HARRISBURG — Hundreds of pharmacies across Pennsylvania have gone out of business in recent years, data obtained by Spotlight PA show, and pharmacists say legislation passed last year to help isn’t doing enough to stave off more closures.
The problem, pharmacists and their advocates say, boils down to how much pharmacies are paid for their work and the medications they provide. The reimbursements offered through insurance plans frequently don't cover the costs of the drugs themselves or the related overhead expenses, such as paying for staff and keeping the lights on, according to multiple Pennsylvania pharmacists and pharmacy owners.
Several pharmacists told Spotlight PA that depending on reimbursement rates, pharmacies can bring on more customers and fill more prescriptions — and still end up losing money.
“It’s kind of a double-edged sword,” said Eric Abramowitz, a pharmacist and co-owner of Eric’s RX Shoppe in Montgomery County.
Pharmacists and some lawmakers have blamed closures on pharmacy benefit managers (PBMs) — middlemen in the drug pricing chain — although advocates for those businesses dispute it.
The ongoing Rite Aid bankruptcy closures threaten to further limit access to medication counseling, immunizations, and other local services. Several pharmacists told Spotlight PA the situation for the industry is dire across the state.
“We are getting closer and closer to the day that we don't have main street pharmacies with their doors open,” pharmacist Erich Cushey, owner of Curtis Pharmacy, which has four locations in rural southwestern Pennsylvania, told Spotlight PA.
Blaming the middlemen
Democratic Gov. Josh Shapiro criticized PBMs in his budget address in 2024, saying that “folks are also getting screwed by the high cost of prescription drugs” and that PBMs “have made record profits on the backs of Pennsylvanians.”
These intermediaries play a large role in what patients pay for medications, as they administer prescription benefits, which leads them to deal with drug manufacturers and pharmacies. The companies say they help reduce the cost of prescription drugs, while their critics deride them as middlemen that drive up those prices.
Shapiro called for reforming the operations of PBMs and said the businesses should have to report more information to the Pennsylvania Insurance Department.
Last year, a bipartisan group from both chambers of the state legislature said Pennsylvanians were “losing access to affordable prescription drugs.” They specifically noted the large role that three such PBM companies — CVS Caremark, Express Scripts, and Optum Rx — have in the marketplace.
In legislative hearings at the time, pharmacists and advocates described an unequal playing field in which pharmacies don’t have leverage to negotiate fair reimbursements in contracts. Rob Frankil, executive director of the Philadelphia Association of Retail Druggists, told lawmakers that PBMs were steering patients to their affiliated mail-order or in-person pharmacies. He described CVS — which has hundreds of stores in Pennsylvania — and its affiliated PBM as an example of who could benefit.
“All this creates an imbalance of power,” he said.
It’s not just a problem for mom-and-pop stores, according to him. Large operators without such an alliance with a major PBM, including grocery store chains and Rite Aid, are “suffering just as much as the independents,” Frankil told lawmakers.
Rite Aid acquired a PBM in 2015, reentering “a market brimming with competition from large, national players,” the Associated Press reported at the time. But the plan didn’t work. The pharmacy chain sold its Elixir PBM company in 2024, Forbes reported, after it first filed for bankruptcy. Frankil told Spotlight PA that Rite Aid’s PBM operation “never really gained much traction and never came anywhere close to competing with the big three” companies.
PBMs and their advocates have pushed back on these criticisms, saying they help lower the cost of prescription drugs for patients. Without them, “employers and health plans would be forced to go it alone on pharmacy benefits, which would result in significantly higher drug costs for patients,” says the website for the national Pharmaceutical Care Management Association.
Heather Cascone, assistant vice president for the organization, told Spotlight PA many factors influence pharmacy closures, including “customer preferences for online options and whether doctors or hospitals practice near a pharmacy.”
A spokesperson for CVS Caremark called independent pharmacies “a vital part” of its pharmacy network and said it reimburses those pharmacies in Pennsylvania more than it does CVS pharmacies. “Our reimbursement models are designed to support access and stability across a diverse pharmacy landscape,” spokesperson Phil Blando said.
