(Editor’s note: SUNY Institute for Local News deployed 20 interns to NY newsrooms this summer. Interns were eligible for a $500 Best Story award. Mia Quick is the recipient for the below story. At the story’s end, read about the challenges for this story as well as links to the 3 other entries.)
By MIA QUICK
SUNY New Paltz (For The Overlook)
Village Apothecary, Woodstock’s independent pharmacy, is telling some customers that it can’t survive if it keeps filling the 15% of prescriptions that it sells at a loss, asking them to consider paying for medicine out of pocket, using a big-box outlet, or buying a store membership to get discounted prices.
In an email reviewed by The Overlook, the retailer told some customers that “predatory reimbursement practices” by pharmacy benefit managers, or PBMs, have more than tripled its loss ratio from 3% in 2015. It also said 90% of its prescriptions cost less than its break-even price of $12. Granted, the policy could change as the pharmacy weighs its options.
The shop is one of many small pharmacies across the nation, including those in Saugerties, Boiceville, and Phoenicia, that say they’re being squeezed by pharmacy benefit managers who act as intermediaries between drugmakers, insurers, and pharmacies. A push toward large retailers such as CVS, meantime, degrade opportunities for one-on-one care just as potential cuts to Medicaid spark more worries about the nation’s healthcare system.
“By not having controls, we’ve allowed these organizations to create monopolies and essentially control the market,” Neal Smoller, the pharmacist who founded Village Apothecary 15 years ago, said in an interview. “And what’s happened as a result is providers are getting paid less and less, and customers are paying more and more.”
Pharmacy benefit managers originated in the 1960s as a tool to set reimbursement rates and pay pharmacies when insurers allowed prescription drug coverage into their plans. These days, they set prices, determine access to medications, and reap fees from insurers. About 80% of U.S. prescriptions are managed by CVS Caremark, the Express Scripts business of Cigna and UnitedHealth Group’s Optum Rx, according to the House Committee on Oversight and Accountability.
Phoenicia Adapts
The Pharmaceutical Care Management Association, which represents pharmacy benefit managers, said in a statement emailed to The Overlook that the benefit managers are just one part of a more complex set of issues.
“Independent pharmacies often point the finger at PBMs instead of acknowledging that there are many factors that influence closures, including customer preferences for online options and changing demographics,” the group wrote in the statement. “To be clear, PBMs aren’t trying to put pharmacies out of business.”
Some local pharmacies are taking novel steps to cope with industry turbulence. In Phoenicia, Wellness Rx touts itself as the nation’s first not-for-profit community pharmacy, and says it will help transfer certain loss-making prescriptions from CVS on behalf of customers.
“Without a regulatory balance, we’re all screwed,” said Edward Ullman, the pharmacy manager at Wellness Rx. “We’ve got a mess of chain drug stores dominating the landscape.”
Ullman, Smoller, and the National Community Pharmacists Association said the benefit managers offer them no room for negotiation on contracts, leading to situations in which they pay more to acquire drugs than they charge customers, and no reimbursement for their labor.
`No Clue’
“There’s knowledge that’s being shared and has a value, and the PBMs have taken that value away from us,” said David Abreu, a pharmacist who once owned his own store and now works at pharmacies in Boiceville and Saugerties that he says are also taking losses. “We have to be accessible to the public. They have no clue how little money we’re making on it.”
In addition, the tedious and confusing back-and-forth between insurers, benefit managers, and the pharmacy leave Abreu less time to connect with customers.
“My knowledge and experience really comes into play,” he said. “The interactions still pay off more than filling a prescription, both energetically and monetarily.”
Take Niki Gatos, who uses Village Apothecary for two reasons: It’s close to her Woodstock home and she values one-on-one interactions absent from automated CVS voicemails. She said that during the pandemic, Smoller was attentive to her husband, David, who was more at risk than most because he had Parkinson’s Disease and was over 65.
“He went out of his way to get the vulnerable people vaccinated,” Gatos said. “He really did a great job with that—trying to get the vulnerable people in the community to know that he had them, and to get them vaccines.”
In response to rising drug prices, Village Apothecary now offers customers a $60 annual membership that cuts the price of its two-tier Cost+ plan to $12 and $20, down from $16 and $20.
Smoller praised his team and said he appreciates the support of the local community. Smoller also said that pharmacy benefit manager contracts often prohibit pharmacies from refusing to fill prescriptions for reimbursement-related reasons, except in cases of clinical necessity or legal constraints.
“I was taught that we are here for a long time to serve a community, and everybody should be treated the same, whether you are a ‘profitable’ patient or an ‘unprofitable’ patient,” Smoller said. “And so the fact that finances even have to be brought into the conversation is something that’s antithesis to what I was taught.”
Mia Quick is an intern and contributing reporter. You can reach her at reporting@theoverlooknews.com.
ABOUT THE STORY:
My best work at The Overlook centers a local pharmacy’s financial struggles against third-party companies in an effort to explain the wider, national struggle of independent pharmacies. This story went beyond simply informing readers of the many struggles pharmacies must overcome; it impacted a local community, small businesses fighting to survive, and the health of real people who rely on pharmacies to fill life-saving prescriptions.
The pharmacy world is often overlooked and, according to pharmacists, often preyed upon by unchecked third-party companies. Due to the complex relationship between independent pharmacies and these companies, it was clear from the beginning that this was not going to be as simple as my other assigned stories.
Interviewing pharmacists proved to be a lesson in and of itself. The prospect of having their experiences and unique strategies for their businesses’ survival in the hands of a journalist, ultimately out of their control, was terrifying.
About a week later and after much deliberation among The Overlook team, we finally had a finished piece. Some of the interviewees felt that the information was harmful to their business and asked to speak with my supervisor. This led to difficult phone calls where serious concerns about the framing of the story and whether it would do more harm than good were voiced.
This situation forced us, as a newsroom, to weigh how we handle vulnerable
sources, especially those taking the risk to speak out against powerful institutions.
The Overlook considered everything from source protection to legal risk, all while trying to preserve the truth and accountability that journalism demands. Ultimately, we made some careful edits, clarified language, and provided additional context so that concerns were addressed without compromising the story’s impact.
When the piece was finally published, we held our breath as we waited.
On the day of the article’s publication, my interviewees were thankful for The Overlook’s published article. The pharmacies were met with support from their customers and overall, the interviewees felt the final article was fair and they were glad that the story had been told.
That shift, from fear to pride, was a powerful indicator of our impact.
This experience challenged our newsroom’s approach to reporting on vulnerable or high-risk sources, sparking broader conversations about how we frame and follow up on sensitive stories.
It wasn’t just about views, it changed the way I think about trust, collaboration, and ethical responsibility in journalism. For me, this article went beyond just one story. It challenged our internal systems and helped evolve our editorial process for the better. I’d also like to think that in some way, it positively impacts the health of customers at my local pharmacies.
OTHER ENTRIES:
Michelle Grisales, SUNY Stony Brook, “Foster parenting – A Most Admirable Task.”
JT Stone, SUNY Albany, “At 111, Paula is not slowing down.”
Rodrigo Feijao, University at Buffalo, “Screamo music scratches out life in Rochester.”
