When Parshil Patel took over The Medicine Shoppe Pharmacy in Butler last December, he knew the timing was complicated. Rite Aid had just shuttered locations across the region, sending patients scrambling for alternatives. Staff and systems were in transition and the broader financial pressures squeezing independent pharmacies across Pennsylvania were not going away.

Still, Patel was optimistic.

“Things are going in the right direction,” he said. “In the last few months, there’s been a lot of awareness and a lot of politicians are advocating for PBM (pharmacy benefit manager) reforms. That’s the reason we made this move and purchased this pharmacy.”

His optimism is hard-won. Independent pharmacies across Pennsylvania, including those here in Butler County, are caught in a financial vise that already has forced more than 1,000 to close statewide since 2000, according to the Pennsylvania Pharmacists Association (PPA). That number includes Rite Aid locations, many of which were already serving communities with limited healthcare access. Their closures made an already difficult situation worse.

Victoria Elliott, CEO of the pharmacists’ association, said the closures have created what the industry now calls pharmacy deserts: areas where residents can no longer reach a local pharmacy without significant travel.

“More closures, less access to care — we’re already seeing it with some significant hospital closures,” Elliott said. “It’s devastating for some areas.”

A coalition called Pennsylvanians for Protecting Pharmacy Access has mapped the crisis in detail. Its interactive tool at protectpharmacyaccess.org allows residents to search closures by county and legislative district, and to identify which remaining pharmacies are most vulnerable. Statewide, 213 community pharmacies are operating in areas where their closure would create or expand a pharmacy desert.

At the center of the crisis are pharmacy benefit managers, or PBMs. These are the largely unregulated, for-profit intermediaries that sit between insurance plans, drug manufacturers and pharmacies, setting the rates at which pharmacists are reimbursed for the prescriptions they dispense.

PBMs were originally hired by employers to help manage the cost of prescription drug benefits. Over time, they grew into a major industry and the incentives shifted. Today, PBMs can reimburse pharmacies below the actual cost of the medication, a practice known as spread pricing. They pocket the difference between what they charge health plans and what they pay the pharmacy. They can also impose retroactive fees and, in some cases, steer patients toward pharmacies those same PBMs own.

Patel, who worked previously as a pharmacy manager in New Jersey and later for Independence Blue Cross before purchasing The Medicine Shoppe, said the math is brutal for a small operation.

“The reimbursement rates we receive from insurance companies often don’t cover the actual cost of the medication, making it a challenge to stay profitable,” he said. “In some cases, we’re losing money on certain prescriptions.”

When a local pharmacy closes, the loss ripples well beyond the inconvenience of a longer drive.

Pharmacists do not require appointments. They keep extended hours, including weekends. They counsel patients on medications, flag dangerous drug interactions, administer vaccines and serve as a front line connection to the healthcare system for people who may have limited access to a doctor.

The push toward mail-order prescriptions, often encouraged by PBMs, does not adequately replace that access. A 90-day mail-order supply can sit unused if a dosage changes. It also removes the regular, in-person contact that helps pharmacists catch problems early.

The Medicine Shoppe is already seeing the effects of the regional pharmacy losses. Following the Rite Aid closures, Patel said the burden on independent and retail pharmacies increased significantly. His store is now accepting new patients and planning to add vaccination services and nonsterile compounding in the coming months.

As independent pharmacies struggle, larger chain retailers like Giant Eagle have stepped in to absorb patients displaced by closures.

Jannah Drexler, a spokesperson for Giant Eagle, said the chain partners with a qualified third-party data conversion company whenever it acquires prescription data from another pharmacy to ensure patient information transfers completely and in compliance with pharmacy regulations. Phone lines from closed locations are forwarded to the appropriate Giant Eagle Pharmacy so customers can quickly reach staff with questions.

The sudden nature of the Rite Aid closures created real strain.

“Because the Rite Aid prescription acquisitions had to take place quite suddenly to ensure uninterrupted pharmacy service for customers, there was an initial strain on nearby Giant Eagle Pharmacy locations as new patients were getting set up with our systems,” Drexler said.

Since then, she said, the company has prioritized hiring additional pharmacy staff and expanding high-volume pharmacy departments.

“We are now in a strong staffing position,” she added.

On pricing, Drexler said Giant Eagle accepts a wide variety of national pharmacy discount cards and programs but cannot speak to personalized arrangements customers may have had elsewhere. She encouraged patients with cost concerns to connect with their local pharmacy team to explore available options.

On the question of whether large chains contribute to independent pharmacy closures by undercutting prices, Drexler pushed back.

“At Giant Eagle Pharmacy, we do not manipulate drug prices to draw customers away from other locations. Our focus is on providing customers with convenient and reliable pharmacy access and we believe that independent pharmacy locations help to fill an important need for healthcare across our communities,” she said.

For patients who relied on compounding or specialty medications at their previous pharmacy, Drexler said Giant Eagle carries the full range of prescription medications and is not currently aware of gaps in availability. In cases where compounding is needed — a service outside Giant Eagle’s scope — the chain refers patients to independent or specialty compounding pharmacies.

Pennsylvania’s response to the broader crisis has been incremental.

Act 77 of 2024 gave the state Insurance Department new authority to regulate PBM practices in the commercial insurance market, including a ban on requiring patients to use a pharmacy owned by their PBM.

But the law left Medicaid untouched and Elliott said enforcement mechanisms still need work.

“It’s great to have all this legislation,” Elliott said. “But without any enforcement or real mechanisms for pharmacies to say, ‘this is wrong, and this is why’ without repercussions from PBMs, it’s just lip service.”

The pharmacists association is pushing for deeper reform: raising the Medicaid dispensing fee to meet the federal standard, banning spread pricing and moving Pennsylvania Medicaid to a single pharmacy benefit administrator model. Senate Bill 1186, sponsored by a bipartisan group led by state Sens. Lisa Boscola, D-18th, and Judy Ward, R-30th, would create that model for Pennsylvania’s Medicaid managed care program.

The PPA will bring those concerns to state lawmakers on April 14, when pharmacy owners, pharmacists and advocates will gather at the state Capitol for Pharmacy Legislative Day. Information is available at papharmacists.com.

For Patel, in Butler, the path forward is clearer than the politics. He is focused on building relationships with patients, expanding services and proving that an independent pharmacy can thrive here if given a fair shot.

“Greater transparency and fairness in reimbursement would make a huge difference,” he said. “Supporting small healthcare providers is important because we play a key role in community healthcare access.”

This article originally appeared in the April edition of Butler County Business Matters.