Independent pharmacists tell Michigan lawmakers PBM practices fuel closures; PBM trade group defends savings

At a House Oversight Subcommittee hearing on pharmacy closures, independent pharmacists and a national PBM trade-group representative presented sharply different views on whether pharmacy benefit manager practices are driving local pharmacy shutdowns.

John Gross, a pharmacist who owns six rural stores and is executive director of the Michigan Independent Pharmacy Association, said independent owners are at a "breaking point." He told the panel that when reimbursements do not cover acquisition costs plus a professional dispensing fee, pharmacies lose money. Gross recounted a member report of "$365,000 in clawbacks" for three stores and shared a MIPA packet showing examples of state-contracted plans that paid $2 or less for hundreds of prescriptions across a sample period.

"Pharmacies close when they can't pay their bills," Gross said, asking the committee to focus on oversight and on reimbursement formulas that ensure pharmacies recover drug acquisition cost plus a dispensing fee. He described how managed-care carve-outs and multiple PBM arrangements for the same Medicaid population can result in inconsistent reimbursement for the same pharmacy.

Miguel Rodriguez, executive vice president and general counsel of Americanarmacies, told lawmakers that market consolidation leaves a few dominant PBMs that also own or operate large pharmacy chains, creating conflicts of interest. "Effectively, the PBM acts as a referee, but they also own one of the teams on the floor," he said, arguing that vertical integration can disadvantage independent retailers.

Representing the PBM perspective, Sean Stevenson, senior director of state affairs for the Pharmaceutical Care Management Association, said PBMs negotiate rebates with manufacturers, administer benefits for employers and public programs, perform utilization management and drive volume-based savings. Stevenson cited figures in his slide deck — including an asserted per-person savings of about $1,154 annually and a projection of $42.3 billion in savings in Michigan over 10 years — and cautioned lawmakers about state-mandated dispensing-fee increases, citing a West Virginia case he described as raising costs for the same drug volumes.

On the floor, representatives asked pointed questions about utilization management and step-therapy rules (which some lawmakers said can delay access to prescribed drugs) and about contract lengths and transition timelines for spread-pricing bans that take effect in 2028. PCMA's Stevenson said plan design is typically the payer's decision and that PBMs implement payer-directed rules; he added that contract durations and market practices vary by buyer.

The subcommittee did not vote on new legislation at the hearing. Members said they would continue oversight work and consider further data and testimony; the meeting adjourned following procedural motions.