Harry Webb has seen a flurry of interest in popular weight loss drugs at his independent pharmacies in Indiana, but he doesn’t know how much longer he can afford to stock them.
Many local pharmacies are losing money on glucagon-like peptide-1 (GLP-1) receptor agonists like Novo Nordisk’s Ozempic and Wegovy as reimbursement rates come in below acquisition cost, according to an informal survey from the National Community Pharmacists Association. Respondents reported losing an average of more than $37 per 30-day supply, according to the unpublished survey.
“We’re hoping that there’ll be some type of reimbursement relief going into the new year,” Webb said. “But if not, we may have to make the decision to stop stocking these drugs.”
The use of GLP-1 medications has exploded in recent years, with Ozempic expected to rank fifth among this year’s top-selling drugs after not even entering the top 10 in 2022, according to a recent forecast from data firm Evaluate. The surge in demand has led to global shortages and raised concern among patients and insurers about off-label use.
Keeping GLP-1s in stock has been a challenge amid supply chain issues, Webb said. But even when they are available, they’re expensive. An Ozempic pen package costs more than $935 at the wholesale acquisition price. Wegovy, which contains the same active ingredient but is specifically approved for weight loss, costs nearly $1,350 per package. Webb said nearly half the paid claims last quarter at his busiest store in Rochester, IN, fell below the price he pays to wholesalers to acquire GLP-1s.
“Obviously, over the years, there’s been trends where a drug has become very popular. It happened with Prozac back in the day,” he said. “But when Prozac was a brand-name drug, it was not $1,000,” he added.
About 86% of community pharmacies said they’ve had to turn patients away because they were losing money on the drugs, and 88% said they’ve considered no longer filling prescriptions, according to NCPA’s survey.
“Having to say that ‘I can’t afford to fill the prescription for you,’ that’s not what we’re in business for,” said Kurt Proctor, a pharmacist and senior VP of strategic initiatives at NCPA. “It’s very frustrating.”
‘Not just an independent pharmacy issue’
Larger chain stores such as Walmart and Kroger have also reported that despite rising sales, GLP-1 medications have a low impact on profitability, according to AlphaSense transcripts of recent quarterly earnings calls.
“It’s not just an independent pharmacy issue. I think it’s a bigger issue than that,” Trevor Thain, owner of Topeka Pharmacy in Indiana, told Endpoints News.
For independent pharmacies, however, the money they make off prescriptions is the bulk of their businesses. That’s unlike pharmacy giants, which can offset any losses in their pharmacies with other goods they sell, like cosmetics and food. While Walmart executives have called GLP-1s a “lower margin” class of drugs, US president and CEO John Furner noted in a June investor meeting that the pharmacy business is overall “really helpful for a business that sells food, and sells apparel, over-the-counter, and the entire assortment that we sell.”
While Thain also vends flowers and fabrics at his store, he noted that he “got into this” to be a pharmacist. “If I can’t do the base function of my job, which is to provide healthcare in a friendly way and make it accessible and efficient, that’s where I have the biggest problem,” he added.
Proctor with NCPA speculated that pharmacies vertically integrated with pharmacy benefit managers may also be getting better deals. PBMs negotiate with drug manufacturers on behalf of insurers and establish reimbursement rates. Some studies suggest that PBMs may reimburse their affiliated pharmacies at higher rates than non-affiliated pharmacies, a pharmacy co-owner testified at a September US House Committee on Oversight and Accountability hearing.
“Between the insurers and the wholesalers, they’ve found a way to remove us completely from any share of the benefit of those products,” Mike Reppucci, owner of Inman Pharmacy in Cambridge, MA, said of GLP-1s, which he added are “some of the biggest products out there now.” Reppucci said he’s seen reimbursement rates, in general, drop steadily for years.
The PBM industry has fought back against state legislation targeting such behavior, including an Arkansas law passed in 2015 that prohibits PBMs from reimbursing pharmacies at lower rates than the cost to dispense the drug. (The Supreme Court upheld that law in 2020.)
Others are pushing for change at the federal level. The bipartisan Pharmacy Benefit Manager Transparency Act of 2023, introduced by Sens. Maria Cantwell (D-WA) and Chuck Grassley (R-IA), would increase transparency around PBM practices, including requiring PBMs to report differences in reimbursement rates or fees they charge affiliated and independent pharmacies.
“Instead of focusing on legislation that risks increasing drug costs, Congress should refocus on enacting policies that promote more competition in the prescription drug marketplace, including policies that eliminate common and egregious drug company practices aimed at extending patents in highly anti-competitive ways,” JC Scott, president of the PBM trade group Pharmaceutical Care Management Association (PCMA), said in a September statement. PCMA did not respond to a request for comment.
Duty to fill
Until then, Thain does everything he can to fill his patients’ prescriptions — including driving to the nearest chain store to pick up the drugs on behalf of customers with no car.
“I’ve actually even [driven] like 40 minutes round trip to the next town to find a box and pick it up with their insurance at a different pharmacy and bring it here for my patient because that is more cost-efficient than using their insurance and buying the drug myself,” he said.
The alternative is losing a customer. Thain has already lost several “life-longers” who’ve taken their business to another pharmacy that can afford to fill all their prescriptions, including GLP-1s.
“To move the needle on this thing, it’s going to take patients,” he said. “Hearing that from the people who can’t get their medicine is more powerful than me.”
AUTHOR: Nicole DeFeudis, Endpoints News Editor