Deborah Keaveny, pharmacist and owner of Keaveny Drug in Winsted, Minnesota, was recently featured in a Fox 9 KMSP news segment by Kelcey Carlson, shedding light on the growing issue of Pharmacy Benefit Managers (PBMs) and their role in the decline of small-town pharmacies. Keaveny, a national advocate for local pharmacies, has been at the forefront of efforts to address what she and many others view as exploitative practices by PBMs. She has helped form legislation that aims to put an end to these practices, which have contributed to the creation of “pharmacy deserts” across the country.
The Rise of Pharmacy Deserts
Keaveny and her husband, Kelly, have been running their pharmacy in Winsted since 2005, with a legacy rooted in the original Keaveny Drug in Cokato, which Kelly purchased from his father in 1995. Over the years, they have witnessed countless pharmacies close due to the harmful influence of PBMs. In Minnesota alone, the number of independent pharmacies has plummeted from 406 in 2012 to just 156 today. This decline has led to what are now referred to as pharmacy deserts—areas lacking easy access to prescription medications.
In rural areas, a pharmacy desert is defined as any location within a 10-mile radius without immediate access to a pharmacy, while in urban areas, this desert expands to locations where individuals don’t have access to a pharmacy within a mile. This shortage forces many people to travel further or rely on mail-order prescriptions, creating unnecessary barriers to healthcare for thousands of individuals.
What Are PBMs and How Do They Affect Pharmacies?
PBMs are intermediaries that operate between drug manufacturers and pharmacies, managing prescription drug benefits for health plans, unions, large employers, and government entities. Originally created to process prescription drug claims and negotiate discounts for insurance plans, PBMs have grown in power, with large health insurance companies now controlling them. This has created significant conflicts of interest, as Keaveny explains, because PBMs not only negotiate drug prices but also determine which medications are included in formularies, set pricing for these drugs, and dictate reimbursement rates for pharmacies.
The problem arises from the vertical integration of PBMs, where they are owned by health insurers. This structure allows PBMs to maximize profits by keeping manufacturer rebates, steering patients to their own pharmacies, and reimbursing independent pharmacies at much lower rates. Despite claiming to save consumers money, PBMs are often redirecting savings into their own pockets, making healthcare more expensive for the very individuals they are meant to serve.
According to Keaveny, PBMs generate enormous profits—estimated at over $315 billion annually—but these profits come at the expense of consumers. As Keaveny points out, PBMs prioritize profits for shareholders over patient care, leading to higher insurance premiums and increased copays, while the cost of medications continues to rise.
The Growing Movement Against PBMs
While PBMs were originally created to streamline the pharmaceutical process, Keaveny argues that their unchecked greed has led to exploitative practices that harm patients, independent pharmacies, and taxpayers. The lack of regulation in this sector has allowed PBMs to evolve into powerful, profit-driven entities that control nearly every aspect of the pharmaceutical supply chain.
Keaveny has been vocal about the fact that PBMs have not kept their promises to lower drug prices. Despite their claims to have saved consumers money, medications have never decreased in price since PBMs became involved in the process. In fact, their growing influence has led to significant harm to independent pharmacies and the communities they serve.
Currently, the three largest PBMs—CVS Caremark, Express Scripts, and OptumRx—control nearly 80% of the prescription benefits market in the U.S. These companies, which are often known to consumers as their prescription drug benefits provider, have come under increasing scrutiny for their monopolistic practices.
In response to the growing frustration, independent pharmacy owners like Keaveny are uniting through proposed legislation and class-action lawsuits to fight back against PBMs. The goal is to end these shady practices and restore balance to the pharmaceutical industry, ensuring that small-town pharmacies can continue to serve their communities.
This story is the first in a series of articles that the Herald Journal will publish on PBMs and the ongoing challenges they pose to independent pharmacies across the nation.