Preferred Pharmacies, Mail Order May Mean Higher Costs for Medicare Part D

JANUARY 16, 2014

ALEXANDRIA, Va. (Jan. 16, 2014) – The Medicare Part D program and taxpayers often pay more when prescription drugs are obtained through “preferred” pharmacies and mail order than they would if the same prescriptions were filled through other, “non-preferred” pharmacies, according to a cost comparison using the Medicare Plan Finder website. The findings come shortly after recently proposed requirements that officials with the U.S. Centers for Medicare & Medicaid Services (CMS) suggested for Medicare prescription drug plans (PDPs) in 2015.

“This analysis suggests that neither preferred pharmacies nor mail order are the bargains for Medicare that their proponents claim,” said National Community Pharmacists Association (NCPA) CEO B. Douglas Hoey, RPh, MBA. “We commend CMS for its recent, enhanced scrutiny of both preferred pharmacy plans and mail order. We encourage the agency to follow through on its proposed changes, which should produce greater choice and pharmacy competition for beneficiaries in 2015.”

NCPA staff chose one commonly purchased PDP, the AARP Medicare Rx Preferred drug plan, and entered into Plan Finder four of the most-prescribed 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. The costs were compared between preferred, mail order and non-preferred pharmacies in nine cities across the country.

According to the NCPA analysis:
  • 89 percent of the time, preferred pharmacy costs to Medicare were higher than those of non-preferred pharmacies.
  • 100 percent of the time, mail order costs to Medicare exceeded those of non-preferred pharmacies.

The following chart represents the costs to Medicare through the AARP Medicare Rx Preferred drug plan for the four prescription drugs examined, according to Medicare’s Plan Finder website:

City Preferred Pharmacy Mail Order Non-prefered Pharmacy
Castleton, Vt. $763.23 $818.90 $761.35
Farmington, Maine $792.90 $822.90 $768
Parsons, W.Va. $775.23 $826.90 $735
Roanoke, Va. $775.23 $826.90 $735
San Marcos, Texas $763.23 $818.90 $738
Shelby, Ohio $769.23 $820.90 $735
Smithfield, Nev. $763.23 $818.90 $750
Topeka, Kan. $769.23 $820.90 $783.43
Vidalia, Ga. $763.23 $818.90 $761.35

Source: Medicare Plan Finder (

Community pharmacies excluded; rural access concerns

“Independent community pharmacies are often excluded from a plan’s list of ‘preferred pharmacies’ and thereby denied the ability to offer patients the lowest, advertised co-pay,” Hoey noted. “Community pharmacy owners have contacted plans and offered to accept the same contract terms and conditions, including reimbursement, as preferred pharmacies, but are routinely rebuffed or ignored. This situation creates problems for patients because independent community pharmacies are frequently located in rural and other underserved areas, from which the closest preferred pharmacy may be 20 miles or further away.”

This week community pharmacists have been sounding off about problems with exclusive preferred network plans. Their tweets using the hashtag #pharmacychoice include:
  • @dbesmaevr: @Commpharmacy #pharmacychoice I am losing patients that need my care and expertise #powhatanrx
  • @usaveitcorp: My store can match prices & care for patients face-to-face. Why can't I participate as a Medicare preferred pharmacy?#pharmacychoice
  • @Btownpharmacist: Lost another Medicare customer to their "preferred" pharmacy today. #pharmacychoice

Mounting evidence questions preferred pharmacy plans, mail order

The NCPA comparison announced today is the fifth time in the last 12 months that an examination of Medicare data has shown that preferred pharmacies and/or mail order are often more costly for the program than non-preferred pharmacies.

In November 2013 CMS released its analysis finding that in some instances mail order charges Medicare as much as 83 percent more than community pharmacies. Four months earlier the agency found that “prices are sometimes higher in certain preferred networks,” compared to traditional plans offering patients greater choice.

Separately, an NCPA staff analysis in March 2013 of the same four drugs mentioned above across eight cities found the Plan Finder full costs were higher 75 percent of the time at the preferred network pharmacy 94 percent of the time at mail order, compared to the non-preferred pharmacy. 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.

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