Howard Jacobson sat in his car outside a Long Island rehab center, holding a box of medication that cost him more to buy than he would be reimbursed to dispense. The longtime pharmacist, who owns Rockville Centre Pharmacy and West Hempstead Pharmacy, says moments like this have become routine in an industry he once believed had room for sustainable community care.
For Jacobson, who has spent nearly four decades behind a pharmacy counter, the crisis is no longer abstract. It is existential.
Independent pharmacists across New York describe the same pattern: reimbursement rates from pharmacy benefit managers — the middlemen known as PBMs — frequently fall below the cost of the drugs they dispense. PBMs negotiate prices on behalf of insurance plans, adjudicate claims and determine how much pharmacies get paid. But with three companies controlling nearly 90 percent of the national market, pharmacists say they have little leverage.
“They pay me what they want,” Jacobson said. “Many times now they’re paying us below my cost of the medication.”
Jacobson says he has cut hours, trimmed staff and subsidized losses out of his own pocket.
On some drugs, he said, the reimbursement rates defy logic.
“Yesterday I did a prescription for 46 cents,” he said.
New York lawmakers, backed by hundreds of pharmacists, are now pushing the Patient Access to Pharmacy Act, or PAPA, which would establish minimum reimbursement standards for commercial insurance plans and increase oversight of PBMs. Legislators say it mirrors a cost-plus model that New York’s Medicaid program implemented in 2023 and that independent pharmacies credit with stabilizing state spending.
Assemblymember Judy Griffin said she had spent years hearing the same warnings from pharmacists in her district.
“They really have limited incomes, like our seniors,” she said, referring to the patients who rely most heavily on local pharmacies. “Getting the drugs at a cheaper price is really important.”
Griffin co-sponsors the bill, which has more than 80 supporters in the Assembly. She said the closures of pharmacies — including dozens of Long Island stores — have already strained communities that depend on them for guidance, delivery and everyday care.
“It’s nice when your pharmacist knows you,” she said.
The bill would set a minimum reimbursement rate tied to the cost of acquiring and dispensing medication. It would also impose transparency requirements on PBMs and restrict practices that critics say steer patients toward PBM-owned mail-order pharmacies or chains.
At a rally last week outside Rockville Centre Pharmacy, Jacobson warned lawmakers plainly:
“No business can afford to operate at a loss.”
Critics of the bill — including some insurers, employer groups, and PBMs — argue that mandating reimbursement floors could increase premiums, reduce negotiating flexibility and drive up pharmaceutical spending. They warn that cost-plus models can weaken market competition and could ultimately shift financial burdens onto employers and consumers.
CVS Caremark, the PBM owned by CVS Health and one of the three largest benefit managers, did not respond to a request for comment.
“We’re offered one-sided contracts, and it’s take it or leave it,” he said. “If you leave it, then not only are you telling your patients you don’t care about them, you’re leaving a network.”
Griffin said she sees the legislation as part of a broader effort to protect not just small businesses but a key piece of the state’s healthcare infrastructure.
“I am really at my wits' end on how to keep my business going,” he said. “I don’t want to concede defeat.”
