Local pharmacies are boarding up nationwide. Nearly 2,200 American pharmacies shut their doors between 2017 and 2020, leaving 20,000 in business nationwide — about half the number in 1980.

These closures are bad for local communities and patients’ health. When small, independent shops close, patients lose access to the pharmacist who personally knows local residents. They have personal knowledge of their health conditions, prescribed medications, and the potential interactions those medicines might have with new ones. Local communities may also lose a convenient place to get a flu shot, other immunizations or blood-pressure screening.

Small pharmacies employ more than 300,000 people.

Fortunately, lawmakers across both parties are aware of the plight of local pharmacies and the consequences of their diminishing numbers. That is why bipartisanship has rallied behind three dozen bills during this session of Congress. These bills aim to curb the power of pharmacy benefit managers (PBMs) — the giant, secretive corporations that have played a significant role in driving drug prices higher and independent pharmacies out of business.

PBMs negotiate discounts from drugmakers on behalf of insurers. In exchange, pharmaceutical companies receive favorable inclusion of their products on a plan’s formulary. PBMs also administer reimbursements from the system’s payers — insurers, federal and state governments, and corporations — to providers, including pharmacies and clinics.

Their apparent role in the health system is to lower drug costs and save consumers money. Instead, PBMs have made the system increasingly complex, enabling them to extract outsized revenue from it while crowding out the small mom-and-pop drugstores that have long supplied various community needs.

Today’s biggest PBMs are vertically integrated with drugstore chains and their mail-delivery services, and the biggest insurance companies.

Drugstores buy medicines wholesale, but PBMs decide how much pharmacies get reimbursed for dispensing medications to patients with insurance. There’s no legal requirement for PBMs to provide equal reimbursement, so they can favor affiliated pharmacies while leaving independents out.

They do so by restricting where patients can access specific medicines or requiring patients to refill prescriptions at an affiliated pharmacy, no matter which drugstore supplied the original dose. PBMs can also encourage insurers to push unaffiliated pharmacies out-of-network.

As one would expect, the operations of these middlemen take place out of sight. Rules for the disclosure of contractual and other arrangements are practically nonexistent.

PBMs have also taken on the role of quality-control enforcer in prescription dispensing. Purportedly, this is to incentivize high-quality service. In reality, PBMs use their audits to justify “clawing back” fees from, you guessed it, small, independent pharmacies.

It’s time to put an end to secret and unsavory practices. It’s time PBMs were required to make their negotiations public, forbidding the practice of clawing back reimbursements and allowing patients to access the local pharmacy of their choosing.

Karen Kerrigan is the president and CEO of the Small Business & Entrepreneurship Council./InsideSources