Last August, the venerable pharmacy chain Walgreens acknowledged its struggles, marking a significant shift in the company’s trajectory. After years of declining profits, store closures, and workforce reductions, Walgreens sold its operations to private equity firm Sycamore Partners, receiving a fraction of its previous valuation. This acquisition is part of a troubling trend, as Walgreens, like many pharmacies, has been negatively impacted by powerful pharmacy benefit managers (PBMs).
PBMs have become a contentious topic in American healthcare, blamed for escalating drug prices, denying essential medications, and exacerbating the closure of pharmacies. They work as intermediaries between insurance companies and pharmacies, but their profit-driven practices have raised concerns. Critics argue that PBMs negotiate with drug companies to secure rebates and discounts, but instead of passing those savings to consumers, they retain a significant portion for themselves, ultimately pushing higher prices on patients.
In response to these issues, Congress recently took action to address the role of PBMs in the healthcare system. This legislation, spearheaded by Senators Ron Wyden and Mike Crapo, treats PBMs similarly to public utilities, imposing regulations to ensure fair practices within their networks. The bill includes provisions to prevent PBMs from unfairly excluding pharmacies from their networks and mandates that they transparently disclose pricing information to customers.
These reforms are crucial, given the increasing number of pharmacy closures across the country. Between early 2024 and early 2025, approximately 3,200 pharmacies—representing about 5% of all pharmacies in the U.S.—are expected to shut down. Many independent and rural pharmacies have found it particularly challenging to survive in this environment, forcing patients to rely on mail-order services that often lack the quality and reliability of community pharmacies.
The situation reflects broader issues stemming from the consolidation of various entities within the healthcare industry, including PBMs, which dominate the market. Three companies—Caremark, OptumRx, and Express Scripts—control a staggering 80% of the PBM market, creating a vertically integrated system that favors the largest insurers while sidelining independent pharmacies.
The legislative effort to regulate PBMs marks a pivotal moment in addressing their monopolistic behavior, especially in light of Walgreens’ decline and the potential for continued pharmacy closures. While there are still concerns regarding the timing of the reforms and the ability of PBMs to navigate around regulations, the action taken by Congress represents a significant step toward restoring fairness in drug pricing and ensuring better access to pharmacy services for consumers.
As Congress continues to investigate the practices of PBMs and further hearings are on the horizon, there is a glimmer of hope that meaningful change is achievable. The legislation, while not without its shortcomings, signals an awareness of the issues plaguing the pharmacy landscape and the need for reform to protect independent pharmacies and consumers alike.