More Pharmacy Choice for Patients Does Not Necessarily Mean Higher Medicare Costs, Leading Health Economist Argues

Published Online: Wednesday, August 6, 2014
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Alexandria, Va. Aug. 6, 2014 - Bipartisan legislation to give Medicare beneficiaries better access to medication and more choice of pharmacy does not have to cause expenses to rise and there is insufficient basis to support such claims, a prominent health care and antitrust economist argues in a new white paper.

Dr. David M. Eisenstadt, veteran of the U.S. Department of Justice Antitrust Division and Principal at Microeconomic Consulting and Research Associates (MiCRA), analyzed H.R. 4577, the Ensuring Seniors Access to Local Pharmacies Act, at the request of the National Community Pharmacists Association (NCPA). H.R. 4577 would give seniors in medically underserved areas more convenient access to discounted or "preferred" copays at independent community pharmacies or others willing to accept the drug plan's terms and conditions.

"The theoretical point made in this comment is that as a matter of economic theory price does not have to increase," Dr. Eisenstadt writes. "This comment is offered as rebuttal to any party that claims that such a rule will cause Medicare Part D drug prices to rise."

Dr. Eisenstadt's analysis also notes that:
  • There is "insufficient basis" to support claims by health insurance middlemen that H.R. 4577 would increase costs.
  • It is possible that costs decrease if H.R. 4577 fosters more aggressive competition among pharmacies.

"Patients should have access to medications and counseling at the pharmacy that works best for them, without the interference of insurance middlemen," said NCPA CEO B. Douglas Hoey, RPh, MBA. "That leads to better medication adherence and more optimal health outcomes. That's what H.R. 4577 would do and this economic analysis strengthens the case for this bipartisan legislation."

Dr. Eisenstadt's analysis supports earlier work by the Centers for Medicare & Medicaid Services (CMS). Medicare officials have extensively reviewed narrow network, "preferred pharmacy" drug plans. They concluded that "including any pharmacy that can meet the terms and conditions of the preferred arrangements in the sponsor's preferred network is the best way to encourage price competition and lower costs in the Part D program."

H.R. 4577 has the support of leading consumer and health advocates including Consumers Union, HealthHIV, Medicare Rights Center, National Grange, National Senior Citizens Law Center and National Rural Health Association.

In addition, 76 percent of likely voters support the legislation, according to a recent nationwide public opinion survey.

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