The 2024 law is bringing new requirements and restrictions meant to help level the playing field. Those provisions go into effect at staggered times. For instance, registered PBMs need to submit annual transparency reports regarding their financial transactions beginning July of next year.
State Rep. Jessica Benham (D., Allegheny), the bill’s prime sponsor, said she’s proud of the work to pass the law and she’s already hearing of positive results when it comes to PBMs complying with it. But she said there are more issues to address.
“In many ways, we laid a good foundation for future work,” Benham said.
The impact of closures
Despite last year’s legislation, Pennsylvania is still reeling from pharmacies shutting down.
More than 800 licensed Pennsylvania pharmacies went out of business from January 2020 to early July of this year, according to Department of State records. While some new ones opened during that same time period, the data show a net loss of hundreds of pharmacies — with more expected. A state database of active pharmacies as of early July included about 230 Rite Aid ones.
These closures cause some patients to have to travel further, and some are running into problems as they try to transfer prescriptions, pharmacists and other health care leaders told Spotlight PA. Those barriers could lead some patients to slip through the cracks and not get their medications filled. Pharmacists and some lawmakers pushing for changes told Spotlight PA mail-order prescriptions aren’t sufficient to fill the gap left when local stores close.
“Where we see the biggest impact, it’s usually in … rural locations and it’s in the underserved locations,” said John DeJames, president of the Pennsylvania Pharmacists Association. “So the people that need the help the most are the ones … getting hit the most.”
In testimony to lawmakers last year, Lackawanna County pharmacy owner Eric Pusey described a bleak financial situation. In 2022, nearby pharmacy closures led patients to bring hundreds more prescriptions per week to his store, and total sales increased, he said.
But Pusey’s store ultimately lost more than $100,000 that year, he told lawmakers. To remain in operation, he tapped his personal savings and retirement funds, he said, and started looking into a loan through a federal program.
He’s made changes since then and cut expenses. This month, Pusey told Spotlight PA he has consolidated his debt and reduced his losses. But he said he can’t take out more loans — he’s maxed out what’s available. If Pusey had to sell his store right now, based on the estimates he’s heard, the proceeds wouldn’t cover what he owes.
“My goal right now is to break even for the rest of the year,” he told Spotlight PA, “and then hope that we get some type of legislation that will at least generate some type of profit that will help me to continue to serve our patients.”
In York, a south-central Pennsylvania city with about 45,000 residents, the recent closure of its downtown Rite Aid “is a huge loss,” said Monica Kruger, director of the city’s Bureau of Health.
Family First Health, a federally qualified health center with multiple locations in south-central Pennsylvania, plans to open a pharmacy in York this fall, which will help fill in the gaps.
Jenny Englerth, president and CEO of the nonprofit, told Spotlight PA that the recent pharmacy closures caused the organization “to escalate our timeline” for opening the pharmacy.
In Montgomery County, Eric’s RX Shoppe responded to closures by hiring more staff. Marc Ost, co-owner, said their goal is to figure out ways to serve patients in the area.
“We’re going to continue to do this because we feel it’s right,” Ost told Spotlight PA. “But, at some point, the financial burden of it catches up.”
Calls for more action
Pharmacists and their advocates say the 2024 law and its implementation haven’t provided enough assistance. The Pennsylvania Pharmacists Association says more state action is needed as pharmacies “continue to grapple with unsustainable reimbursement rates, predatory practices, and operational pressures that threaten their ability to serve communities.”
A proposal from state Sens. Judy Ward (R., Blair) and Lisa Boscola (D., Northampton) would affect payments to pharmacies for the millions of patients enrolled in the state’s Medicaid program. In a June memo to colleagues, they said the approach saved hundreds of millions of dollars in administrative costs for Ohio, while also allowing hundreds of millions of dollars in dispensing fees to go directly to pharmacies.
Their co-sponsorship memo said pharmacy closures in the state “are being driven in large part by middlemen in the pharmaceutical supply chain,” referring to PBMs. Boscola and Ward’s planned legislation has not been introduced yet.