OSKALOOSA, Iowa — Independent pharmacies have struggled for the past few years to make a profit due to declining drug reimbursement and a recent cyber attack on one of the country's largest health care payment systems.
Those are two factors that have the owners of two central Iowa independent pharmacies worried they'll close this year along with many others.
Payments to local pharmacies – like John Nicholson’s Mahaska Drug – were delayed in a ransomware attack in February against Change Healthcare – a division of UnitedHealth Group.
“We were not able to process any prescriptions for over two days," Nicholson explained. "Now all of our reimbursement money that is owed to us, I don’t know what is going to happen. It’s sitting out there somewhere.”
UnitedHealth Group claims electronic prescribing is available again as of last week, but are still working to fix provider electronic payments and testing of claims systems.
It's an issue that caught Nicholson by surprise, telling Local 5 News the health care payment system is flawed and vulnerable.
The delay in payments for independent pharmacies has hit them harder financially at a time when they're already struggling to break even.
Nicholson said their priority is to always serve the community and fill their prescriptions while ensuring they're paying their employees too.
However, declining drug reimbursement payments from the three main Prescription Benefit Managers (PBMs) who control a majority of prescriptions filled in the U.S. means independent pharmacies are paying more money for prescriptions for customers than what they're being reimbursed from by PBMs.
“We’re losing money," Nicholson explained. "We’re not even being paid the cost of the drug. Let alone what it costs to dispense it.”
Brad Magg, of Spring City Pharmacy in Colfax, told Local 5 he's also struggling to break even with their payments, adding: “We shouldn’t have to fill 100 prescriptions and only make a couple dollars on 20 of them. We just want to break even on all of them and not have to play this game of ‘we’ll fill for you, but not fill for you.’”
On most transactions, Magg and Nicholson spend less than average it costs to fill a prescription in Iowa through the Medicaid Program ($10.97 in 2022). Nicholson said as a result, he's not even breaking even on 80% of filled prescriptions this year.
If there are not changes to drug reimbursement policies from PBMs soon, Nicholson and Magg suspect many independent pharmacies will close this year. In fact, according to the Iowa Pharmacy Association, 40.8% of pharmacies reported expectations to close within the next 12 months.