Pharmacy Benefit Managers have caused community pharmacy closures across Iowa
WASHINGTON – During today’s Senate Judiciary Committee hearing, Chairman Chuck Grassley (R-Iowa) questioned three witnesses on the impacts of pharmacy benefit managers’ (PBMs) increasing role in the drug supply chain and the need to support rural pharmacies that provide essential services to local communities. Each witness endorsed Grassley’s legislative work to combat PBMs.
Dr. Randy McDonough of Iowa City, Co-owner and CEO of Towncrest Pharmacy Corporation and president of the American Pharmacists Association (APhA), testified on PBMs’ devastating impact in Iowa. McDonough noted, “In Iowa alone, more than 200 pharmacies have closed since 2014, and a record 31 pharmacies closed in 2024.”
Grassley’s opening remarks are available HERE.
Photos of the witnesses, including Dr. McDonough, can be found HERE.
In his opening statement, McDonough outlined the crisis facing rural community pharmacies:
“Last year, our total net income for these six pharmacies was over a negative $116,000. This has forced us to make some hard decisions. At the beginning of the year, we were deciding to close a pharmacy in one of our rural communities because of its financial challenges…Instead of closing it, we converted it to a hybrid telepharmacy. Even in this model, our first quarter numbers for this pharmacy indicate almost a negative net income of $80,000, challenging our decision not to close,” McDonough said.
“On May 1st, we decided to close another one of our rural pharmacies because there was no viable financial path for us to keep this pharmacy open. So, now my corporation has become one of the statistics,” McDonough continued.
“At the end of the day, I just call it a broken system. A system where I want to provide care, but it has become financially infeasible … And a system that is about ready to implode upon itself. The race to the bottom has ended—and I, along with my community pharmacy colleagues, can no longer survive,” McDonough concluded.
Grassley asked McDonough what Congress can do to help rural pharmacists and the patients they serve:
“I think a good place to start is your bill, S.526 the Pharmacy Benefit Manager Transparency Act, where it bans PBMs’ deceptive and unfair pricing schemes, prohibits PBM clawbacks of payments that have been made to pharmacies and improves transparency about spread pricing and pharmacy fees,” McDonough said.
Grassley also asked Chief Pharmacy Officer Sharon Faust of Navitus Health Solutions about his PBM Transparency Act and the information Navitus provides to clients as a pass-through PBM model:
“We provide access to all the data, all the client's data, and access to what pharmacies are paid, and auditability of that as a fiduciary response … I think your bill does a great job of introducing transparency, and that's really, really needed in this industry,” Faust said.
Following Grassley’s question, University of Southern California Scholar and Professor Seeraj Sood discussed the impact of establishing fiduciary responsibilities, or duty of care requirements, on PBMs:
“I think the price transparency bill that you have proposed complements fiduciary responsibility. So, the idea of price transparency is to figure out if you're getting good value for your money or not, if your PBM is acting in the interest of your members or not. And what fiduciary responsibility does is it legally obligates the PBM to act in the interest of the members. So, if you find out that the PBM is not acting in the interest of your members, you have some recourse to address that issue. So, I think fiduciary responsibility combined with transparency can really make the markets work better for the American patient,” Sood said.
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