Arkansas lawmakers learn about conditions squeezing state’s independent pharmacists

Arkansas pharmacists told a legislative panel Tuesday about a “perfect storm” of lower drug reimbursements, cash flow issues and the ripple effects of consolidation in their industry that threaten their existence.

“The marketplace as a whole is dying by a hundred slashes,” pharmacy owner Blake Torres told the Legislature’s Joint Performance Review Committee. “We’re pleading with you for help.”

Torres, owner of West Side Pharmacy in Benton, cited the abrupt closure of a 133-year-old pharmacy in Saline County on Aug. 17 — Smith-Caldwell — as evidence of the pressures on pharmacists, not just independent operators like himself but also grocery chains that operate pharmacies.

Smith-Caldwell’s owners sold their business to Walgreens and transferred patients to the pharmacy chain, but the sudden move resulted in “scared, angry” patients who showed up at Torres’ drug store for help and in calls from caregivers seeking emergency prescriptions, he said.

Smith-Caldwell won’t be the last domino to fall, Torres said. “Another one in my county is in severe jeopardy, and they might not have six months. … If we do not fix the broken marketplace, we are consolidating into a single-payer system.

“We are no longer providing health care… we are providing cattle care,” he said.

The committee also heard from Betsy Tuberville, owner of Camden Drug in Camden, and John Vinson, CEO of the Arkansas Pharmacists Association. Both also testified about recent severe cuts in reimbursements through the state’s employee benefits program.

“We just want to take care of our patients and get paid for it,” Tuberville told legislators.

Despite state laws regulating middlemen known as pharmacy benefit managers (PBMs), “we continue to see take-it-or-leave it contracts and cuts in reimbursement,” Torres said. When a new state contract with Wisconsin-based pharmacy benefits manager Navitus took effect July 1, Torres said, his reimbursement rate was “slashed significantly.”

Three PBMs control more than 70% of the pharmacy drug market, Torres said.

Slow reimbursements are also squeezing independent pharmacists, he said. Average time for reimbursements from PBMs is 35-41 days, from Medicare 30 days and from Medicaid 10-14 days, he said.

The system is also rife with conflicts of interest, Rep. Vivian Flowers, D-Pine Bluff, said, because PBMs are also in the mail-order pharmacy and insurance business.

Vinson, responding to a lawmaker’s questions, said he believes that the strategy of PBMs that own a pharmacy “is to push rates to the floor.”

Tuberville said a PBM that also owns a pharmacy puts her at a competitive disadvantage.

Several legislators suggested that PBMs may be violating Act 900 of 2015, the state law that regulates drug benefit managers. The U.S. Supreme Court upheld the law in 2020.

After nearly two hours of testimony and questions, the committee voted to continue the discussion at its next meeting in September, at which it expects to hear from a pharmacy benefits manager.

After the meeting, Hammer told the Advocate the intent of the meeting was to raise awareness among legislators of the “perfect storm” facing Arkansas’ pharmacies.