Pharmacies of all sizes, from the smallest neighborhood store to the retail giants, are reeling from a change in federal law. It establishes a new price structure for drugs in the Medicaid program.

National pharmacy groups plan to lobby Congress to stop the law from taking effect.

In the shadow of Houston’s Third Ward, Art Abernathy’s pharmacy has survived for almost three decades.

But with 75 percent of his customers on Medicaid the independent pharmacist could soon be struggling to stay in business.

“It’s a disaster,” Abernathy said.

Because of federal cuts, Texas will drastically reduce the amount of money it reimburses pharmacies for Medicaid prescriptions beginning in October.

“Many of the drugs in this formula are going to be 15 to 30-odd percent less than what we pay for them,” Abernathy said.

For example, one kind of medicine costs Abernathy $400 a bottle. Under the new formula he would only be repaid $300.

“Basic business: You don’t sell below what your cost is and stay in business,” he said.

Across town at the briar grove pharmacy David Devido is in better shape.

Only one percent of his business is Medicaid prescriptions, but he berates Congress for what he calls the unfair price formula.

“They evidently want to save money, but they want to save money on the backs of the retailers,” Devido said. “It’s a bad program for us.”

Independent pharmacists fear other third-party payers such as Medicare and insurance companies will follow suit. If that happens, it could be the death knell for the family-owned pharmacy.

Medicaid patients would have fewer options to get their medicine, and only a prescription for more change will save their neighborhood pharmacy.