Sonya Frausto, a pharmacist and small business owner in Sacramento, said Tuesday she plans to close Ten Acres Pharmacy in the Land Park area due to the unsustainable cost of operating an independent pharmacy.

“My whole goal as a pharmacist is to take care of people,” Frausto said. “We’re all about people. We’re all about family. We’re all about community.”

Frausto opened the Land Park pharmacy in 2020 during the COVID-19 pandemic, striving to personalize the pharmacy experience for community members.

“People had questions and didn’t want to visit big, huge stores,” she said. “We became a hub for COVID vaccines and COVID testing, and then just kind of grew from there. Really giving patients their own personalized attention.”

She said she first noticed serious financial problems with reimbursement rates in 2023, when she was buying prescription drugs for her customers.

“We were purchasing them at a high price and then when we were getting reimbursed by the insurance company, we could easily be under reimbursed. Not just cents, but hundreds of dollars,” she said.

Reimbursement rates are set by companies called Pharmacy Benefit Managers, or PBMs. They work as an intermediary between insurance companies, manufacturers and pharmacies, setting the amount that the pharmacy will be reimbursed for its prescription purchases.

“I can’t afford to run a business when my overhead isn’t being met by just the basic things that I do every single day,” Frausto said. “We had to make the really tough decision to close.”

According to the California Pharmacists Association, this issue is prevalent and shuttering pharmacies around the state.

“Essentially, the independents have no bargaining power in the contract process,” said Susan Bonilla, CEO of the California Pharmacists Association. “One of the most devastating consequences of these terrible contracts is the reimbursement rate.”

The association represents pharmacists, pharmacy students and pharmacist technicians around the state, providing continuous education and advocacy on their behalf at the state Capitol.

“The primary reason that independent pharmacies are going out of business in California is because they cannot compete with the three large monopolistic PBMs, Pharmacy Benefit Managers are, frankly, driving them out of business,” she said Tuesday.

She explained, for example, that a pharmacy could purchase a drug for $100, but the PBM could only offer $80 in reimbursement for it.

“They just cannot keep their doors open because they’re not even covering the cost of the acquisition of the medication, much less their overhead. How are they supposed to pay their employees, keep the lights on, pay rent if they’re not getting a dispensing fee that will cover that?” Bonilla said.

This trend concerns her, especially as more urban areas start to also become pharmacy deserts, or areas where pharmacies are not available to residents.

“It’s just accelerated into really a crisis,” she said.

Governor Gavin Newsom vetoed SB 966 last year.

This bill would have required the California Department of Insurance to establish a licensing and oversight structure for Pharmacy Benefit Managers and require them and health plans to report additional data on prescription drugs, he said in a September letter to the Senate.

Newsom wrote at the time, “I believe that PBMs must be held accountable to ensure that prescription drugs remain accessible throughout pharmacies across California and available at the lowest price possible. However, I am not convinced that SB 966’s expansive licensing scheme will achieve such results.”

KCRA 3 reached out to the governor’s office multiple times Tuesday for an updated response on the state’s efforts to bring down prescription drug costs.

On Tuesday evening, a spokesperson shared the response below:

“Late last month, Governor Newsom signed the Health omnibus trailer bill — AB 116 by the Committee on Budget. California is shining a light on the middlemen who inflate prescription drug prices, while protecting access to essential medications. The Governor’s revised budget led efforts to license and regulate Pharmacy Benefit Managers (PBMs) for the first time, increasing transparency and accountability in the pharmacy supply chain. It also expanded CalRx’s authority to procure brand-name drugs and respond to politically motivated supply disruptions, helping shield access to critical medications.”

Currently, SB 41 is going through the legislative process. It seeks to increase fairness and transparency among pharmacies, manufacturers and insurance companies.

The governor’s spokesperson said his office does not comment on pending legislation.

Frausto said she hopes elected leaders address the issues she is facing for future pharmacists and independent pharmacy owners.

“I might have to close, but other students, other pharmacists, who want the dream of owning their own pharmacy should have that option,” she said. “Every community deserves to have a community pharmacy.”