Another Independent Pharmacy Closes in San Diego

The closure of Point Loma Shelter Island Drug after decades of community service is not an isolated event — it is part of a nationwide problem threatening the survival of independent pharmacy in America.

A Point Loma Institution Closes Its Doors

After more than 3 decades of serving the local community in San Diego, Point Loma Shelter Island Drug, and its sister store up on the top of the hill, Point Loma Cabrillo Drug, closed their doors. 

The pharmacies, owned and ran by Michael Saad, provided personal and friendly service. It was very different that what customers get at the large chain pharmacies.

Alas, during the last 5 – 8 years, the pharmacy was plagued by a number of steadily worsening problems. 

One source of the problems was crime: stealing, breaking and entering, an on one occasion, armed robbery, required resources to be spent on protection.

Pharmacy Benefit Managers (PBMs) and the Clawbacks Killing Independent Pharmacies

Another source was the greed of the insurance companies, specifically the so-called Pharmacy Benefit Managers (PBMs), that employ the poignantly named practice of “clawback”.

Pharmacy Benefit Managers are nothing but middlemen that administer prescription drug benefits on behalf of health insurers, employers, and government programs. The three largest PBMs — Express Scripts, CVS Caremark, OptumRx — together process the majority of prescription claims in the United States, wielding enormous leverage over the reimbursement rates paid to pharmacies.

A clawback occurs when a PBM retroactively reduces the amount it pays to a pharmacy for a prescription medication that has already been dispensed to a patient. This reduction can happen days or even months after the prescription has been filled, leaving the independent pharmacy financially responsible for the difference between the initial reimbursement and the clawback amount.

Clawbacks are as painful as the name implies. 

When a PBM claws back funds, it effectively takes back money that the pharmacy had initially received as reimbursement for the medication. Independent pharmacies often operate on slim profit margins, so unexpected clawbacks can disrupt their cash flow, making it challenging to cover operating costs, purchase inventory, and pay staff.

The Federal Trade Commission launched an investigation into PBM practices in 2022, citing concerns about the impact on independent pharmacies and drug affordability for patients. Several states have enacted anti-clawback legislation to protect community pharmacies, not California, though, as of the writing of this blog entry.

The Human Cost: a Community Pharmacist Calls It Quits

Stories like Michael’s are, sadly, common across the US. The National Community Pharmacists Association reports that hundreds of independent pharmacies close each year, with PBM reimbursement practices cited as a leading cause. The loss of these pharmacies diminishes not only medication access but also the fabric of community cohesion, and the kind of relationship-based care that no chain pharmacy can provide.

After years of working 12 hours days, trying to keep the business afloat, for Michael it was time to move on and slow down. He sold the stores to one of the smaller chain pharmacies.

The longtime patrons cherished a pharmacist like Michael who knew them by name rather than date of birth. He and his friendly staff will be sorely missed. 

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Alexander Papp, MD