March 28, 2012

H.R. 1946 Would Increase Costs by Up to $15.6 billion

  • H.R. 1946 could increase direct costs to commercial payers by $7.6-$15.6 billion over five years, an average increase of approximately 4-8 percent of total prescription sales across all independent pharmacies.
  • Increased costs from antitrust exemptions to independent pharmacies would likely be passed on to health insurers, employers, and consumers and could result in employers reducing health insurance benefits.
  • While antitrust exemptions under H.R. 1946 do not apply to most federal programs, they would allow pharmacies to collectively bargain with plans in the new state-based health insurance exchanges, which could increase federal costs.
  • There is no compelling economic reason to confer antitrust exemptions to independent pharmacies, since these institutions are profitable and protected by existing competition laws.
  • Existing market mechanisms give independent pharmacies leverage to bargain with health plans and pharmacy benefit managers (PBMs). Nearly 80 percent of independent pharmacies rely on intermediaries known as Pharmacy Services Administration Organizations (“PSAOs”) that pool the bargaining power of many independents to collectively negotiate reimbursement and contract terms with health plans and PBMs.

Read the CRA Study: The Cost of Independent Pharmacy Antitrust Exemptions, 2013-2017