Can Kansas indie pharmacies finally beat monopoly middlemen?
In Kansas and around the country, local drug store owners are fighting prescription drug middlemen - and the wins feel imminent.
A new article from the excellent Kansas City-area publication The Beacon asks a key question: Can the owners of local drug stores convince Kansas to follow in the footsteps of Arkansas and drastically curtail the power of pharmacy benefit managers?
In Kansas and around the country, independent pharmacy owners are organizing and pushing to constrain, and in some cases end, how the monopoly prescription drug middlemen do business. The Beacon told the story of a local Kansas pharmacist whose own battle with cancer exposed the kind of discrimination powerful PBMs inflict on smaller pharmacists.
From The Beacon:
Mike Burns is a pharmacist and a small-business owner. He also has been a cancer patient. [...]
As he began the treatment his doctors prescribed, he quickly got personal experience with something he has often seen happen to patients who come through his AuBurn Pharmacy stores in Kansas and Missouri.
Though his own drugstores were in his network, Burns’ insurance carrier told him his pharmacy couldn’t fill a prescription for capecitabine, an oral chemotherapy medicine. Instead, he was directed to a specialty pharmacy that had a contract with his plan’s pharmacy benefit manager, also known as a PBM.
Burns provided documentation to the Senate committee to show what happened next. His insurance plan, Blue Cross and Blue Shield of Kansas, ended up paying $15,300 to the PBM’s contracted specialty pharmacy, St. Luke’s Advanced Care Pharmacy. But the medicine would have cost just $2,300 had he been able to fill it at his own AuBurn Pharmacy.
As an independent pharmacy owner, Burns’ story is incredibly common. PBMs have wedged themselves between drug makers and patients, controlling which pharmacies can access certain prescription drugs and how much they’ll pay for them. The three biggest and most powerful PBMs in the country — CVS Caremark, Optum Rx and Express Scripts — account for nearly two-thirds of the market. All three also own or control a retail pharmacy, so they tend to steer customers to their own pharmacies, under-reimburse independent pharmacies for the drugs they buy, and otherwise practice the kind of discrimination and self-preferencing rampant among conglomerate monopolies.
PBMs are deeply unpopular among pretty much everyone not directly paid by those PBMs or the Chamber of Commerce. In 2024, major newspapers published in-depth investigations of PBMs, exposing the middlemen for driving up drug prices, putting small pharmacies out of business and hiding their practices from the public. A Federal Trade Commission report tagged PBMs as dominant middlemen able to dictate drug prices to consumers and rip off independent pharmacies.
“The vertical and horizontal integration of PBMs and large insurers has resulted in an oligopoly that functions today as a monopoly.” - Mike Burns
Among those independent pharmacies and their local associations, opposition to PBMs has been fierce. Small business advocates have pushed lawmakers to make moves against PBMs, in Kansas and nationally. Bills introduced in the Kansas statehouse would demand fairness and ban discrimination by PBMs between different pharmacies. A Kansas Senate committee focused on the prescription drug industry heard testimony from Burns and other advocates about the power and greed of PBMs.
“The vertical and horizontal integration of PBMs and large insurers has resulted in an oligopoly that functions today as a monopoly,” Burns told the Senate. “This monopoly allows PBMs to drive out competition, forcing more patients and employers into their integrated models where they inflate prices, driving greater profits to themselves and increas[ing] costs to taxpayers, employers and patients.”
Another Kansas pharmacist, Brain Caswell, told Kansas senators that, as head of both the Kansas Pharmacists Association and the National Community Pharmacists Association, “I’ve met with pharmacists across Kansas and the nation, and the single greatest threat to our profession and to patient care is the monopolistic and anti-competitive practices of PBMs.”
I can’t stress this enough: This kind of testimony, in Kansas or elsewhere, requires an astonishing amount of bravery. PBMs control which drugs a pharmacy can access and how much they’ll pay for them. Whenever a local business owner publicly blows the whistle on the abuses of powerful companies that very literally dictate whether their business succeeds or fails, it speaks volumes to the reality and severity of the abuse they face. I promise, folks wouldn’t put their businesses at risk just to make stuff up or exaggerate the problem.
PBM monopolization and abuse are real — but so is the potential for reform. Small pharmacies in Arkansas pushed the state to adopt a first-in-the-nation ban on PBMs also owning retail pharmacies, forcing conglomerates like CVS Caremarket to functionally separate their PBM and pharmacy businesses if they wanted to continue doing business in the state. When Governor Sarah Huckabee Sanders signed the bill into law last April, her press release included ELEVEN (!!!) local pharmacists and drug store owners, along with doctors and others, praising the new law. That law is now on hold after the monopolist PBMs challenged it in court, of course. But the grassroots and bipartisan popularity of ending PBMs abuse is unquestioned. North Dakota — already home of a longstanding ban on chain pharmacies and the most vibrant independent drug store economy in the country — passed a major PMB licensure and oversight bill this year. Meanwhile, Kansas Senator Roger Marshall has spearheaded multiple federal bills that would help end PBM abuse, alongside Senators like Bernie Sanders and Peter Welch.
Again, none of these reforms would even see the light of day without the organized voices of small businesses and their advocates. Yes, pharmacies are literally crucial, life-saving businesses in communities — but lots of small businesses are crucial to their communities, and they have the collective power to force changes within their states. We’re currently seeing similar, organized pushes by independent grocers, who are demanding that their local lawmakers end chain stores’ corporate bullying and price discrimination. Farmers across the country are banding together to break the grip that processing, seed and equipment monopolies have on their ability to make a living. This grassroots resistance to monopoly dominance is spreading — and wins now feel inevitable.