December 16, 2014


(Washington, D.C.) —A study released today by the Centers for Medicare and Medicaid Services (CMS) on preferred pharmacies in Medicare Part D should raise a new round of questions from policymakers about the agency’s attempts to overhaul the popular program, the Pharmaceutical Care Management Association (PCMA) said today.

“When Congress returns, CMS may want to brief them before changing Medicare Part D’s popular low-premium plans. Congress was assured earlier this year that CMS would pursue no ‘controversial’ changes,” said PCMA President and CEO Mark Merritt.

CMS is releasing the new study during a webinar today. The following are key questions about the study and its policy implications:

  • Is this study a pretext for new CMS pharmacy access requirements in 2016? Does CMS already have the authority to require new access standards in 2016 or do they need to issue new regulations?
  • Since these requirements impact plan negotiations with pharmacies, wouldn’t they violate “non-interference?”
  • Based on these findings, how many existing plans would not qualify in Part D to participate in 2016? How many beneficiaries would be disrupted?
  • Would new access standards force plans to add new “preferred” pharmacies even if these pharmacies don’t offer cost-savings? What if not enough new pharmacies are willing to offer cost-savings?
  • Given the controversy around preferred pharmacy network provisions in the Part D rule earlier this year, will CMS brief Congress on these findings and any proposed action plan when they return in January?
  • Has the Office of the Actuary or the Federal Trade Commission (FTC) examined the impact these access standards would have on consumers and premiums?

Research and polling highlight the value of preferred pharmacy networks in Medicare, including:

  • A survey conducted by Hart Research Associates shows that nine out of 10 seniors from urban, suburban, small town and rural areas have convenient access to these discounted pharmacies in Part D.
  • A recent analysis finds that almost nine out of 10 Medicare Part D prescription drug plans offered in the 2015 feature lower co-pays at preferred independent, chain, and big box pharmacies.
  • A study from Visante finds that in urban and suburban areas, the average Medicare beneficiary travels about one extra mile to use a preferred retail pharmacy to save $20-$40 on monthly cost sharing or can save even more with no travel by using a mail-service pharmacy.
  • The FTC wrote a letter to CMS on any willing pharmacy provisions included in the agency’s Medicare Part D rule and 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.”
  • An actuarial study from Milliman finds that preferred pharmacy network will reduce federal Medicare Part D costs up to $9.3 billion during the next 10 years.
  • An actuarial study from Oliver Wyman finds that eliminating preferred pharmacy networks in Part D would increase premiums by approximately $63 annually for over 75 percent of Part D enrollees and raise overall program costs by an estimated $24 billion over the next 10 years.

Currently, most national Part D pharmacy networks include virtually all drugstores—some 64,000 nationwide—giving beneficiaries access to more pharmacy locations than the combined number of McDonalds, Burger Kings, Pizza Huts, Wendy’s, Taco Bells, Kentucky Fried Chickens, Domino’s Pizzas, and Dunkin’ Donuts across the country.