By Jaymie Baxley
Cole’s Pharmacy, a family-owned drug store in Person County, closed in early February after nearly 70 years, leaving many residents in and around Roxboro with a longer drive for medications and fewer local health care options.
Robbie Carver, who managed the pharmacy with his sister, said the increasingly unpredictable reimbursements and fees from pharmacy benefits managers made it impossible to stay in business.
Pharmacy benefits managers, commonly referred to as PBMs, are huge pharmaceutical distribution companies that act as gatekeepers in the prescription drug supply chain, often squeezing retail pharmacists.
“It’s like having a skeleton in your closet,” Carver told The Roxboro Courier-Times. “You don’t know who they are, where they are or how they operate. They cut and cut and cut what we received as paybacks from medicine that we sold.”
The closure of Cole’s Pharmacy reflects a broader pattern.
A 2024 data brief from the Rural Policy Research Institute at the University of Iowa showed that the number of rural retail pharmacies across the U.S. declined by 5.9 percent from 2018 to 2023. At least three rural towns in North Carolina — Faison, Selma and Tryon — lost their pharmacies during that time frame.
Now Congress and North Carolina lawmakers are moving to rein in anti-competitive practices that many say have put financial strain on those community pharmacies — pressures that led to institutions like Cole’s closing across rural and urban areas.
What are PBMs?
PBMs create payment formulas that determine which medications are covered. They also set the reimbursement rates that are paid to pharmacies and impose fees that can be assessed weeks or months after a prescription is filled.
For years, much of this activity took place behind the scenes, and patients would only encounter PBM policies when they hit roadblocks trying to fill expensive prescriptions.
In the past two decades, though, PBMs have become more pervasive and more powerful by consolidating with large insurance companies. In 2024, for example, nearly 80 percent of all prescription claims in the U.S. were processed by just three PBMs: CVS Caremark, Express Scripts and Optum Rx.
Independent pharmacists PBMs operations often lack transparency and can result in payments that fall below what it costs them to dispense a medication.
“PBMs are the ultimate middlemen,” said Kaite Krell, director of congressional affairs for the National Community Pharmacists Association. “They control how you’re allowed to get your drug, where you’re allowed to get your drug, how much that drug is going to cost and how much your pharmacist is going to get paid to dispense it.”
Federal response
In February, Congress enacted what Krell’s association called the “first major PBM reform in decades” as part of the budget deal for the coming year.
The Consolidated Appropriations Act of 2026 separates PBM compensation in Medicare Part D, the prescription drug plan for seniors and some people with disabilities, from the price of drugs and the rebates tied to them. This change is intended to remove incentives to favor higher-cost medications.
It also requires PBMs to use contract terms and performance measures that are “reasonable and relevant” to the services they provide, a provision aimed at preventing arbitrary fees, retroactive payment clawbacks and other practices pharmacists say have been used to reduce reimbursements even after prescriptions are filled.
“That’s absolutely huge,” Krell said.
Separately, President Donald Trump’s administration has proposed new rules that would require PBMs to disclose more detailed information about how they are compensated in contracts with self-insured employer health plans.
Supporters of the rule, which must undergo a public comment period and potential revision before a final version is issued, believe it will help employers who provide health insurance to their workers understand where their drug spending goes and negotiate better terms.
PBMs’ rural impacts
Joe Moose, who with his brother runs Moose Pharmacy, a 142-year-old business with eight locations in the Central Piedmont, said PBMs have driven reimbursement rates so low that community pharmacies often lose money dispensing medicine. That undermines their ability to sustain other vital services that they provide: administering vaccines and blood pressure screenings and helping patients manage chronic conditions.
“If you’re paying somebody to fill their prescription, there’s no money left from that already negative thing to offer all of these other services,” he said, adding that pharmacy closures can cut off health care access for people — especially if they’re poor and uninsured.
“They don’t have access to a primary care doc, so the local pharmacy becomes the primary layer of health care for the whole rural community,” Moose said.
Loss of a local independent pharmacy can have ripple effects that extend beyond medication access and can destabilize entire communities, he said.
“We’ve seen data where when community hospitals close, the community itself doesn’t thrive and survive,” he said. “I think it’s very much the same when a community pharmacy closes in a rural area.”
‘Simply wrong’
U.S. Rep. Deborah Ross (D-Raleigh) worked on the legislative language around PBMs that appears in the federal budget bill. A former state lawmaker and civil rights attorney, Ross learned about the problems with PBMs shortly after she got to Congress in 2021.
“I had independent pharmacists who met with me about this issue and explained how PBMs were working,” she told NC Health News. “They told me pretty much that PBMs were manipulating the system as middle people and were pocketing profits or passing them on to an ownership entity, which might be a pharmacist, at the expense of both patients and independent pharmacies.”
She began collaborating with a bipartisan group of lawmakers that included U.S. Rep. Buddy Carter, a Republican from Georgia who is a pharmacist.
Much of the market distortion, Ross found, stemmed from the “vertical integration” of PBMs. In many cases, the same parent company owns the PBM, a health insurer and a chain of pharmacies, which means the organization can steer patients to its own pharmacies, control prices across the supply chain and keep more of the profits.
“When PBMs were invented, they were really supposed to be more watchdogs to protect the consumer,” Ross said. “But when they became part of a vertically integrated organization and they could then steer people to the pharmacies that they worked with and get a bonus for doing that, then consumer protection no longer became the goal.”
Ross said the reforms are intended to restore transparency and ensure that savings negotiated in the drug supply chain reach patients and plan sponsors rather than intermediaries.
“If PBMs were just trying to negotiate low prices with everybody and not getting paid themselves for it, that would be a whole different matter,” she said. “But this is a situation where the savings don’t go to the consumer. They go to the PBM, and that is simply wrong.”
While the provisions of H.R. 7148 are not set to take effect until 2028, Ross said they’ve been met with positive feedback from independent pharmacists.
“They’re waiting to see how it’s implemented,” she said.
State lawmakers make their moves
North Carolina lawmakers have also taken action; they passed the SCRIPT Act in 2025. Signed into law by Gov. Josh Stein this past July, the law puts new guardrails on how PBMs operate in commercial insurance and North Carolina’s Medicaid managed care plans. It contains provisions designed to protect the state’s independent pharmacies and to lower out-of-pocket costs for patients.
Among other changes, the law requires PBMs to allow any pharmacy willing to meet contract terms to participate in their networks and prohibits them from steering patients to preferred pharmacies through higher copays or other financial penalties.
It also bars PBMs from reimbursing their own affiliated pharmacies at higher rates than independent competitors and includes protections intended to prevent pharmacies from being paid less than the cost of acquiring certain medications.
“We don’t have to accept an underwater claim,” Moose said. “That gives a powerless industry, being the community pharmacy and primarily independent community pharmacy industry, some power and some say-so.”
The state and federal reforms, he added, are “very encouraging.”
“As pharmacists, we’ve been screaming about [PBMs],” he said. “Then you start looking at stats of all the pharmacy closures that are happening and all the pharmacy deserts that are being created, and you see all of that points largely to PBM activities.”
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