A survey conducted by 3 Axis Advisors revealed potential impacts of the Inflation Reduction Act’s Medicare Drug Price Negotiation Program.
Reporter: Brian Nowosielski
In the form of payment delays, cash flow shortfalls, and overall revenue losses, the 10 drugs whose price negotiations are set to take effect January 1, 2026, present a detrimental financial risk to community pharmacies in the US. Highlighted by a recent analysis of the Inflation Reduction Act’s (IRA) Medicare Drug Price Negotiation Program (MDPNP), experts believe it could lead to pharmacy closures, reduced prescription access, and further financial pitfalls for independent pharmacies.
“Everyone wants to reduce drug costs for seniors and taxpayers,” said National Community Pharmacists Association (NCPA) CEO B. Douglas Hoey, MBA, in a news release.1 “But, as our research shows, the program is structured in a way that will force many independent pharmacies out of the Medicare Part D program. Drug costs may come down, but there will be a shortage of pharmacies to dispense medicine.”
While many experts and industry leaders see the MDPNP as a win for patients’ out-of-pocket drug costs, it has significant impacts on the overall business of prescription drug dispensing. Amidst a complex pharmaceutical supply chain and health care benefits system, independent pharmacists and the groups that advocate for them believe price negotiations will lead to even more failing pharmacy businesses.
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However, when the IRA was initially crafted in 2022 to introduce drug cost savings, it focused on patients rather than the providers that dispense their medications. The IRA specifically gave power to the Centers for Medicare & Medicaid Services (CMS) to negotiate with drug manufacturers the price of medications most commonly used among senior populations with Medicare insurance coverage.
“CMS is proud to have negotiated drug prices for people with Medicare for the first time. These negotiations will not only lower the prices of critically important medications for cancer, diabetes, heart failure, and more, but will also save billions of dollars,” said CMS Administrator Chiquita Brooks-LaSure in a news release.
But according to pharmacy industry experts, the Medicare price negotiations will only lead to other complications. While costs may decrease for patients, other parties within the supply chain will be forced to absorb lost costs, specifically pharmacies.
First, according to NCPA’s news release, a result of the price negotiations would be payment delays for at least 7 days on any of the 10 selected drugs. Delays can also result in pharmacies missing their “prompt pay requirements” for Part D drugs. Furthermore, these delays are projected to result in the loss of $11,000 in weekly cash flow... CONTINUE READING
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