Three Milwaukee Walgreens stores have closed or plan to close in November and December of this year as part of a nationwide initiative that will shutter close to 1,200 stores by 2027.

Meanwhile, local and national pharmacies are also strained. Milwaukee-based Hayat Pharmacy and other area pharmacies stand to benefit from absorbing carryover business from the loss of Walgreens stores in the community, but an overarching rise in backend costs and a drop in pharmacy benefit manager (PBM) reimbursements continues to plague pharmacies nationwide.

“The PBMs are hurting us, but we are managing,” said Hashim Zaibak, founder and CEO of Hayat Pharmacy.

PBMs like CVS Caremark (Caremark), Cigna Express Scripts (Express Scripts), and UnitedHealth Group’s Optum Rx (Optum Rx) control more than 80% of the market and are vertically integrated with health insurers, pharmacies, and providers, according to a report from the Federal Committee on Oversight and Accountability.

At Hayat, 10% of prescription drugs purchases are being reimbursed below cost, according to Zaibak.

Zaibak raised concerns for the Hayat in the event that a further decline in reimbursement surpasses 10%.

“With lower prescription reimbursements in one corner and higher back-end fees in the other, many community pharmacists are thinking about throwing in the towel,” according to a February report from the National Community Pharmacists Association.

Hayat Pharmacy’s expansion has paused for the time being. Two new Hayat Pharmacy locations were planned for Milwaukee at 1238 S. Cesar Chavez Dr. and on the corner of North 56^th Street and Fond Du Lac Avenue within the Stott’s Medical and Mental Health Services facility. The location on S. Cesar Chavez Dr. is awaiting third-party credentialling while the location on N. 56th St. and Fond Du Lac Ave. needs to open simultaneously with Stott’s. Another location at North Farwell Avenue and East Brady Street on Milwaukee’s East Side was acquired in 2019 by Hayat and was expected to complete construction by the end of 2025. Costs to renovate the historic building have slowed the opening of this location.

While awaiting the opening of the above mentioned locations, Hayat focuses its efforts on sustaining its existing locations, Zaibak said.

Hayat is combating the rise in operational cost by installing new revenue building services including in-home vaccine services, long-lasting injectable anti-psychotic drugs, and insurance-covered weight loss drugs.

In March of this year, Wisconsin pharmacists were given the go-ahead to enroll as a provider under Wisconsin Medicare. If enrolled, the now ratified 2021 Wisconsin Act 98 gives the Wisconsin Department of Health Services the authority to reimburse licensed pharmacists for services within their scope. Hayat is using this newly adopted policy also to maintain operations in all 20 of its locations.

“Something needs to change,” Zaibak said.