Small Town Pharmacies Are Closing Up Shop
According to the Associated Press…
It seems that small town drug stores have been adversely affected by the prescription drug bill that was passed by Congress. Many of them are closing due to the great difficulties in dealing with the new law.
Apparently, before the Medicare drug benefit, which began on January 1, 2006, many of the small town pharmacy’s customers paid cash. However, under the new law, private insurance plans would pay the tab — which is the problem.
These insurance companies use their considerable clout to demand bigger discounts from the drug stores, and they withhold their payments to the drug stores for a considerable amount of time — to get their way in the bargain for discounts…and thus, small town drug stores are starved out of existence by the drug and insurance companies.
The Medicare Drug Benefit aka Medicare Part D, means lower and slower payments to drug stores. Insurance companies have an economic incentive to delay payment, because they get millions from the federal government and Medicare beneficiaries for administering the drug benefit law; the longer they can hold onto the money, the more interest that money can generate. Unfortunately, the losers are the small town pharmacies and their customers.