WASHINGTON--(BUSINESS WIRE)--A new study from the Senior Care Pharmacy Coalition (SCPC), the nation’s leading voice for long-term care (LTC) pharmacies, performed by CLA (CliftonLarsonAllen LLP) and with input from ATI Advisory details the significant financial impact Medicare drug price negotiations will have on LTC pharmacies that provide essential, government required services to more than two million seniors and others in long-term care.
SCPC believes the report’s findings clearly demonstrate the need for Congress to address the broken LTC pharmacy payment model that allows Medicare Part D Plans and pharmacy benefit managers (PBMs) to reap massive profits at the expense of both seniors and the LTC pharmacies that provide them with essential services and medications every day.
SCPC recently launched the Save Senior Rx Care campaign to highlight this critical issue and urge Congress to take action to protect LTC pharmacies and millions of patients in long-term care across the country. Specifically, SCPC is calling on Congress to pass meaningful PBM Reform in 2024 and to adopt a special LTC pharmacy service fee on medicines subject to Medicare price negotiations.
The new report, “Long-Term Care Pharmacy Cost Analysis,” which analyzed data from more than 120 LTC pharmacies nationwide, found the current payment model often forces LTC pharmacies to dispense medications significantly below their own costs. The report shows a total average cost to dispense of $14.98 per prescription, which is more than double the average dispensing cost incurred by retail pharmacies. This disparity is attributable to the specialized services LTC pharmacies are required to provide such as enhanced medication management, consultant services, patient-specific packaging, heightened quality controls, 24/7/365 delivery and more.
“Roughly two million seniors in long-term care depend on the essential and unique services provided by LTC pharmacies—services that are simply not otherwise available,” said Alan Rosenbloom, President and CEO of the Senior Care Pharmacy Coalition. “Unfortunately, unintended consequences arising from the IRA’s Medicare drug price negotiations threaten seniors’ access to the medicines they need – and those problems only grow more dire with the perverse LTC pharmacy reimbursement dictated by big PBMs that dominate the market.”
The new report follows the Biden Administration’s announcement detailing the first round of Medicare negotiated drug prices set to take effect in January of 2026. LTC residents rely heavily on insulin, inhalers, and 8 of the first 10 drugs subject to negotiated Medicare prices. If the flawed payment model isn’t fixed, many LTC pharmacies may not survive, and many seniors will lose access to essential services. The problem will only get worse as more branded drugs are subject to price negotiations each year unless Congress takes action to fix it.
“While economic and regulatory environments can vary due to geography, patient mix, prescription volume, and labor costs, the results of the survey found the median and average LTC pharmacy total cost per script was approximately $6 to $7, respectively, more than the base cost per script,” said Chad Kunze, Health Care and Life Sciences Principal at CLA. “As reimbursement and regulations evolve, sometimes there’s a need to align those to mitigate an unintended impact, such as this one.”
Another study, conducted by ATI Advisory’s Principal Anna Kaltenboeck, who leads ATI’s Prescription Drug Reimbursement Practice, estimated that applying negotiated prices to LTC pharmacy prescriptions dispensed in Q4 2023 would result in an average 27.5% loss to pharmacy operating margin.
SCPC and the Save Senior Rx Care campaign urge Congress to use this new report as a catalyst for passing meaningful PBM reform in 2024. SCPC notes that any reform package should address LTC pharmacy specific reimbursement issues while also creating guardrails to ensure patients, and not health plans and PBMs, benefit from the savings of lower drug prices.
“The first round of Medicare negotiated drug prices will have an existential impact on many LTC pharmacies. This has been harmful to our sector and should serve as a wake-up call for lawmakers who want to save seniors’ access to care,” added Rosenbloom. “Thanks to this report we now have a clear picture of the devastating impact—particularly for the smaller pharmacies which make up most of our community – and the patients they serve. Congress simply must act swiftly to protect LTC pharmacies and the patients who rely on them.”
About Senior Care Pharmacy Coalition
The Senior Care Pharmacy Coalition (SCPC) is the only national organization exclusively representing the interests of LTC pharmacies, representing 75% of the sector overall. Its members operate in all 50 states and serve 850,000 patients daily in skilled nursing and assisted living facilities across the country. Visit seniorcarepharmacies.org to learn more.
