David Bonfiglio’s small town pharmacy is getting busier and busier, but staff and revenue are shrinking. 

With low reimbursement rates for many of the pharmaceutical drugs he orders, Bonfiglio has had to cut employees and reduce hours at his Oak Creek store in Routt County. 

Bonfiglio’s story, which he told to Colorado lawmakers during a Wednesday hearing at the Capitol, is not uncommon for independent pharmacists. He hopes a proposed bill will help change that. 

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“Approximately 35% of prescriptions I fill are reimbursed below costs,” Bonfiglio said. “This situation we are in is unsustainable. … If allowed to continue, the personal drive to care for our patients may finally be overtaken by the need to cut our losses and close our doors.” 

Local pharmacists say their dependence on pharmacy benefit managers, the middlemen between drug manufacturers and pharmacies, is why. 

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These companies, meant to negotiate lower drug rates with suppliers, have grown to control approximately 80% of the prescription drug market in the United States at a time when independent pharmacies are shuttering. 

A 2024 report by the Federal Trade Commission links pharmacy benefit managers to inflated drug prices and claims the companies “may be using their market power across the distribution chain to set reimbursement rates at untenably low levels for independent pharmacies.”

Since 2010, about one in three pharmacies have closed in the U.S., according to a joint study by the University of California Berkeley School of Public Health and the University of Southern California. 

Lawmakers in 2020 took a crack at reforms to the industry with a bill that prohibits pharmacy benefit managers from reimbursing a pharmacy for less than what it reimbursed an affiliate for the same services. 

This year, House Bill 1222 seeks to expand on that effort by further regulating reimbursement rates and loosening the power pharmacy benefit managers have to dictate a local business. 

The bill is sponsored by Reps. Meghan Lukens, D-Steamboat Springs, and Ty Winter, R-Trinidad, as well as Sen. Dylan Roberts, D-Frisco, and Sen. Cleave Simpson, R-Alamosa. 

If passed, the bill would mandate that rural independent pharmacies be reimbursed for no less than a prescription drug’s average cost, which is determined by the state’s medical services board. That reimbursement would be in addition to the dispensing fee for filling a prescription. 

The bill also requires pharmacy benefit managers to give pharmacists a 30-day notice of their right to appeal an audit that may lead to more than $1,000 being recouped from their store. It would prevent companies from banning pharmacies from working with a third party courier to deliver prescription drugs to a patient. 

Lukens said rural independent pharmacies see higher rates of closure and report low reimbursement rates as the key contributing factor. Her sweeping mountain district is home to just two drug stores, one of which belongs to Bonfiglio.

“If that pharmacy closes, an entire community will no longer be able to be served and will have to travel over 20 miles to the nearest pharmacy,” Lukens said. “Twenty miles may seem close, it may seem far, but I can assure you it’s a long and winding road. If it’s a blizzard in the middle of winter, it can be a challenge to get the drugs that you may need.” 

Lukens said pharmacies provide critical health care, including prescription refills and delivery, vaccinations, testing and screenings. 

“When rural independent pharmacies close, patients lose access to care,” Lukens said. “Communities lose health care providers and Coloradans are forced to travel greater distances to access care or are left to forgo care completely.”

Health care industry representatives raised skepticism about the bill, particularly over its broad definition of rural independent pharmacies and implementation timeline, which they said could impact insurance premiums. 

“Implementing these changes immediately would upend existing contracts and create operational chaos,” said Colorado Association of Health Plans Executive Director Kevin McFatridge. “At a minimum, a one-year implementation period is needed to allow for proper adjustments and avoid unintended consequences.” 

Patrick Boyle, who represents the Pharmaceutical Care Management Association, a pharmacy benefit managers trade group, said the bill should also be amended to narrow the definition of rural pharmacies to ensure it does not include chain stores. 

“Independent pharmacies have a tough business model,” Boyle said. “Chain pharmacies have a very different business model (that) is not reliant, as independent are, on the pharmacy part of the business, if you will.” 

The bill was approved unanimously on Wednesday by the House Health and Human Services and now heads to a full House vote. It will then need to pass the Senate before having the chance to be signed into law.