Alexandria, Va. March 21, 2013 - Thirty-one U.S. Representatives and a U.S. Senator have written to Medicare raising questions about the impact of so-called "preferred pharmacy" drug plans, which may actually raise costs to the Medicare Part D program and taxpayers, according to a recent statement by Medicare officials and an analysis by the National Community Pharmacists Association (NCPA).
Preferred pharmacy plans differ from traditional drug benefit plans in that they establish tiers of pharmacies. The plans allow most pharmacies to participate as "network" pharmacies in order to allow the plan to satisfy Medicare's geographic access requirements. But only a limited number of pharmacies are allowed by the plan to participate as a "preferred" pharmacy authorized to offer the plan's lowest, advertised co-pays. Most plans do not allow independently owned pharmacies to participate as a preferred pharmacy in their network. The increasing number of preferred pharmacy plans are especially challenging for seniors in rural areas, where independent or regional pharmacies are often the closest pharmacy and where the nearest preferred pharmacy may be 20 miles or more away.
"We have been hearing increasing concern from Medicare beneficiaries and small business owners regarding Medicare Part D plans that feature preferred pharmacy networks," wrote U.S. Representatives H. Morgan Griffith (R-Va.), Peter Welch (D-Vt.) and 29 other Representatives, adding that "we fear these networks could lead to a decrease in access to quality care and threaten the survival of community pharmacies."
The lawmakers noted they were concerned over questions about the usefulness of the Medicare Plan Finder website and the fact that some plans may require seniors to travel long distances to reach a preferred pharmacy. They asked the Acting Administrator of the U.S. Centers for Medicare & Medicaid Services (CMS) to "outline a plan to mitigate any hardship" that the plans may cause beneficiaries and community pharmacists, and asked if Medicare plans to "expand opportunities for independent pharmacies to join and compete with the Part D preferred networks on a level playing field."
Separately, U.S. Sen. Jerry Moran (R-Kan.) has also written to CMS raising questions about the plans. In his letter, he cited the unique pharmacy access challenges of a rural state like Kansas; questioned whether the preferred pharmacy plans are accurately marketed to beneficiaries; and whether independent pharmacies are allowed to participate. "I believe that local pharmacists play a very important role in the delivery of health care across our country because in many rural communities they are often the most accessible provider," Senator Moran wrote.
"Independent community pharmacists and the patients they serve greatly appreciate the leadership of these officials in posing exactly the right questions to Medicare," said NCPA CEO B. Douglas Hoey, RPh, MBA. "Some seniors are surprised to learn that they must travel great distances to obtain the lowest advertised co-pays. Medicare officials bought into these plans with the expectation that they would help to reduce costs. However, a comparison on Medicare Plan Finder's website suggests that the Plan Finder full cost may be the same or even higher at preferred pharmacies and mail order than they are at non-preferred, network ones, such as locally owned pharmacies. In addition, community pharmacies are losing longtime patients to rival pharmacies without having any opportunity to participate as a preferred pharmacy. It is high time for Medicare to ensure seniors preserve their right to choose their pharmacy rather than being led into certain pharmacies."
In an analysis, NCPA staff looked at four common drugs (generic version of Lipitor—atorvastatin calcium Tab 20mg 90 day supply; generic version of Plavix—clopidogrel Tab 75mg 90 day supply; diovan—Tab 80mg 90 day supply; and Nexium—Cap 40mg 90 day supply) on Medicare's Plan Finder website. Looking at two large preferred pharmacy plans (AARP MedicareRx Preferred and Humana Walmart Preferred Rx), the cost of the drugs was compared between preferred pharmacies, mail order pharmacies and non-preferred pharmacies in eight cities (Helena, MT; Salt Lake City, UT; Pierre, SD; Cheyenne, WY; Boise, ID; Denver, CO; Salem, OR; and Des Moines, IA). Across the eight cities, the Plan Finder full cost of the preferred network pharmacy was more expensive than the Plan Finder full cost of the non-preferred network pharmacy 75 percent of the time. Furthermore, the Plan Finder full cost when comparing mail pharmacy to a non-preferred network pharmacy, was again higher 94 percent of the time.
Last month, Medicare officials hinted at such cost discrepancies, saying, "We are concerned because our initial results suggest that aggregate unit costs weighted by utilization (for the top 25 brand and top 25 generic drugs) may be higher in preferred networks than in non-preferred networks in some plans." In addition, the Medicare Payment Advisory Commission (MedPAC), Congress' advisory board on Medicare issues, at both its January meeting and in its most recent quarterly report to Congress, raised questions about preferred pharmacy plans' impact on program costs, beneficiary costs and beneficiary access.
"Community pharmacists have raised concerns about beneficiary access in preferred pharmacy plans since day one," Hoey added. "Now those concerns have been heard by members of Congress and many others."