Independent pharmacist Kim Wright juggles a range of responsibilities to support her patients in rural Virginia. At her pharmacies in Amelia, Farmville and Cumberland, she packages pills into daily blister pouches, deciphers medical paperwork and helps her patients navigate their medications and insurance.
Her Cumberland location serves as a lifeline for the county’s 9,675 people. With no primary care doctor in the area, Wright’s pharmacy is the town’s only access to health care. The population skews older, and limited internet access creates additional barriers.
Patients often rely on Wright for guidance, describing their symptoms and asking whether they should see a doctor or visit the emergency room.
Despite the vital role she plays in the community, Wright’s businesses face significant financial challenges as reimbursement from insurance companies is often lower than the cost of drugs.
“We are month to month right now,” Wright said.
She’s not alone. Financial struggles forced about 50 retail pharmacies across Virginia to close last year, including Rite Aid and Walgreens locations, according to data from the Virginia Board of Pharmacies.
Lawmakers hope to turn this around with a package of bills, HB 2610 and SB 875, moving forward in the General Assembly this year.
Sen. Aaron Rouse, D-Virginia Beach, is leading a bipartisan effort in the General Assembly to centralize Virginia’s Medicaid pharmacy benefits under a single state-contracted pharmacy benefit manager. Rouse’s bill is paired with a companion measure in the House of Delegates, sponsored by Del. Katrina Callsen, D-Charlottesville.
Only Medicaid would be affected because it’s a state-run program, giving Virginia the authority to implement changes. There are currently 1.9 million Virginians enrolled in Medicaid, according to state data.
Medicare, on the other hand, is a federally administered program, and would not be impacted by this legislation.
Pharmacy benefit managers act as middlemen who negotiate between drug manufacturers, health plans and pharmacies. They negotiate which drugs are covered by insurance, set reimbursement rates for pharmacies and secure rebates from manufacturers. However, PBMs have drawn significant criticism.
“Part of the problem is there’s no transparency,” said Jeremy Counts, who owns an independent pharmacy in Blacksburg. Counts has also worked with an advocacy group called Pharmacists United for Truth and Transparency. He noted that roughly 30% of the drugs he dispenses are reimbursed below the cost of purchasing them.
Adding to the financial strain, pharmacies must cover a dispensing fee of approximately $10 for drugs, which further increases their losses when drugs are reimbursed at low rates.
Already, 20 counties across Virginia have only one pharmacy or none at all, according to data from the Virginia Pharmacy Association. Without intervention, even more pharmacies could close in 2025.
Other states have implemented similar reforms that resulted in significant savings. West Virginia, for example, moved to a centralized PBM model in 2017, saving about $54 million annually, Rouse said during a Senate Education and Health Committee meeting last week.
Despite the predicted benefits, the legislation faces significant opposition.
The Virginia Association of Health Plans, which represents the five managed care organizations that serve Medicaid enrollees in Virginia, opposes the legislation. It argues that the December 31, 2025, implementation deadline does not allow enough time to execute such a large-scale change.
The association also estimates that it could cost up to $17 million in administrative costs to the state.
The Department of Medical Assistance Services, the state agency that administers Medicaid and other coverage programs, also opposes the bill. Jeff Lunardi, chief deputy of the department, said that the legislation would be a “seismic change” and added that the model is not the most direct way of solving the problem.
In response to concerns, the bill was amended to extend the implementation deadline to July 2026, and legislators removed a conflict of interest provision that would have prohibited the state from contracting with a PBM that had previously operated in Virginia.
This effort builds on previous attempts at overhauling the state’s drug pricing structure. Last year, a similar proposal was introduced through budget amendments from Del. Mark Sickles, D-Fairfax County, and Sen. Travis Hackworth, R-Tazewell County, but it failed during conference negotiations.
During a Wednesday House Appropriations meeting, Sickles, who chairs the committee, described the new bill as “controversial” and said he wanted more time to consider the legislation. The committee voted to delay action until Friday, when it reconvenes.
The Senate Finance Committee voted Wednesday to report the bill, moving it to the full chamber.
____________________
Clarification 9:45 a.m. Jan. 30: Cumberland County has a population of 9,675. That detail was omitted from an earlier version of this story.