Kentucky Pharmacy Gives Up Battle With PBMs And Closes Store

Feb. 6--After more than two years of suffering steep financial losses and battling state officials and corporate pharmaceutical giants, Gregg Henry finally called it quits.

After losing $5,000 in January, Henry, the owner and pharmacist at Sacramento Pharmacy, decided Sunday to close the store.

On Monday, he quit filling new orders. Instead, Henry and his staff started helping customers transfer prescriptions to Muhlenberg County Pharmacy in Central City, which Henry owns and will continue operating, and other pharmacies in the region.

Henry spent the weekend consulting with colleagues and crunching numbers. At one point, he considered raiding his retirement account to keep the store open. But at the rate the store was losing money, he figured he couldn't stay open long enough for the Kentucky Department for Medicaid Services or lawmakers to swoop in and save the day.

For at least two years, he has pleaded with state officials. He's held town hall meetings and taken his concerns to the media.

"We've been taking losses for years and years, and the losses got bigger and bigger. Enough is enough," Henry said.

The issue: Pharmacy benefit managers, or PBMs, connected to large corporations, such as CVS Caremark, act as middlemen in Kentucky when it comes to reimbursements for prescribed drugs for Medicaid customers. Those PBMs, which are in competition with independent pharmacies, set the rates for reimbursement.

About three years ago, the PBMs started slashing some Medicaid reimbursements. Later, those companies sent letters to independent pharmacies, asking to buy them out.

Last spring -- even after lawmakers passed legislation in 2018 meant to stop PBMs from cutting reimbursements by more than 5% without prior notification and permission from state officials -- the corporate giants were at it again. CVS Caremark, one of the nation's largest PBMs and owner of about 45 CVS pharmacies in Kentucky, slashed WellCare reimbursements to Sacramento Pharmacy by an average of 50% -- without following state guidelines.

In January, the pharmacy got unexpected cuts from a different PBM. Express Scripts, which started handling reimbursements for Humana and Anthem last month, cut Sacramento Pharmacy's payments by an average of 52%, Henry said.

Humana and Anthem represent 40% of that pharmacy's business.

When Henry complained to officials in the Department for Medicaid Services, they informed him the 5% rule did not apply because Express Scripts was a new PBM. It did not need to seek permission to adjust reimbursements or give a 30-day notice to the pharmacy. Instead, the pharmacy should consider Express Scripts' new rate as a base rate going forward.

So, in Henry's ongoing David-and-Goliath battle with PBMs, he lost again. And PBMs won again.

It was the second time in as many years Henry felt state officials let down independent pharmacies.

Medicaid reimbursements are extremely important to pharmacies in rural areas because a larger percentage of their patrons use Medicaid services.

His decision to close Sacramento Pharmacy was filled with angst. Last month, the pharmacy started its eighth year in business.

Henry is more than a small-town pharmacist. He's become a friend to many in this town of fewer than 500, many of whom are elderly.

His business did well until PBMs started cutting his reimbursements in 2017. Because of Sacramento Pharmacy, residents didn't have to drive to Calhoun, Madisonville, Owensboro or Central City for their medication.

The store has been a lifesaver for Terry Francis, who suffers from multiple health issues.

Francis has no insurance to cover her cost of medications.

She called regional pharmacies to check on the price of her pain medication. Prices ranged from $300 to $450 a month.

Henry filled that prescription for $25 a month, Francis said.

"I would have had to quit taking that medication long ago if not for him," she said. "And I'm sure I'm not the only one he helped."

When Henry made public his plans to close the store on Monday, Sacramento Mayor Betty Howard received several calls from concerned residents.

Howard is one of Henry's customers. She asked him to move her prescriptions to his Central City store.

"I hate that (Sacramento Pharmacy) is gone," Howard said. "I wish there was something we could do."

She's most concerned about the elderly in her community, who may have difficulty driving to other cities to pick up their medications.

Now that Sacramento Pharmacy is no longer filling new orders, only two pharmacies are left in McLean County: Walgreens in Calhoun and Poole's Pharmacy in Livermore.

Henry has transferred many of his Sacramento customers' prescriptions to his Central City pharmacy. However, he let customers know he can't afford to take any whose insurance provider is linked to PBMs that have cut his reimbursements.

If he did, his Central City store, which opened in October 2019, would be forced to close eventually as well, he said.

With Sacramento Pharmacy closing, half of his staff will lose their jobs. Henry is cutting at least three technicians, a full-time pharmacist and a delivery driver.

If state pharmacy officials agree, Henry plans to close Sacramento Pharmacy at the end of this week. However, for the next 30 days, he will continue to help customers transfer prescriptions to the pharmacy of their choice from his Central City store. The number there is 270-757-2557.

In the meantime, Henry is pushing Senate Bill 50, which declares an emergency and seeks to remove PBMs from the reimbursement process. The bill advanced out of a Senate committee Wednesday.

Those PBMs "used our own tax money to eliminate us," Henry wrote to his patrons on Facebook recently.

He plans to host a final town hall meeting in the future. Henry wants to explain what happened to Sacramento Pharmacy and other independent pharmacies across the state that have closed in the past year or so.

Also, he plans to express appreciation to patrons, many of whom have become his close friends.

Henry is not leaving Sacramento with his head hanging.

"This little bitty pharmacy in this little bitty community stood up," Henry said of at least two years of fighting against the PBMs. " ... I hope the Sacramento Pharmacy is able to put a face on SB 50. And I hope our martyrdom creates a wake-up call about the absolute necessity for the passage of this legislation."

Renee Beasley Jones, 270-228-2835, [email protected]

Renee Beasley Jones, 270-228-2835, [email protected]

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