Despite concerns among some pharmacy leaders that the Bush Administration's new prescription drug benefit for seniors will lower the industry's revenues, officials at the Centers for Medicare and Medicaid Services (CMS) have concluded that just the opposite is likely.

"While the Medicare prescription drug benefit is expected to have several effects on pharmacy revenue, both positive and negative, our estimate is that the impact on the overall pharmacy industry, including small pharmacies, will be positive," the officials concluded.

In proposed new rules advanced to implement the program by 2006, CMS acknowledged that the bad news for pharmacy is that reimbursement levels under the new Medicare program will almost certainly be lower than those set by private sector third party insurers. As seniors move from these private Rx plans to Medicare coverage, the agency said that overall prescription drug revenues among the nation's pharmacies could drop by as much as 1.1%.

According to CMS, though, the good news for pharmacy is that this decline will be more than offset by increased drug utilization among seniors?a development which could boost the industry's Rx sales between 1.7% and 3%.

The bottom line: federal officials expect that the new Medicare drug benefit will produce a net increase in prescription drug spending at community pharmacies of at least 0.6%, and perhaps as much as 1.9%.