As pharmacies across Vermont close, North Star Health opens 3 new ones

SPRINGFIELD — In the era of independent pharmacy closures and ballooning drug costs, a new pharmacy that charges less for drugs seems counterintuitive, if not impossible. 

But that’s exactly what North Star Health, a Federally Qualified Health Center that operates medical clinics in Vermont and New Hampshire, did when it officially launched three new pharmacies in Springfield, Vt., Londonderry, Vt., and Charlestown, NH on Tuesday. 

In Springfield, pharmacists, patients and local leaders filled the bottom floor of the old mill building that North Star now occupies for the official ribbon cutting of the small pharmacy. The space itself is hardly bigger than a telephone booth. Over-the-counter drugs — Tums, Advil, eye drops — line one wall, while two consultation windows, which open onto a larger pharmacy workspace, occupy another. 

The Springfield center also includes primary care clinics, behavioral health specialists and vision care.

As a Federally Qualified Health Center, North Star is eligible for certain federal funding opportunities and different Medicaid and Medicare reimbursement rates than other clinics and hospitals. Health centers like North Star are designated as federally eligible if they’re nonprofits serving medically underserved areas. Their pharmacies are also eligible to buy pharmaceutical drugs at a steep discount through a federal pricing initiative called the 340b drug pricing program.  

With it, North Star’s pharmacies are able to buy drugs for far less than the sticker price, mark them up enough to make a profit and still charge patients less than what a for-profit retail pharmacy needs to charge. That reduction is especially important for brand-name drugs that have no generic alternatives, Samantha Tyrrell, the pharmacy manager at the Springfield center, said.

Without the program, the pharmacy would make no financial sense for North Star, Josh Dufresne, the CEO of the Springfield Health Center, told VTDigger.

“We just barely make it work all the time. This (pricing program) is one of those pieces that if it went away, there needs to be another reimbursement mechanism or something that helps us break even,” he said. “We’re able to take that margin and offset the cost of providing primary care, which isn’t reimbursed very well, or behavioral health or whatever else.”

Local pharmacies have certainly felt the squeeze in recent years. In May, Smilin’ Steve’s Pharmacy abruptly closed its Springfield, Ludlow and Woodstock locations. A year earlier, Rite Aid announced its bankruptcy and closed stores across southern Vermont.

Between 2019 and 2024, Vermont lost 28 pharmacies, nearly one in five at the time, the state’s Board of Pharmacy told VTDigger in 2024. That same 2024 article analyzed pharmacy deserts in Vermont and found that more than one-fifth of the state’s census tracts had low access to pharmacies — with some of the least access in Windsor and Rutland counties, where North Star serves patients.

Many attribute the trend to the ever-shrinking margin pharmacies are able to make from drugs. It’s not unusual for drugstores to be reimbursed for less than it cost them to purchase a drug, the Vermont Pharmacists Association has said. People point to the pervasive intermediary operators, known as pharmacy benefit managers, as shrinking the profit for pharmacies while inflating it for insurers and pharmaceutical companies. In 2025, only three companies — CVS’s Caremark, Cigna’s Express Scripts and UnitedHealth Group’s Optum Rx — processed 80% of the country’s prescription claims.

North Star and its patients saw the gap these national trends created in southern Vermont. Dufresne said the organization began exploring opening pharmacies in response to patient requests.

Though Tuesday marked the pharmacies’ official ribbon-cutting, the Springfield location began operations in November for patients who were willing to pay out of pocket or those covered by some commercial insurers. Now, it has established contracts with Medicare, Medicaid and most insurers.

When Smilin’ Steve’s pharmacy closed in May, the pharmacy saw an influx of patients, seeking to transfer prescriptions from a patchwork of specialists and doctors.

“They came down here with a ream of paper that was transfers this thick,” Tyrell said, holding her thumb and index finger more than three inches apart.

Another benefit she and Dufresne both see of having in-house pharmacists is more organized care.

North Star’s pharmacists read patients’ health records and consult with primary care clinicians one floor up. Dufresne sees that coordination as particularly beneficial for recruiting young primary care providers fresh out of school, which he said is one of the biggest challenges the health center faces.

Dufresne’s hope is that the pharmacy can slot neatly into North Star’s suite of primary care, vision, dental and behavioral health services. A truly healthy patient, he said, is one whose clinicians prioritize preventive care and keep them less reliant on pharmaceuticals altogether.