Texas Pharmacies are Closing, With Ripple Effects Throughout Entire Communities

Patients Suffer Under State Medicaid Pharmacy Program

By Bruce Biundo

Texas Insider Report: AUSTIN, Texas – Since March, when the state’s Medicaid pharmacy patients were transferred from a ‘fee-for-service’ to a managed-care program run by private sector pharmacy benefit managers (PBMs), dozens of pharmacies have closed and many more are struggling to avoid the same fate. Without corrective action by state leaders, many of these pharmacies will not survive – to the detriment of the patients & communities they serve.  

One community pharmacist, who has been in business for decades, told me he is filling some prescriptions at a net loss and others for profits measured in cents rather than dollars.  If this continues, he will be forced to close if he cannot find more profitable opportunities.

If managed care continues on this path, it will have an increasingly adverse impact on the economies of Houston and other Texas communities and will diminish the quality of care for residents.

Managed care for Medicaid pharmacy services has only been in place for nine months, but it has already done great harm to patient access and the viability of community pharmacies in the Houston area and around the state.

Simple economics explain why.

The PBMs — with the state’s blessing — have dropped reimbursement rates to pharmacies filling Medicaid prescriptions by as much as 80%. PBMs have also dramatically cut the reimbursement for the drugs dispensed to rates that are often times well below a pharmacy’s actual cost to fill a prescription.

The results are both unfortunate and predictable:

  1. Reduced Services
  2. Job cuts, and for some
  3. Closing their Doors.

Any time a pharmacy closes there is a ripple effect throughout the entire community.  Patients are displaced and in some cases, especially in underserved urban and rural areas, they lose access to pharmacy care.

Employees lose jobs and the entire community is affected when a local business can no longer contribute to civic and charitable causes.

As a consultant who works with many Houston-area pharmacists, I find it inconceivable that Texas would empower PBMs to threaten an entire sector of the health industry.

These pharmacies are an indispensable partner in providing care to their local communities, especially those with shortages of doctors and other health professionals.  They are easily accessible, open longer hours than most health care businesses and offer a variety of low-cost services, such as vaccinations and health screenings, in addition to prescription drugs.

But community pharmacies contribute more than jobs and health care services – they are vital contributors to their local economy.  According to the National Association of Chain Drugs Stores (NACDS), nearly 39,000 people are employed by the approximately 2,750 independent and chain pharmacies in Texas.

These businesses generate more than $400 million in tax revenue each year.

Community pharmacies are also implementing practices that improve health outcomes and save money without reducing access to care.  One example is the Medication Therapy Management (MTM) programs now used by Medicare and other patients.  Under MTM, pharmacists work with individual patients to increase the effectiveness of their medications and decrease the risk of harmful interactions or side effects.

As a former practitioner myself, I understand the value pharmacists add to a patient’s care. Many patients, especially the elderly and indigent, rely heavily on their neighborhood pharmacist for advice about their medications, nutritional support and overall health.

Texans count on and trust their pharmacists, just as they do their doctors, speaking of them as “my pharmacist” just as they might say “my doctor.”   In fact, in 2011, a Gallup survey ranked the honesty and ethical standards of pharmacists second highest among 21 professions, behind only nurses.

If managed care continues and the state does not adequately compensate community pharmacies for the services and products they provide, pharmacies will continue to close, jobs will be lost, Texans will lose access to vital services, and the highly-valued pharmacist-patient relationship will become a thing of the past.

Bruce Biundo, R.Ph. is a pharmacy consultant with Professional Compounding Centers of America and chair of the political action committee of the Texas Pharmacy Association.


  1. Just stop taking medicaid, it is not mandatory that these pharmacies accept it. The more providers that refuse to accept medicaid, the less dependency on it we will have on it, and hopefully Texas can end participation in a system that fails at every level and causes health to be worse, not better.

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