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Lawmaker: 'Pharmacy deserts' are on the rise in New York

Spectrum News: Capital Tonight

You’ve heard of food deserts?

In the same poor urban and rural areas of the state, there are so-called "pharmacy deserts," and they’re becoming more common as independent pharmacies go out of business.

According to New York Assemblyman John McDonald, longtime owner of Marra’s Pharmacy in Cohoes, the reason pharmacies are going belly-up is due to the actions of Pharmacy Benefit Managers (PBMs).

“Here in my district alone, from South Albany up to Cohoes, four pharmacies have left in the last two years,” McDonald told Capital Tonight. “And I can tell you why: it’s because of the reimbursement which is illogical and not sustainable.”

A pharmacy’s primary source of revenue comes from prescriptions, but an intermediary called a Pharmacy Benefit Manager, or PBM, is cutting into that revenue. PBMs are responsible for reimbursing pharmacies for the cost of the medication they dispense; but frequently the reimbursement doesn’t cover the cost of the drug.

McDonald said that PBMs have been profiting on the backs of the independent pharmacies.

“Between what they charge the pharmacy and what they charge the health plan, there is a delta, usually $6 to $7 per prescription,” he said. “So, the PBMs have been using us for their own profits,”

Two bills that passed both houses of the state Legislature last session could stop this practice if Gov. Kathy Hochul signs them into law.

The PBM Transparency Bill will license and regulate Pharmacy Benefit Managers. The Pharmacy Pass-Through Bill would standardize reimbursement for managed care plans that contract with PBMs.

Capital Tonight received an emailed response to McDonald’s allegations from Greg Lopes, assistant vice president of strategic communications for the Pharmaceutical Care Management Association (PCMA), which represents PBMs.

“Accusations that PBMs are forcing store closures are unproductive and not based in fact," the response says. "There are more independent pharmacies now than there were five and 10 years ago. In New York specifically, the number of independent pharmacies in New York increased 25% from 2011 – 2021 while the number of chain pharmacies in New York decreased 14% from 2011 – 2021.”

Assemblyman McDonald argues that the association is fudging the numbers.

“Many people know that pharmacies now have their retail pharmacy and their long-term care pharmacy, which fall under the same category,” McDonald said. “Plus, there are many pharmacies that don’t deal with PBMs because of their practices.”

Additionally, out-of-state pharmacies and small wholesalers are registering as pharmacies, but they don’t serve the same communities as independent pharmacies.

“Come down to visit with me in Arbor Hill. Come down to downtown Troy. There are no pharmacies there,” McDonald said of two low-income areas. “The reality is [PCMA] can play with numbers as much as they want to, but we are not able to service the people who need service.”

The Business Council of New York State also issued a statement Tuesday against the legislation that McDonald supports.

“Legislation supported by the independent pharmacy lobby … will cost New York patients and health plan sponsors $28 billion in increased prescription drug costs,” according to Lev Ginsburg, of The Business Council of New York State.

Again, Assemblyman McDonald argues that the assertion is incorrect.

“That’s totally inaccurate,” McDonald said. “I work with the Business Council. I’m a member, and the PCMA is also a member. That is a very disingenuous argument. Maybe there is a $100 million hit on the pass-through, but quite frankly, that could be addressed by some other legislative action, if the governor wants to address it.”

The Business Council’s statement continues.

“Considering the extraordinary financial impacts caused by the pandemic, it would be irresponsible to enact policies that would further drive up the costs of healthcare for those who need it," it said.


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