The Cost of Independent Pharmacies Antitrust Exemptions

During the past fifteen years, the number of consumers with prescription drug coverage has expanded dramatically. More widespread drug coverage has increased competition among retail pharmacies as many large and sophisticated payers, such as employers, unions, governmental programs, as well as health plans, hired pharmacy benefit managers (“PBMs”) to efficiently manage pharmacy benefits for their employees and enrollees. As a result of the competition induced by PBMs, pharmacy profit margins on prescriptions narrowed from the levels that pharmacies had historically earned when most of their customers were cash paying individuals. With the implementation of Medicare’s prescription drug benefit, even fewer consumers are paying in cash for their prescriptions. Independent pharmacy representatives claim that narrowing profit margins on prescriptions has caused their industry financial hardship and argue that they should receive antitrust exemptions that would allow them to bargain collectively with health plans and PBMs, even as their own industry data indicate increases in prescription volume, sales, and dollar profits.