Medicare Drug Plan Changes a Win for Patients, Taxpayers

By B. Douglas Hoey, RPh, MBA
CEO of the National Community Pharmacists Association
Alexandria, Va.
As published in The Hill

Overshadowed by the daily drumbeat of news concerning the Affordable Care Act, Medicare has outlined several enhancements to Part D prescription drug plans (PDPs) that would address bipartisan congressional concerns, give seniors more choices and reduce the program's costs by an estimated $1.3 billion over five years.

Seniors will benefit in several ways from the proposed rule issued by the U.S. Centers for Medicare & Medicaid Services (CMS).

First, Medicare's proposal offers more choice of pharmacy for the same co-pay. Currently, whether they like it or not, many seniors are steered toward those pharmacies that their drug plan has arbitrarily deemed "preferred pharmacies." The excluded, non-preferred pharmacies are contractually obligated by these drug plans to charge higher co-pays. CMS is proposing letting any pharmacy willing to accept a drug plan's terms and conditions (including reimbursement rate) to offer "preferred cost-sharing". Seniors would have greater choice among pharmacies at no added cost. This will particularly benefit seniors in underserved rural areas that often include an independent community pharmacy, but from which the nearest preferred pharmacy may be 20 miles away or more. Medicare officials concluded that this approach is "the best way to encourage price competition and lower costs in the Part D program."

Second, Medicare's proposal would let more seniors choose between community pharmacies and mail order ones without penalty. Many seniors prefer talking to a pharmacist face-to-face when they want to, rather than waiting for drugs by mail and dealing with 1-800 call centers. CMS proposes to eliminate some higher co-pays for seniors who prefer to use a community pharmacy, many of which provide same-day, home delivery. This change is also budget-neutral, because Medicare data has shown that mail order is often more expensive for Medicare and taxpayers than local pharmacies.

Third, Medicare's proposal would give more patients access to cost-saving medication therapy management (MTM) consultations with pharmacists. CMS suggests expanding the eligibility criteria for MTM consultations. These in-depth medication reviews have been shown to help improve health outcomes and reduce overall medical costs by improving adherence to prescribed medication and avoiding costlier treatments, such as hospitalizations.

Myths vs. facts

Medicare's action comes in response to concerns raised in 2013 by approximately 50 members of Congress demanding action. Some of these changes are opposed by billion-dollar middlemen, known as pharmacy benefit managers (PBMs), which administer drug plans.

PBMs foisted preferred networks and PBM-owned mail order on to CMS with the promise of grandiose cost savings. In fact, five separate analyses over the past year of Medicare data have shown that preferred pharmacies and/or mail order are often more costly for the program. Now that Medicare is on to them, those same, discredited PBMs and their supporters appear to be engaged in scare tactics seeking to undermine the agency's proposal.

MYTH: CMS' rule will lead to government "price setting" for drugs by allowing the agency to interfere with negotiations between Part D plans and drug manufacturers.

FACT: The debate over whether or not Medicare should negotiate drug costs directly with pharmaceutical makers is outside of the scope of this proposed rule. In enacting the 2003 law authorizing Part D, Congress' intent was clear—to allow those agreements to occur in the private sector unfettered by Medicare. CMS itself clarified that it interprets the law's intent as to ensure that CMS does not "create any policies or become a participant in any discussions [between plan sponsors and drug makers] that could be expected to interfere" with decisions concerning drug cost, rebate and coverage (or "formulary") issues.

MYTH: Premiums will increase because of this rule.

FACT: If a community pharmacy is willing to accept the same terms and conditions (including reimbursement level) that PBMs agreed to with a preferred pharmacy, the costs to Medicare and the drug plan are the same. There is no basis for increasing premiums as a result of this policy change.

MYTH: National pharmacy chains will withdraw from preferred networks if more pharmacies are allowed in, thereby reducing the plans' cost effectiveness and increasing costs.

FACT: Medicare officials rejected this argument, noting that they are "skeptical that such participants in the highly competitive retail market will abandon their market share by returning to the broader [non-preferred] network."

There are other pharmacy-specific features of Medicare's proposed rule that deserve support. It would allow community pharmacists to simply understand the methodology by which they will be reimbursed by Part D plans, and to require reimbursement rates to be updated more frequently to account for circumstances such as the soaring costs of some generic drugs. In addition, the rule would protect long-term care pharmacies from being financially penalized for adopting new dispensing methods intended to reduce medication waste.

Medicare's proposed rule is open for public comment through March 7th. As a pharmacist and on behalf of independent community pharmacists and their patients, I believe these proposals should be implemented.

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Kevin Schweers
Senior Vice President, Public Affairs
703.838.2682

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Director, Public Relations
703.600.1174

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