Independent drugstores closing across Michigan as reimbursement gaps widen

Independent pharmacies across Michigan are closing rapidly because pharmacy benefit managers under reimburse them, according to the American Pharmacies Group.

Independent drugstores across Michigan are closing quickly because of a reimbursement system that pharmacy owners and advocates say does not cover their costs.

The American Pharmacies Group, a national advocacy organization for independent pharmacies, says pharmacies are closing throughout the state at a rate it calls alarming. The group blames the closures on how pharmacies are paid for prescription drugs, a process controlled largely by pharmacy benefit managers.

Pharmacy benefit managers act as intermediaries between drugstores and insurance companies. They set reimbursement rates, decide which medications are covered under specific plans, and negotiate pricing. For independent pharmacies, those decisions often result in payments that do not cover the cost of the drugs they dispense.

Detroit pharmacist Mike Nabolsi said his pharmacy routinely loses money on prescriptions because insurer payments fall short of wholesale prices.

"We're getting under reimbursed for something that we bought... something that cost $1,000, we're giving it to a patient, and we're getting reimbursed $900. We can't survive," Nabolsi said.

The reimbursement gap forces pharmacies to either absorb losses or turn away patients. In many cases, benefit managers steer patients toward large chain or big box pharmacies through their formulary decisions and network design, reducing the customer base of independent stores.

The American Pharmacies Group is pushing for changes that would make savings from insurance negotiations reach independent pharmacies rather than stay with benefit managers or insurers. The group says independent pharmacies provide medication access in neighborhoods where chain stores are absent.

Michigan has seen a steady decline in independently owned pharmacies over the past decade as national chains consolidate market share and reimbursement pressures mount. The closures reduce prescription access and also affect pharmacies that offer compounding, immunizations, and other clinical services that larger operations may not provide at the same level.

The group did not specify the number of closures or identify particular communities most affected, but said the trend is statewide. The American Pharmacies Group is seeking legislative and regulatory changes that would increase transparency in how benefit managers set rates and allocate savings.

Nabolsi and other independent pharmacists say more pharmacies will close if the payment structure does not change.