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On Feb. 25, independent pharmacies across Alabama locked their doors and symbolically walked out in protest, calling it “a chance to mourn the death of the small-town pharmacy.” Now, several pharmacy owners are urging lawmakers and the public to support Senate Bills 93 and 99, which they say are critical to keeping their businesses alive.

“It’s an attempt to get on a level playing field with the PBMs,” said Alan Carpenter, co-owner of Foster Drug Co. in Luverne and Hayneville Drugs in Hayneville. “Through the last ten years or more, they have cut reimbursement and cut and cut. It’s been death by a thousand cuts. Just little by little to the point that we’re selling medications below cost.”

Carpenter and his brother John are fourth-generation pharmacy owners struggling to keep their business afloat under the current system. 

“We’ve been serving Crenshaw County since 1896,” Carpenter said. “We’ve been doing this for 129 years and I don’t know that we will make it to 130.”

At the heart of the issue are pharmacy benefit managers (PBMs), third-party administrators that process prescription drug claims for insurance companies. The managers determine reimbursement rates for pharmacies, negotiate discounts with drug manufacturers and regulate how pharmacies get paid for dispensing prescriptions. 

According to the Alabama Pharmacy Association, many pharmacies are struggling to keep their doors open as they are often reimbursed at a price lower than their cost of dispensing the medication to the patient.

One of the bills, SB 93, seeks to address the problem by prohibiting PBMs from reimbursing pharmacies at rates lower than their acquisition cost. It would also prevent PBMs from charging fees related to network participation and claims processing. Additionally, the bill would give pharmacists more freedom to disclose drug prices and alternative treatments to consumers and allow pharmacies to refuse to dispense medications when reimbursement is below cost.

The other, SB 99, takes PBM regulation further, mandating that they reimburse pharmacies at rates based on the National Average Drug Acquisition Cost and pass 100% of manufacturer rebates to clients. It also bans practices like “spread pricing,” where PBMs charge clients more for drugs than they pay pharmacies. Violations could result in civil penalties per infraction and pharmacies, insurers and patients would have legal recourse against PBMs. 

Chip Whitaker, owner of Whitaker Family Drug Stores, with a location in Greenville, participated in the walkout and hopes community members will contact their legislators in support of the bills.

“The bottom line is we are losing independent pharmacies across Alabama and across the nation at an alarming rate and it’s due primarily to middlemen in the drug supply chain…,” Whitaker said. “PBMs must be strongly regulated in Alabama, or else you will continue to see the loss of local pharmacies.”

Beyond the business aspect, Whitaker stressed that the issue directly impacts patients’ access to life-saving medications. 

“If we are getting paid less by the insurance company and PBM than it cost us to buy that same prescription, then it makes it very hard for pharmacies to stock that medication,” Whitaker said.  “Therefore, it becomes harder for the patient to access what they need to stay alive and lead a normal life.”

Whitaker also warned of the unchecked power PBMs wield over the industry.

“The way it is right now, PBMs are making billions of dollars off of these predatory arrangements with both employers and pharmacies,” Whitaker said. “Essentially, you have a PBM monopoly that’s got to get busted up and the only way to do that at this point is through the Alabama Legislature and Congress passing laws to address it.”