The Hidden Lender in America’s Drug Supply Chain

A few weeks ago, the White House announced what sounded like a seismic breakthrough: Medicare beneficiaries would soon pay $50 for GLP-1s, and Medicare would “pay” $245. News outlets repeated those numbers as if they were self-explanatory. People cheered. Politicians took victory laps.

Meanwhile, I sat at my computer staring at the announcement, genuinely trying to understand what those numbers meant in the real world.

Like so many federal drug-pricing announcements, it didn’t make any sense.

As a pharmacist, when someone tells me a drug will cost a certain price, I need to know who is paying that price, to whom, when, and through what mechanism. Prices don’t magically move from a press release into a real transaction. There has to be a payment flow. There has to be a claim. There has to be reconciliation.

None of that was explained.

So I did what pharmacists do every day: I asked a simple, obvious question.

What does “the Medicare price is $245” actually mean?

Is that what Medicare pays me when I dispense the medication?
Because if so, there’s a big problem. Buying that drug costs my pharmacy more than a thousand dollars. Are we now expected to lose $700 per fill and call it patriotism?

Or does $245 mean what Medicare pays the manufacturer?
Or the PBM?
Or is the $245 a number that only exists on paper?

I commented on a LinkedIn post about the press release from Brian Reid — one of the sharpest minds in pharma pricing — and asked the question.

He didn’t know either.

That was the real warning sign. If he couldn’t figure it out, the people writing the policy certainly didn’t.

A few weeks went by. Then a woman named Buffy Nelson — whose background in Medicare and specialty pharmacy is the real deal — replied with the answer I’d been looking for.

And that answer floored me.

Because beneath the headlines was a reimbursement mechanism so unworkable that I had to read it twice to make sure I hadn’t misunderstood it.

I hadn’t.

Here’s the translation:

Under the new Medicare ‘Maximum Fair Price’ model, pharmacies are expected to buy the drug at full cost — roughly $1,000 — dispense it to the patient, accept a $50 copay plus $245 from Medicare’s PBM, and then file paperwork with a third-party facilitator who will contact the manufacturer and attempt to reimburse the pharmacy for the remaining $705.

Let me say that again without the jargon:

Pharmacies front the cash.
The government underpays us.
Then we chase the manufacturer for the difference.
And the manufacturer has no obligation to give us even one more penny.

This isn’t a reimbursement system. It’s a scavenger hunt.

And even that’s being generous, because scavenger hunts at least have rules.

To make this even more surreal, the party responsible for making pharmacies financially whole isn’t Medicare or the PBM. It’s a completely separate “Medicare transaction facilitator” — a middle entity that doesn’t exist in any pharmacy workflow today — who must validate acquisition documentation, match it to Medicare payments, forward the information to the manufacturer, and then hope the manufacturer reimburses what we’ve already spent. The cherry on top is that this process (if it even works) could take weeks.

Imagine explaining this to a small-business owner outside health care:

Picture a steakhouse forced to buy each ribeye for $1000, sell it for $295, and spend months trying to claw back the remaining $705 from a supplier through a bureaucratic chain no one has ever used before. All while being legally barred from charging enough to make a profit. And they have to do that every single time someone orders a ribeye.

That’s the Medicare “price.”

Now imagine doing this not once or twice, but hundreds of times a month — at scale, with razor-thin margins, during the most challenging financial era retail pharmacy has ever faced.

Pharmacies already lose money every time we dispense certain drugs because PBMs reimburse us below cost. GLP-1s alone cost my pharmacy $26,000 in losses last year. We’ve operated under negative-margin dispensing for years because PBMs engineered a system that punishes anyone who isn’t vertically integrated.

And now the government is layering an additional cash-flow burden on top of it.

What’s being described here isn’t just inconvenient. It’s economically impossible.

No business — healthcare or otherwise — can survive if it’s required to endlessly extend non-guaranteed interest-free loans to the federal government and drug manufacturers.

But that’s exactly the position pharmacies have been placed in.

And here’s the detail that should make every policymaker uneasy:

This is not just a GLP-1 issue.
This is the reimbursement model that will govern the first ten drugs with negotiated prices under the Inflation Reduction Act beginning on January 1.

Every pharmacy in America was told: sign up for this process or lose the ability to bill Medicare.

Medicare prescriptions make up about 40% of the volume at my pharmacy, C.O. Bigelow. Threatening to take that away is like holding a knife to my throat. I had no choice.

Congress passed the biggest drug-pricing reform in modern history.
CMS announced the first slate of negotiated prices.
The White House held a press conference celebrating the savings.

But the operational mechanism required to execute those prices — the plumbing beneath the policy — was never designed, tested, communicated, or even conceptually understood by the people who will be financially responsible for its implementation.

Pharmacies have every reason to be angry.

I’ve said it countless times: drug prices need to come down. I believe in that goal. I support policies that make it happen.

But what was announced here isn’t a policy. It’s a wish list stapled to an IOU.

You cannot “lower prices” by creating a reimbursement model that forces pharmacies to operate as zero-margin lenders.

You cannot declare victory on drug affordability when the people actually dispensing the medication are left holding the deficit for months.

And you certainly cannot call something a “Medicare price” if the only entity actually paying that price is the pharmacy.

We’ve seen this pattern before:

And now add this: Medicare drug-pricing reform without a functioning reimbursement system.

Pharmacies continue to be treated as interchangeable cogs that will somehow “make things work” no matter what nonsense comes down from Washington or from PBMs or from drug manufacturers.

Meanwhile, the reality is simple:

Pharmacies die from cash-flow problems long before they die from low margins.

We can’t wait months to get reimbursed on a $700 deficit per prescription. We don’t have the balance sheets of CVS or UnitedHealth or the corporate accountants who can bury liabilities across subsidiaries.

Independent pharmacies — the places where patients actually talk to human beings — run on real cash. When that cash evaporates, we close.

And once a pharmacy closes, it doesn’t come back.

Patients lose continuity.
Communities lose access.
Healthcare becomes colder, more centralized, more corporate, and more dangerous.

All because someone in Washington wanted a headline before they had a process.

Lower drug prices are worth fighting for.
But half-baked policy can do real harm.
Reform without execution isn’t reform — it’s performance.

And right now, pharmacies have been drafted into an economic role they never agreed to play:

Interest-free lenders for Medicare’s drug strategy.

If policymakers want this system to work — truly work — then the people dispensing the medication need to be part of the design, not an afterthought.

If any of those people happen to be reading this, I’m not hard to find.

I’m not here to whine. I’m here to help build something that won’t collapse the moment it touches the real world.

Giddy up.

Alec Wade Ginsberg, PharmD, RPh
4th-Gen Pharmacist | Owner & COO, C.O. Bigelow
Founder, Drugstore Cowboy