The Cost of Independent Pharmacies Antitrust Exemptions

During the past fifteen years, the number of consumers with prescription drug coverage has
expanded dramatically. More widespread drug coverage has increased competition among
retail pharmacies as many large and sophisticated payers, such as employers, unions,
governmental programs, as well as health plans, hired pharmacy benefit managers (“PBMs”)
to efficiently manage pharmacy benefits for their employees and enrollees. As a result of the
competition induced by PBMs, pharmacy profit margins on prescriptions narrowed from the
levels that pharmacies had historically earned when most of their customers were cash
paying individuals. With the implementation of Medicare’s prescription drug benefit, even
fewer consumers are paying in cash for their prescriptions. Independent pharmacy
representatives claim that narrowing profit margins on prescriptions has caused their industry financial hardship and argue that they should receive antitrust exemptions that would allow them to bargain collectively with health plans and PBMs, even as their own industry data
indicate increases in prescription volume, sales, and dollar profits.