Most pharmacies struggle to make profits – if any at all – said Garrett Smith, owner of Equity Rx in Jay, Florida.
Smith explained that pharmacy benefit managers (PBMs), the middlemen between insurance companies and pharmacies, often reimburse pharmacies less than the wholesale cost of the drug. Nearly half of all prescriptions are filled at a loss, making profit margins, if any, negligible.
Florida Rep. Shane Abbott, who owns and operates two pharmacies, experiences these pressures firsthand.
As both a lawmaker and pharmacist, Abbott brings a “different knowledge” to the legislature and the regulation side of healthcare, allowing him to “help the practice of pharmacy be in a better spot,” he says.
This interview explores the financial strain on independent pharmacies and potential solutions that could make them sustainable again.
What follows has been edited for length and clarity.
MAGUIRE: How has your experience in healthcare and law shaped your view of the current crisis facing independent and rural community pharmacies?
ABBOTT: Being a pharmacist gives me insight into how the healthcare world works – what we may be spending money on that we shouldn't, where we might spend maybe a little better. It allows me to bring that piece to the legislative side, especially since it is the largest expenditure in the state budget.
MAGUIRE: What specific healthcare policies have you been able to influence due to your background as a pharmacist?
ABBOTT: My first year, the governor wanted to address PBM regulation in Senate Bill 1550. I was able to work with the legislature to craft language that gave us some oversight and corrective actions for misbehaviors in the PBM world. It allowed me to share my knowledge of how PBMs work and how they affect the practice.
MAGUIRE: Data, as well as many pharmacists, have said the reimbursement model makes it difficult for pharmacies to make profits. Do you see that in your business?
ABBOTT: Reimbursement has become an issue in the last five to seven years, and has gotten worse with more aggressive pricing models. We have to adapt and try to figure things out – different pharmacies use different models. Every pharmacy is different, and you choose a model based on the demographic and geographic area you serve.
MAGUIRE: Beyond PBMs, what are other ways to address this issue?
ABBOTT: Eventually, you just have to get to a cost-plus model with as few people in between services as possible. We add an expense every time we put more middlemen between a service, driving up healthcare costs and decreasing profit margins and sustainability. The more folks you can get out of the middle that don't actually provide a service, the cheaper it becomes for the end consumer or the employer.
MAGUIRE: Will simplifying the process of getting people medications be most easily achieved through a legislative effort? How should the reforms take place?
ABBOTT: I think the free market will eventually correct itself. If pharmacies stop taking certain insurance plans, it creates an access issue. If folks can't get health care, they make noise so that things change – reimbursement changes, models change and all that. But, there's always a balance between allowing the free market to correct itself and governmental intervention.
MAGUIRE: Are there any legislative steps currently being taken to advocate for pharmacies or a different economic model?
ABBOTT: Yes, but I also have to be cautious that I’m not pushing any self-serving legislation. There are a lot of different governmental entities looking at this issue and working on it, and I think the federal government has its eye on it right now.
Florida, along with other states, are waiting for findings from the state Office of Insurance Regulation’s inspection of current marketplace behaviors so we can determine what the next legislative move needs to be, if one is needed.
I think pharmacy has a great opportunity with the One Big Beautiful Bill Act, which includes the Rural Health Transformation Program. It's a rural health care transformation grant to find ways we can provide health care and make it more accessible in rural areas through Medicaid. I think it's a golden opportunity for pharmacies to show how they can provide more services and improve reimbursement, improve outcomes and demonstrate their value in healthcare.
MAGUIRE: How can rural communities take advantage of this grant?
ABBOTT: It's available to every state. Each state can propose ways it could improve rural health care. Pharmacy could be a big part of that, especially in rural areas, where sometimes the only health care provider in a rural town is a pharmacy.
MAGUIRE: Is Florida pursuing this grant?
ABBOTT: Yes. In September, the Florida Agency for Health Care Administration took input from pharmacists on how they could increase access, sustainability and outcomes in rural areas. Now, they’re developing Florida’s model to be submitted to the federal government by early November to see if they qualify for the grant.
MAGUIRE: What are ways pharmacies can help increase access and improve outcomes?
ABBOTT: Pharmacies can do a better job tracking medication compliance for rural patients, provide delivery services, blood pressure checks, diabetic testing and help with diabetic counseling.
For example, having a blood pressure clinic in the pharmacy allows you to monitor someone with higher-than-normal blood pressure over a few days. If it continues to stay up, you encourage them to see their primary care physician.
MAGUIRE: What can pharmacy owners do, apart from advocating for legislation, to remain viable under this current reimbursement model?
ABBOTT: First, they should all know who their state representative and state senator are, and make sure that they have built a relationship with them. They should let them know the issues they’re seeing and maybe even invite them into the store to see those issues at some point.
Second, they should always be asking themselves, “How can I save that employer in my area money by doing it in a different manner?” Pharmacies need to start unifying, collaborating and innovating to do things differently than we are right now.