Medicare Drug Benefit Will Boost Pharmacy Rx Sales, CMS Predicts

Despite concerns among somepharmacy leaders that the Bush Administration'snew prescription drugbenefit for seniors will lower the industry'srevenues, officials at the Centersfor Medicare and Medicaid Services(CMS) have concluded that just theopposite is likely.

"While the Medicare prescriptiondrug benefit is expected to have severaleffects on pharmacy revenue, both positiveand negative, our estimate is thatthe impact on the overall pharmacyindustry, including small pharmacies,will be positive," the officials concluded.

In proposed new rules advanced toimplement the program by 2006, CMSacknowledged that the bad news forpharmacy is that reimbursement levelsunder the new Medicare program willalmost certainly be lower than those setby private sector third party insurers. Asseniors move from these private Rxplans to Medicare coverage, the agencysaid that overall prescription drug revenuesamong the nation's pharmaciescould drop by as much as 1.1%.

According to CMS, though, the goodnews for pharmacy is that this declinewill be more than offset by increaseddrug utilization among seniors?a developmentwhich could boost the industry'sRx sales between 1.7% and 3%.

The bottom line: federal officialsexpect that the new Medicare drugbenefit will produce a net increase inprescription drug spending at communitypharmacies of at least 0.6%, andperhaps as much as 1.9%.