SCOTUS Ruling May Help Independent Community Pharmacies Rebuild

Pharmacy Times^® interviewed Brian Nightengale, president of Good Neighbor Pharmacy, on how the recent unanimous Supreme Court of the United States (SCOTUS) ruling on Rutledge v. Pharmaceutical Care Management Association (PCMA) may help independent community pharmacies rebuild what may have been lost due to low reimbursement rates.

Alana Hippensteele: Why are low reimbursement rates a critical issue for independent pharmacies, and how will this ruling by SCOTUS help to rebuild what may have been lost due to these low rates?

Brian Nightengale: Yeah, that's a great question. I mean, one of the biggest differences between the business model of an independent community pharmacy versus some of their chain counterparts is really the source of their revenues. So, for an independent community pharmacy, roughly 90% of all of their revenues come from the prescription side of their business.

So, 90% coming from behind the counter, and then of that 90%, roughly 90% to 95% of that is coming through a PBM contract or a state Medicaid contract, which leaves really only 5 to 10% that's coming in as cash pay. So, unlike the larger chains, they don't have that larger diversified frontend for sources of sales.

So, when these reimbursements go down year over year, or the recruitments, like DIR fees, go up, those revenues come down in a big way. At the same time, their cost to serve is going up, so their costs are going up while 90% of their revenues are being challenged by reimbursement. So, it really is kind of critical, and I think much more impactful on some of these smaller independents that aren't as diversified.