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Independent Pharmacies Seek Parity with Chain Stores Over Drug Rates

Ann Kenda
James Bethea, behind the counter at The Coker-Hampton Drug Company of downtown Stuttgart, hopes Arkansas will begin regulating the Parmacy Benefit Managers that decide how much he gets compensated per prescription sale.

At the 90-year-old Coker-Hampton Drug Company in downtown Stuttgart, the pharmacist and owner of the last 25 years, James Bethea, is deeply concerned about the reimbursement rates from Pharmacy Benefit Managers (PBMs) he believes are putting small pharmacies at risk of losing their businesses.

Bethea has chosen to continue to fill prescriptions even though a recent law in Arkansas allows pharmacists to refuse a sale if it meant that they would lose money due to reimbursement rates being lower than the price of the product.

“Those are our customers, and we’re going to take care of them,” he said.

Regulations being considered by the state legislature in a special session beginning Tuesday would allow for oversight of such managers (PBMs) who act as middlemen between insurers and pharmacies.

According to Scott Pace of the Arkansas Pharmacists Association, the industry has been unregulated for too long and has now led to managers negotiating favorable reimbursement rates for the stores their company's own (such as CVS) for common prescriptions such as Tamiflu.

“They turn around and compete with their own retail and mail-order pharmacies to try to steal the patient away from local providers,” he said.

Pace noted that some managers have allegedly sent letters to independent pharmacies suggesting that, if times are tough, it may be time to consider selling the business.

Fourth-generation customer Carlos Carter with pharmacist James Bethea at the Coker-Hampton Drug Company in Stuttgart. Carter said he prefers the personal connection offered at independent pharmacies.

Supporters of the middlemen said their companies serve their purposes in helping to negotiate with drug manufacturers to keep prices down for everyone.

“The pharmacy benefit managers are one of the tools that exist in the toolbox to help manage the cost so that we can get people the medications they need but also do it in a way that doesn’t break the bank,” said state Rep. Charlie Collins (R-Fayetteville).

Rhode Island-based CVS Caremark, which is the pharmacy benefit manager subsidiary of the CVS pharmacy chain, said the proposed legislation in Arkansas would eliminate those who negotiate lower prescription drug costs.

“These potential PBM regulations directly interfere in the contracts between [managers] and their clients, negatively impacting the ability to effectively manage a pharmacy benefit in the state," wrote Christine Cramer, senior director of corporate communications, in an email. "While they may benefit independent pharmacies, these proposed regulations would increase costs for Arkansas consumers as well as payers in the state.” 

If the special session of the legislature decides to pass the legislation, regulation of pharmacy benefit managers would begin on Sept. 1.

This story is produced by Arkansas Public Media. What's that? APM is a nonprofit journalism project for all of Arkansas and a collaboration among public media in the state. We're funded in part through a grant from the Corporation for Public Broadcasting, with the support of partner stations KUAR, KUAF, KASU and KTXK. And, we hope, from you! You can learn more and support Arkansas Public Media's reporting at Arkansas Public Media is Natural State news with context.

Ann Kenda joined Arkansas Public Media in January 2017 from Sudbury, Massachusetts. She is a graduate of Syracuse University and previously worked in public radio, commercial radio and newspaper in Massachusetts and Rhode Island. She focuses on health, justice, education and energy as part of the Arkansas Public Media team. Her stories can be found on the airwaves, and social media.
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