Community pharmacies are concerned about their ability to continue serving Medicare patients, they say, once lower reimbursements for certain Part D drugs take effect in 2026. Some may even be forced to close.
When Congress passed the Inflation Reduction Act, they gave the Centers for Medicare and Medicaid Services the authority to negotiate drug prices in the Medicare Program for the first time. Unfortunately, with big change often comes unintended consequences.
Independent Pharmacies to Face Financial Strain
The Act had wide-ranging effects on Medicare Part D, the federal program that covers pharmacy-issued drugs, but a point of heightened concern is the introduction of negotiated prices for 10 specific drugs. These first drugs were selected based on high expenditure costs by CMS and are those patients take at home, such as pills and insulin. These are also subject to negotiation sooner than physician-administered medicines.
The National Community Pharmacists Association has warned the negotiated reimbursement rate on some of these drugs are too low to cover the costs of stocking and dispensing them. As a result, some pharmacies may limit which drugs they stock and 93% said they have considered leaving the Part D program, citing cashflow concerns.
Medicare patients can account for up to a third of a pharmacy’s business, so lower reimbursement rates have a major impact on the bottom line. Those who can’t make up the revenue may cease to exist, leaving fewer options for patients.
The Most Vulnerable Could Be Hardest Hit
The loss of independent pharmacies could leave patients without local options, especially amid announced store closures by national chains including Walgreens, Rite Aid and CVS.
Without a local pharmacy, patients may have to travel long distances to access essential medications, a barrier to care that falls hardest on the most vulnerable. Minority communities and people living in rural areas are most likely to rely on independent pharmacies, and would, in turn, be most impacted by closures.
Ensuring fair reimbursement rates – those sufficient to keep pharmacies’ doors open – will be essential to maintaining access to medicines for Medicare patients. But without intervention, federal price caps may end up harming patients more than helping taxpayers. Policymakers must be aware of potential harms to Medicare beneficiaries and should be ready to work toward alleviating them.
