Medicare Analysis Finds Mail Order Pharmacies Often More Expensive than Community Pharmacies

Published Online: Tuesday, December 3, 2013
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PRESS RELEASE

Alexandria, Va. Dec. 3, 2013 - Mail order pharmacies frequently charge Medicare prescription drug plans (PDPs) more—as much as 83 percent more—than community pharmacies do for filling prescriptions, a new analysis by the U.S. Centers for Medicare & Medicaid Services (CMS) has concluded, calling into question the assumption many health plan sponsors rely on in subsidizing mail order utilization.

CMS, the agency that oversees the Medicare Part D prescription drug benefit, examined millions of claims from March 2012 and found 21 drug plans that routinely paid more for prescriptions filled through the mail compared to a community pharmacy.

"[T]his analysis has shown that negotiated pricing for the top 25 brands and 25 generics combined at mail order pharmacies is higher than at retail pharmacies for selected PDPs," CMS notes in concluding its analysis. "Thus, our hypothesis that mail order negotiated prices are lower than retail pharmacy negotiated prices was not confirmed. Instead, we are finding higher prices at mail order than at retail pharmacies for some PDPs. CMS continues to be concerned about the impact of these prices on the Part D program."

Many PDPs are administered by pharmacy benefit managers (PBMs), which own most mail order pharmacies. PBMs can grow their profits by steering a plan's patients to a PBM's mail order pharmacy, regardless of the patient's preference or whether doing so results in higher costs to the drug plan or the taxpayer-funded Medicare program.

"This analysis should be a wake-up call to any employer, government agency or other sponsor of a health care plan that blindly accepts the recommendations of PBMs when it comes to drug benefit design and incentivizing mail order utilization," said National Community Pharmacists Association (NCPA) CEO B. Douglas Hoey, RPh, MBA. "Mail order is not for everyone and its appeal as a cost-saver is severely undermined by Medicare's analysis. Instead, health plans should allow patients to choose the pharmacy that best meets their health needs and helps them get the most out of their prescription drug regimen."

The CMS analysis comes on the heels of an earlier 2013 study by the agency finding that prescriptions filled at "preferred pharmacies" sometimes result in higher costs to Medicare than prescriptions filled at non-preferred pharmacies, such as independent community pharmacies left out of the preferred network. NCPA continues to advocate that any pharmacy willing to accept a health plan's terms and conditions, including reimbursement, should be allowed to do so and serve the plan's patients.

Moreover, an independent analysis of millions of 2010 Medicare prescription drug event records found that community pharmacies provide 90-day medication supplies at lower cost than mail order pharmacies and that local pharmacists substitute lower-cost generic drugs more often when compared to mail order pharmacies.

In addition, a first-of-its-kind patient survey, Medication Adherence in America: A National Report Card, finds that the biggest predictor of patients properly taking their prescribed drugs (or medication adherence) is a patient's personal connection (or lack thereof) with a pharmacist or pharmacy staff. Patients of independent community pharmacies reported the highest level of personal connection (89 percent agreeing that the pharmacist or staff "knows you pretty well" compared to just 36 percent of mail order users). Previous surveys have documented that patients are more satisfied with independent community pharmacies than mail order facilities.
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