The recent overturning of the Chevron decision may seem like an obscure legal event, but its ripple effects could be catastrophic for small, independent pharmacies, particularly those like my mother’s, which has been a staple in Yonkers, NY, for over three decades. The Chevron decision, a cornerstone of administrative law, traditionally granted federal agencies the authority to interpret ambiguous laws. This authority allowed agencies like the Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services (HHS) to create guidelines and regulations that could adapt over time. However, the Supreme Court recently overturned this decision, significantly limiting the power of federal agencies to interpret laws without explicit congressional authorization. This change creates a precarious future for small pharmacies already operating on razor-thin margins.
Three specific guidelines issued by CMS and HHS have been instrumental in keeping small pharmacies afloat. These guidelines may now be under threat:
- DIR Fee Reform: Direct and Indirect Remuneration (DIR) fees have been a contentious issue. Designed initially to reward pharmacies for meeting certain performance measures, these fees often end up being surprise charges that pharmacies must pay long after a prescription is filled. CMS guidelines have aimed to cap and regulate these fees, providing some predictability. Without these regulations, DIR fees could skyrocket, further squeezing the already tight profit margins of small pharmacies.
- Network Adequacy Standards: HHS has enforced standards to ensure that insurance plans include enough local pharmacies in their networks. This means patients in Yonkers, and elsewhere, can choose to go to their neighborhood pharmacy rather than being forced to use a large chain. If these standards are removed, insurance companies might narrow their networks, excluding small pharmacies and pushing patients toward larger, often mail-order, services. CVS, for example, has become a near-monopoly by owning the insurance company, the pharmacy benefit manager (PBM), and the pharmacy itself. This vertical integration allows CVS to benefit directly from keeping small pharmacies out of network, thereby capturing more market share. Unfortunately, CVS is not an exception but rather indicative of a broader trend in the industry where large chains increasingly dominate the market.
- Reimbursement Rate Transparency: CMS has pushed for greater transparency in how pharmacies are paid back for the medications they dispense. This has helped small pharmacies understand and negotiate better payment rates. If these transparency guidelines are rolled back, pharmacies could face lower and more unpredictable payments, making it even harder for them to survive.
In Yonkers, where my mother’s pharmacy has served the community for over 30 years, these changes could be devastating. Her pharmacy has been more than just a place to get prescriptions filled; it’s a community hub where locals get personalized advice and care. Without the protections provided by CMS and HHS, small pharmacies like hers may not withstand the financial strain.
The closures of major pharmacy chains like CVS and their shift towards mail-order services add another layer of complexity. As these large chains shut down their physical locations, they pivot to mail-order services, benefiting from large-scale operations and extensive distribution networks. This trend threatens to monopolize the market, making it harder for small pharmacies to compete. Patients in Yonkers might find it more convenient to switch to mail-order, leaving small pharmacies struggling to maintain their customer base.
Mail-order services often get better reimbursement rates and face fewer regulatory hurdles, giving them an unfair advantage over small pharmacies that provide personalized, community-based care. For my mother’s pharmacy, and others like it, the overturning of Chevron could indeed be a severe blow.
The potential fallout from the Chevron decision underscores the need for a balanced approach that considers the unique challenges faced by small pharmacies. Without deliberate action to preserve these critical community resources, we risk losing not just businesses, but the personal touch and community connection they represent. It’s a wake-up call for policymakers and the public alike to recognize the invaluable role of small pharmacies and to fight for their survival in an increasingly monopolized market.
For the people of Yonkers, the stakes couldn’t be higher.
