July 22, 2014
Legislation backed by the drugstore lobby (H.R. 4577, “Ensuring Seniors Access to Local Pharmacies Act of 2014”) championing so-called “any willing pharmacy” mandates in Medicare Part D would undermine the availability of lower cost preferred pharmacy networks and increase Medicare spending by $21 billion over the next 10 years, according to new research from The Moran Company released by the Pharmaceutical Care Management Association (PCMA).
The drugstore lobby targets “medically underserved” areas that have nothing to do with pharmacy access and are defined so broadly that they encompass 95% of all Medicare beneficiaries. By mandating that “any willing pharmacy” be included in preferred networks in these areas, the bill would gut the ability of plans to negotiate lower cost preferred pharmacy options for virtually all Medicare beneficiaries.
As the study notes, “there is not necessarily a relationship between the underserved areas targeted in the legislation and pharmacy access. The targeted underserved areas are identified by primary medical care, dental or mental health providers, without regard to pharmacy access.” Likewise, the study finds that preferred pharmacies would “discontinue discounting since such discounts would no longer be a requirement for preferred network participation.”
Today, the United States has more pharmacies than McDonald’s, Wendy’s, Burger Kings, Pizza Huts, Taco Bells, KFCs, Domino’s Pizza and Dunkin’ Donuts combined.
Key findings from The Moran Company study include:
- While the legislation might appear on its face to be limited in geographic scope, our analysis of data from the Health Resources & Services Administration (HRSA) indicates that 94.77% of all Medicare Part D enrollees reside in counties meeting at least one of the “underserved area” criteria established in this legislation.
- After offsets, we estimate that enactment of this legislation would increase Federal mandatory spending by $21.32 billion over the 2015-2024 scoring window.
“This is a backdoor attempt to ban the popular, low premium plans that encourage shopping at more affordable pharmacies,” said PCMA President and CEO Mark Merritt. “How can plans reduce premiums if their ‘discount networks’ have to include each community’s highest-priced drugstore?”
The Federal Trade Commission (FTC) recently wrote a letter to the Centers for Medicare and Medicare Services (CMS) on any willing pharmacy provisions included in the agency’s Medicare Part D rule. The FTC warned that:
“The proposed any willing pharmacy provisions threaten the effectiveness of selective contracting with pharmacies as a tool for lowering costs. Requiring prescription drug plans to contract with any willing pharmacy would reduce the ability of plans to obtain price discounts based on the prospect of increased patient volume and thus impair the ability of prescription drug plans to negotiate the best prices with pharmacies.
“Evidence suggests that prescription drug prices are likely to rise if Prescription Drug Plans (“PDPs”) are less able to assemble selective pharmacy networks. The proposed provisions may also hinder the ability of plans to steer beneficiaries to lower-cost, preferred pharmacies and preferred mail order.”