alike.
What originally started as a well-intentioned system to negotiate costs on behalf of the patient has turned into a system benefiting a very small fraction of the industry, to the detriment of patients, employers and small businesses. PBMs have been allowed to grow too powerful, too opaque in their practices and too unaccountable to the system and patients they were created to benefit in the end.
Independent pharmacies have long been a crucial healthcare provider to Americans from all walks of life, and their impact deserves to be supported now and for years to come. It’s time for our elected officials to make a stand and protect small businesses and patients alike from the predatory practices of PBMs.
