Karen Dove has owned the Seeley Swan Pharmacy for over 15 years. Being underpaid by PBMs is putting the business in jeopardy.
Karen Dove's hands shake when she starts talking about what it takes to keep a rural pharmacy open.
Each day, she orders drugs customers need at the Seeley Swan Pharmacy. She pays for the drugs before she gets reimbursed and before a customer uses insurance to compensate for what it doesn't pay. Dove doesn't get repaid the full cost of the drug, though, and has to choose an amount she's going to sell a drug on which she's willing to lose.
Dove spends money when she's buying drugs and loses it when she's selling them to customers.
"Most every pharmacy has done everything they can think of to stay afloat. For example, my husband and I have sold third-generation family land to be able to keep a pharmacy here, and if people understood that, they might support us," Dove said.
The Seeley Swan Pharmacy, in its 16th year of business under Dove's ownership, is the only pharmacy in over 100 miles, with customers from Lincoln - 54 miles from the pharmacy's location in Seeley Lake - up into the Swan Valley, another 50 or so miles.
"We strongly need a pharmacy between Big Fork and Missoula," Dove said. "There are too many emergencies. We have too much trauma (with) snowmobilers."
Pharmacists, physicians and lawmakers point the finger at pharmacy benefit managers, or PBMs, for the way this has unfolded for rural pharmacies. This crunch that Dove faces is not uncommon in pharmacies across Montana, and has made it hard for rural pharmacies to stay in business as they can't make up for losses in the same way a Walgreens or CVS can. Industry experts expect that if things don't change by 2026, 50% of rural pharmacies across the country will close.
PBMs set drug prices and the terms of pharmacies' contracts, which dictate how much a drug can be sold for and are something pharmacies need to operate. PBMs were meant to serve as a middleman between drug manufacturers and insurance companies to get the best price on a drug for insurance companies and consumers.
In many cases now, PBMs charge insurance companies more than what a drug costs, particularly for brand name drugs, reimburse pharmacies less and keep everything in the middle, according to industry experts. They also make money from different fees and cost structures that are difficult for rural pharmacies to keep up with.
One example of these charges are called direct and indirect remuneration fees, or DIR fees.
Josh Morris, who owns pharmacies in West Yellowstone, Boulder and Whitehall, said DIR fees are what PBMs assess on pharmacies. Morris said he knows pharmacists that have paid more than $220,000 in DIR fees in one year.
PBMs also have their own way of determining maximum allowable costs, or MACs, which Morris said can put a pharmacy in a position where it's getting less money back for a prescription it paid for after a PBM determined the drug could be acquired for cheaper. Morris said his pharmacies probably get "MACed" 90% of the time.
The three main PBMs - CVS Caremark, OptumRx and Express Scripts - run about 90% of prescription claims that pharmacies file. CVS Caremark is owned by the CVS drugstore chain and Optum is owned by UnitedHealth Group insurance.
These three companies made $570 billion last year while nine rural pharmacies are likely going to close by the end of this year in Montana, Morris said.
Outside of getting rid of PBMs altogether, Dove said the solution is in legislation, on both the national and state levels.
A bill passed in 2021 in Montana let pharmacies mass appeal MAC determinations insteading of being required to handle them one by one. This bill, Senate Bill 395, covered these MAC appeals, under reimbursements and gave the Montana Commissioner of Securities and Insurance's office opportunities for regulation. But Morris said PBMs "got ahold of that bill and were able to water it down," and that it hasn't been reinforced.
Morris, who has worked with the Montana Pharmacy Association's legislative committee, said legislation introduced at the end of July at the national level - House Resolution 9096 - could be a game changer for pharmacists.
This resolution sets up more of a standard reimbursement for pharmacies. Called an actual acquisition cost model, this would require pharmacists to submit the purchases they make to the state in which they're located, like Morris said Montana pharmacists do with Medicaid. The state would then pay the pharmacists a dispensing fee, which Morris said is what they want.
"We don't want to make money on the drugs, we want to get paid for our services...That's what we went to school for. Not to negotiate cost of drugs and trying to get reimbursed, " Morris said.
In the meantime, Dove said she needs her community's support. If people are going to Missoula to get prescriptions filled, consider doing business locally, she said. She believes in community pharmacy and views it as a tenant of small towns, like a post office or a grocery store.
"I know everybody's everything. From these kids being from the point of pregnancy to the point of death, that's what a pharmacist does and you do everything for everybody...From they were born with a tumor on their head to this is the most incredible child heading off to college, to seniors trying to age gracefully...they don't have that if I'm gone," Dove said.
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