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News broke recently that Walgreens is closing another 1200 of its stores. This follows a trend in the pharmacy industry, and as a pharmacy owner, I can tell you exactly why this keeps happening—specifically to Walgreens and similar pharmacies.
On the surface, Walgreens and CVS may seem nearly identical, but there’s a crucial difference that sets CVS apart from Walgreens, allowing it to weather the storm better. That difference lies in CVS’s ownership of a PBM—or Pharmacy Benefits Manager. Understanding this distinction sheds light on the entire issue.
What is a PBM, and Why Does It Matter?
Pharmacy Benefits Managers, or PBMs, are powerful middlemen in the healthcare industry, responsible for managing prescription drug benefits on behalf of insurance companies, employers, and government programs. They wield enormous control over your prescription experience, from what drugs are covered by your insurance, to how much you’ll pay out of pocket, to how much pharmacies are reimbursed for dispensing those medications.
PBMs determine not only how much you, the patient, are charged, but also how much your pharmacy gets paid to fill your prescription. Over the last several years, PBMs have realized they can leverage their influence to open their own pharmacies (like CVS does) or force patients to use their mail-order services. Here’s how it works—and how it’s crushing Walgreens and other pharmacies across the country.
How PBMs Manipulate the System to Their Advantage
Imagine this scenario: You go to a non-PBM-owned pharmacy—say, Walgreens—to fill your prescription. But the PBM handling your insurance doesn’t want you filling your prescription there. Why? Because PBMs can charge insurance payers (such as your employer or the government) up to 22 times more at their own pharmacies than they do at non-PBM-owned pharmacies.
To push patients toward their own pharmacies, PBMs use several tactics, including:
Limiting supply: They may restrict how much medication you can receive at non-PBM pharmacies like Walgreens, forcing you to return more frequently or switch to their mail-order services.
Restricting refills: They limit the number of refills allowed at other pharmacies, pushing you toward their own outlets or online services for convenience.
Underpaying non-PBM pharmacies: The most brutal tactic, especially for independent and non-PBM-owned pharmacies like Walgreens, is the shockingly low reimbursement PBMs pay. Often, the amount PBMs reimburse is lower than what it costs the pharmacy to purchase the drug in the first place.
The result? Pharmacies lose money filling prescriptions. Walgreens—and thousands of independent pharmacies—are trapped in contracts that require them to fill prescriptions, even if they’re losing money on each one. As this has happened more frequently, pharmacies have been left with little choice but to close their doors.
Why Walgreens is Particularly Vulnerable
Unlike CVS, which owns a PBM and can steer patients into its own stores, Walgreens relies entirely on outside PBMs to manage reimbursements and steer patient traffic. With no control over how much it gets paid for each prescription or how patients are funneled to its stores, Walgreens is at the mercy of these PBMs.
In recent years, reimbursement rates have plummeted, leaving Walgreens with a brutal choice: either close stores or continue losing money at an unsustainable rate. This same scenario has already forced over 2000 pharmacies to close their doors this year alone.
The Real Cost to You: Hidden Fees and Higher Prices
PBMs are so powerful because they operate in a hidden layer of the healthcare system. Most patients aren’t even aware they exist. But when PBMs limit your access to certain pharmacies, restrict your medication quantities, and underpay the pharmacies you trust, you end up paying the price.
By funneling patients toward their own pharmacies or mail-order services, PBMs are able to charge insurance payers significantly higher rates, leading to inflated healthcare costs for everyone. Even if your copay hasn’t gone up, the true cost of your medication is climbing—driven by the invisible hand of the PBM steering your prescription.
A Better Way: Fair and Transparent Pricing
If you’re tired of being manipulated by PBMs and overpaying for your prescriptions, there’s a better way. At Forest Park Pharmacy, we’ve eliminated PBMs from the equation entirely. Our cost-plus pricing model is transparent, offering you fair prices on medications without hidden markups or restrictive middlemen.
You can check our prices yourself using our price checker tool at ForestParkPharmacy.com. See if we can save you money—chances are, we can.
At Forest Park, we believe in bringing transparency back to pharmacy, so you know exactly what you’re paying and why. By cutting out the PBMs, we’re able to offer a more sustainable model that benefits both patients and independent pharmacies alike.
So next time you hear about another Walgreens closing, you’ll understand what’s really happening behind the scenes. And if you’re ready to break free from the PBM stranglehold, we’re here to help you take back control of your prescription costs.