The owner of Miller’s Pharmacy in Wyckoff, David Miller, is trying to raise awareness of the economic forces that have been catastrophic for neighborhood drug stores around the nation.
The third generation owner recently made his case to an aide of Congressman Scott Garrett, and is seeking legislative support to reign in the abuses of PBMs. Pharmacy Benefit Management companies are a growing segment of health care spending, but they are for the most part unregulated.
This, many say, is the reason PBMs have been forced to pay nearly $400 million in damages for fraudulent and deceptive practices. The 2007 merger of CVS and Caremark Rx created America’s largest pharmacy chain and 2nd largest PBM. In 2008, CVS agreed to nearly $40 million to 23 states and the United States Government for having switched Medicaid patients to a more expensive drug to increase their own profits.
PBM's Flow of Money in Drugs - click to enlarge
PBMs act as middle men negotiating lower drug costs for corporations, governments and unions by utilizing bulk purchasing power. Unfortunately, savings are not always guaranteed for either client or consumer. Numerous court cases have unearthed a common practice where PBMs steer consumers toward higher priced drugs because they have received a “kickback” from the drug company.
PBMs, especially CVS, have also been found to use customers’ confidential medical information in marketing campaigns putting many customers’ privacy at risk. The goal is not only to steal customers, but to change consumer behavior. PBMs prefer to increase profits by encouraging mail order drug deliveries to cut overhead, but consequently eliminate customer interaction with an actual pharmacist who’s professionalism provides an additional layer of safety for patients.
Some proposed legislation would provide greater transparency in how PBMs negotiate so that clients can more readily judge what, if any, savings are being realized. A report for the State of New Jersey concluded that hundreds of millions could be saved with more transparent dealings. The state of Illinois has determined that abandoning the PBM relationship would result in substantial savings, as did another analysis for the the University of Michigan.
Oakland Drugs in Oakland and Wyckoff’s Miller Pharmacy still offer residents the services provided by an independent drugstore. They follow in an American tradition that allowed small businesses to prosper in America, bringing better ideas to market, and build middle-class communities.
Supreme Court Justice William O. Douglas, in a 1949 case concerning big oil, stated, “When independents are swallowed up by the trusts and entrepreneurs become employees of absentee owners, the result “is a serious loss in citizenship. Local leadership is diluted. He who was a leader in the village becomes dependent on outsiders for his action and policy.”
Franklin Lakes lost the Urban Pharmacy back in 2008, and for some it was the end of an era. One person who remembers growing up with the neighborhood drugstore reminisces on her blog, “The old Urban Pharmacy had charge plates on file for every family in town and we would rack up endless bills buying wax bottle candies, Razzles and Charleston Chews.” On Facebook, a memorial page was establish for those wishing to lament and or remember Urban Pharmacy.