Rep. Celeste Maloy highlights challenges facing small pharmacies in SLC visit

Kevin DeMass, the owner of The Apothecary Shoppe, gave Rep. Celeste Maloy and Federal Trade Commissioner Melissa Holyoak a tour and an in-person demonstration Tuesday on how middlemen can inflate prescription drug prices.

He pulled out two antiviral medications — the generic one sells for $7.63, while the name brand alternative runs $2,210.

The middlemen in the pharmacy industry, pharmacy benefit managers, or PBMs, help negotiate the prices insurers pay and the pharmacies receive. DeMass said they “make more money if they use” the more expensive option because they get rebates from drug manufacturers. Oftentimes, these profits are at the expense of patients who struggle to afford the medicine, he added.

His pharmacy, owned by DeMass and his son, invited other pharmacy owners to join in on the official visit from federal officials to open dialogue about the issues their industry faces.

Maloy, who represents Utah’s 2nd District, said she’s gotten to know folks who run pharmacies in rural Utah, where she’s from. These small pharmacies are often the anchors of main streets in Utah’s small towns, the congresswoman said.

The pharmacy owners say they’re losing money, and in some cases, are on the brink of going out of business, she added.

“They matter as small businesses. They matter as health care providers. They’re part of this ecosystem in Utah, and we’ve got to make sure that they have the opportunity to turn a profit, make a living, and provide this health care,” she told reporters after.

Small pharmacies say they’re losing money

As a part of the tour, DeMoss, a member of the National Community Pharmacists Association, pulled out stacks of documents. In June, he said he “saw 338 patients that represent about 580 prescriptions. We lost $8,009.82 that month,” while pointing at the page. The pharmacy owner claimed the PBMs are responsible for setting these rates, and they can refuse to pay what DeMass’ pharmacy spent on the medications. The Apothecary Shoppe lost about $40,000 on prescriptions over four months because of this, he said.

The FTC’s interim report released over the summer said that PBMs exercise a lot of power over a patient’s ability to access lifesaving drugs. The report also found that these companies have influence on pharmacies, and impose “unfair, arbitrary and harmful contractual terms that can impact independent pharmacies’ ability to stay in business and serve their communities.”

Holyoak, from the FTC, said she didn’t think the report was “fulsome” and said that the federal agency needs to look at more data to learn about what’s going on — “and that’s why I’m here,” she added.

“I do want to continue and encourage the FTC to finish that report and do it in a thorough, economically objective way so that we can actually make some decisions based on good economic evidence,” Holyoak said.

Her visit comes more than a week after the FTC filed a lawsuit against CVS Health, Cigna, and United Health Group for allegedly rigging the prescription drug supply chain for their benefit.

What do small pharmacies have to do to stay afloat?

Jon Pike, Utah’s insurance commissioner who was also on the tour, asked DeMass how he tries to offset his losses. DeMass responded that he has to sell soda, candy, and other services to break even.

About two miles down the road from The Apothecary Shoppe is Jolley’s Compounding Pharmacy. They offer compounding services, custom-made medicine for various needs, like creating a liquid version of medication for children who can’t swallow large pills or a lower-dose medication for people who are weaning off certain pharmaceuticals.

Back in the day, the now 70-year-old Jolley’s pharmacy depended on compounding for business, said Benjamin Jolley, a pharmacist at his family-owned establishment.

It “still serves a substantial role,” he said. “Since it’s not covered by insurance, it’s cash paper, we set the price.” Jolley’s has moved from their original location at Ninth and Ninth to 17th and 11th Street, a spot that has been used by pharmacies for over 100 years.

“There’s a lot of legacy of being a neighborhood pharmacy,” he said. “We’re on a corner where there are apartments across the street, a church and then a gas station, and that’s the only commercial area for six blocks.”

Around 4% U.S. pharmacies closed in 2024

While pharmacies like Jolley’s and DeMass’ implement strategies to avoid losses, many are struggling and closing up. Jolley, who is also a senior fellow at the American Economic Liberties Project, said he analyzed data from a nationally representative database of every community pharmacy in the country.

There were 60,867 pharmacies on January 1 of this year, while on September 1 this year, 2,275 of those pharmacies had closed , he said. That’s nearly 4% of the pharmacies in the country, he said.

He noted that around half of the affected businesses are chains like Rite Aid, CVS and Walgreens, while the other half are independently-owned.

“We’re concentrating more and more and more power in very large companies who have layers and layers of bureaucracy before you can get any kind of meaningful change,” he said.

Maloy said that pharmacy chains are just as affected by PBMs as the little guy. She cosponsored the bipartisan Pharmacists Fight Back Act, which she said contains necessary PBM reforms to help pharmacists be reimbursed “fairly and transparently.”

DeMass and Jolley said they support the bill. “There’s a lot of efforts for reform, but most of them are about making it more obvious how these large middlemen companies get paid,” Jolley said.

But the Pharmacists Fight Back Act “would change the way that we get paid as pharmacists from just made-up prices that I compare to a slot machine,” he said, adding, he bills for a prescription, the PBMs could say they’re paying 0.47 cents or $3,000. “That’s an incredibly frustrating situation,” Jolley said.

“It makes it feel like I am this bookie on Wall Street trying to find problems with how someone is pricing the price of wheat or something, instead of a professional who’s giving people medicines.”

Correction: Federal Trade Commissioner Melissa Holyoak on Tuesday said she did not think a FTC interim report was “fulsome,” and that the federal agency needed to look at more data. A previous version of this story included another word to describe the report.