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“Fiscal Cliff” Deal Has Consequences for Pharmacies

Author: Daniel Weiss, Senior Editor

The bill to avert the “fiscal cliff” passed by Congress will affect the majority of Americans, but several provisions will impact retail pharmacies in particular.
After several months of negotiations among legislators and the White House, both houses of the United States Congress have passed a bill to dampen the effects of the “fiscal cliff,” a combination of spending cuts and tax increases that were set to go into effect at the beginning of 2013. The bill, which President Obama is expected to sign into law, will affect the majority of Americans, but several of its elements will have specific consequences for community pharmacies.
 
Most prominent among these is the inclusion of diabetes testing supplies sold by retail pharmacies in a competitive bidding program for durable medical equipment established by the Medicare Modernization Act of 2003. Retail pharmacy–supplied diabetic testing supplies had been exempted from the competitive bidding program until 2016, but will now be reimbursed at lower rates starting on April 1, 2013. This change is estimated to save the government $600 million, but pharmacist associations argue that the new rates will negatively impact retail pharmacies and their customers.
 
The change “would effectively force many community pharmacists to stop providing diabetes test supplies (DTS) to Medicare beneficiaries,” said John Coster, RPh, PhD, senior vice president for government affairs at the National Community Pharmacists Association (NCPA), in a press release. “The bill would do this by applying DTS reimbursement rates to local pharmacies that are effectively set by large mail order operations.”
 
Dr. Coster also noted that the bill includes a number of provisions that the NCPA supports: a temporary delay in cuts to Medicare and the TRICARE program, as well as a $5 million exemption to the estate tax, which will make it easier to pass family-owned pharmacy businesses from one generation to the next.
 
In an email, Carol A. Kelly, senior vice president for government affairs and public policy at the National Association of Chain Drug Stores (NACDS), noted that if scheduled cuts in discretionary spending go forward in several months, pharmacies could face further reductions in reimbursements. “If sequestration cannot be avoided, pharmacies would experience reimbursement reductions for Medicare Part B drugs and immunizations,” she wrote. “In addition, Medicare Part D plans facing cuts would likely reduce pharmacy reimbursement, too.”
 
More broadly, the bill achieves the following: