Many independent pharmacists will not stock drugs in the price negotiation program

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The National Community Pharmacists Association has submitted comments to the Centers for Medicare and Medicaid Services warning that more than 90% of independent pharmacies may decide, or have already decided, to not stock drugs in the Medicare Drug Price Negotiation Program because of the potential financial losses.

"Pharmacies will have to float thousands of dollars every month waiting for refunds from the manufacturers. That will cause a massive cash flow problem in an environment where thousands of pharmacies have already closed," said NCPA CEO B. Douglas Hoey.

In its comments, NCPA cited a recent national survey of independent pharmacists that found 93.2% of respondents have already decided to not stock the drugs in the program, or they are considering not stocking them.

Hoey said that would be devastating to the program, and render it near-impossible for patients in nonparticipating pharmacies to obtain their medications.

"It's great the government removed big insurance's PBMs from the negotiations and the result was lower prices for these prescription medications," he said. "That's an important outcome for patients and taxpayers. But if almost no pharmacies can stock the drugs because they will sustain huge financial losses, the program will collapse before it even starts."

NCPA said CMS should bar pharmacy benefit managers from requiring pharmacies to participate in the program to serve Medicare Part D patients, and said it should also give pharmacies the ability to cancel PBM contracts without cause.

WHAT'S THE IMPACT?

The Medicare Drug Price Negotiation Program starts in January of 2026. NCPA estimated pharmacies that dispense drugs in the program will have to tie up about $27,000 of their own money every month to stock the drugs, and then wait a month or more for manufacturer refunds to "make the pharmacy whole."

For many pharmacies, the resulting cash flow crunch would be too much for them to absorb in an already difficult payment environment, said NCPA, which added that guidance from the Centers for Medicare and Medicaid Services offered no assurances that the payments to pharmacies from PBM middlemen would cover the pharmacy's costs to acquire and dispense the medicine.

Serving Medicare Part D patients accounts for roughly 35% of the average pharmacy's business, but low reimbursements are forcing many independent pharmacists to reconsider participating in the program, the report said. In a February survey, 93% said they were considering dropping out this year. In this most recent survey, 73% said they have not yet finalized their contracts for 2025, and they don't know which plans they'll be in.

According to the survey cited by NCPA, 60.4% of independent pharmacists are considering not stocking one or more of the first 10 drugs, while 32.8% have already decided not to. More than 96% said PBM and plan reimbursement for Medicare Part D threatened the viability of their business.

At the same time, more than 40% of independent pharmacists said they were paid below what they pay to buy the drug, approximated by the National Average Drug Acquisition Cost (NADAC), on more than 40% of the prescriptions they filled for Medicare Part D patients.

NCPA said CMS should bar pharmacy benefit managers from requiring pharmacies to participate in the program in order to serve Medicare Part D patients, and said it should also give pharmacies the ability to cancel PBM contracts without cause.

THE LARGER TREND

In the first cycle of negotiations, Medicare negotiated with participating drug manufacturers and reached agreement on new, lower prices for 10 drugs. Those prices will become effective starting Jan. 1, 2026.

If the new prices had been in effect in 2023, the Department of Health and Human Services said they would have saved an estimated $6 billion in net covered prescription drug costs, or approximately 22%, across the 10 selected drugs. The new, lower prices range from 38% to 79% discounts off list prices.

In 2026, people with Medicare prescription drug coverage are expected to see aggregated estimated savings of $1.5 billion in their personal out-of-pocket costs.

Earlier this month, 15 additional drugs were selected for price negotiations. They'll take place later this year, and any negotiated prices would become effective in 2027. According to HHS, the selected drugs accounted for about $41 billion in total gross covered prescription drug costs under Medicare Part D, or about 14%, between November 2023 and October 2024.

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.