Pharmacy is Propelling Long Overdue Medicare Reform

Tune-ups. Spring cleaning. Check-ups. However tedious it can be, maintenance is a part of life. We do what we can (most of us do, anyway) to keep things moving as smoothly as possible, triaging as we go to stay on track.

B. Douglas Hoey
The Medicare Part D benefit has been in effect for around 16 years now. If it were a car, it would be long overdue for a tune-up. Some might say it might warrant a complete overhaul.

Part D was created at a time in the early aughts on a fee-for-service chassis. The result has been a siloed benefit that blindly pummels prescription drug costs but has almost no tie back to overall health care costs or health care outcomes. The three dominant health insurance-owned pharmacy benefit managers declare “mission accomplished,” but the actual result is a discombobulated health benefit. Seniors deserve better. Taxpayers deserve better.

Part D represents 36% of the average independent pharmacy’s business. When the Centers for Medicare and Medicaid Services (CMS) in January released its long-awaited proposed rule that would rein in pharmacy direct and indirect remuneration fees, it acknowledged that these fees have gone up over 107,400% since 2010. That’s obviously unsustainable for small-business pharmacies and for patients. The agency recognized what the National Community Pharmacists Association and our members have known for a while — the wheels were coming off.

We worked hard over the years to build bipartisan support among policy makers for swiftly reforming pharmacy DIR fees and grow our group of allies across industries who understand exactly how these fees shake down seniors and local community pharmacies. We appreciate that the Biden administration, unlike others before it, moved to increase transparency so our members can soon have a clear line of sight for what their lowest reimbursement would be. But delaying implementation of these provisions until 2024 and giving PBMs and their insurer-partners/owners another year to manipulate the system and continue charging higher costs to seniors … well, it wasn’t a lemon, but it was a missed ­opportunity.

There were a few other areas of this final rule that also left some room for improvement. Despite NCPA’s urging, for example, CMS did not implement standardized pharmacy performance measures or address metrics. Yes, the rule defines pharmacy “price concession” for the first time, but that new definition does not mandate exactly how sponsors contract with, incentivize or pay pharmacies in their network. While sponsors remain free to offer performance-based payment arrangements, CMS encourages them to be fair, equitable and value-based arrangements.

“Fair” and “equitable” aren’t words small-business pharmacy owners typically associate with PBMs and their insurer-partners/owners — especially in the siloed Part D benefit that offers little incentive for PBMs to use prescription drugs, arguably the Ferrari of health care vehicles, to lower overall health care costs and improve patient outcomes. So NCPA will be staying vigilant and active in the pursuit of development of a set of pharmacy performance measures that actually are standardized, transparent and fair. The Pharmacy Quality Alliance is working to build consensus across pharmacies, plans, PBMs and other stakeholders. NCPA was involved with the formation of PQA as a response to the launch of Part D and has been involved with the organization since then. It is vital in bringing the right people around a common table to craft solutions for measuring quality in pharmacies and in Part D. We will be at that table, representing the interests of independently owned pharmacies.

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