Study Shows Medicare Savings When Local Pharmacies Fill 90-Day Prescriptions

PRESS RELEASE

2/26/13

A newly conducted study of millions of Medicare Part D prescription drug event (PDE) data has 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.

With funding from the National Community Pharmacists Association (NCPA), Norman V. Carroll, PhD, a Professor at Virginia Commonwealth University, reviewed PDE records for 2010 that were supplied by the U.S. Centers for Medicare & Medicaid Services (CMS). The analysis found:

• Lower costs at community pharmacies. For 90-day prescriptions filled by local pharmacies, costs per unit of medication, as compared with mail order pharmacies, were lower for total costs ($0.94 vs. $0.96), Medicare costs ($0.59 vs. $0.63), and all third-party payer costs ($0.64 vs. $0.72). Because of co-pay differentials set by health plans to incentivize mail order usage, patient costs at retail were higher for patients ($0.31 vs. $0.24 at mail order) even though the total cost of those prescriptions was less at retail.
• Greater use of more affordable generic drugs at local pharmacies. Appropriate substitution of generic drugs for pricier brand-name drugs in 90-day prescriptions occurred more often in community pharmacies—91.4 percent of the time vs. 88.8 percent at mail order.

"Local community pharmacists not only offer expert medication counseling face-to-face, but they also provide affordable access to prescription drugs and are leading the way in the appropriate use of lower-cost generic drugs," said NCPA CEO B. Douglas Hoey, RPh, MBA. "This study blows a huge hole in the PBMs' arguments that more mail order is the right prescription for Medicare Part D savings."

"For policymakers and health plan sponsors, these findings offer several recommendations:

• "First, allow local pharmacies to fill 90-day prescriptions. Currently, Medicare Part D drug plans are only required to have some retail pharmacies in their networks provide 90-day supplies. Instead of expanding 90-day mail order, as the PBMs would advocate, this study suggests the opposite—that providing 90-day supply at retail is the right policy to save Medicare money. Those plans that rely solely on mail order for 90-day supplies may very well be overpaying for prescription drugs both in terms of total costs and foregone generic drug savings.
• "Second, do not adopt co-pay levels that incentivize the use of mail order pharmacies based on exaggerated and illusory cost-savings claims. Promoting the use of mail order pharmacies did not save either Medicare or third-party payers one penny, according to this study. Instead, plans should implement neutral co-pay designs that foster competition among all pharmacies based on service, to the benefit of patients.
• "Third, support patient choice and access to local pharmacies. They offer additional health services like immunizations and make vital contributions to local jobs and tax revenue."

Mail order pharmacies are primarily owned and operated by pharmacy benefit managers (PBMs), which also administer prescription drug plans for Medicare, employers and other plan sponsors. This dual role as both provider and program manager is an inherent conflict of interest. The companies have paid out approximately $370 million in recent years to settle claims such as fraud and deceptive practices.

Previous nationwide surveys have documented patients' preference for local pharmacies and lower satisfaction with mail order pharmacies. A January 2013 national survey of 669 Medicare Part D beneficiaries revealed hundreds of complaints about mail order pharmacies and opposition among seniors to being required to use mail order. The poll echoed the findings of the J.D. Power and Associates 2012 U.S. Pharmacy Study and a 2012 Walgreens survey that four out of five patients prefer to obtain their medications at a local pharmacy.