The Hidden Reimbursement Crisis in Medicare’s Drug Price Negotiation Program

The Medicare Transaction Facilitator (MTF) program promised to make community pharmacies whole on federally negotiated drug prices.¹ Four months into operations, the data tell a different story.

Although the MTF was designed so that pharmacies recover the cost of the medication plus a dispensing fee, actual Part D dispensing fees range from $0.00 to $7.15, with a mean of $0.65.² The $7.15 figure is a Humana floor-pricing outlier on a small subset of generics in 1 region and is not representative of the broader market; MedPAC similarly characterizes typical Part D dispensing fees as a fixed dollar amount on the order of $1.³ Against a true cost of dispensing (COD) of $15.00 for retail, drawn from the 2025 National Community Pharmacists Association (NCPA) Digest reporting 2024 data, and $90.50 for specialty pharmacy, derived from the most recent national specialty cost of dispensing study adjusted for medical care inflation, the loss per claim is approximately $14.35 for retail and $89.85 for specialty at the mean dispensing fee.^4-6 Even at the maximum observed fee of $7.15, the loss remains $7.85 retail and $83.35 specialty. Table 1^2-6 illustrates these data.

This is not a rounding error; it is a structural failure embedded in the program’s design, and a continuation of the death by a thousand cuts via poor reimbursements that pharmacies absorb every day. The loss is guaranteed on every claim, with no mechanism within the current structure to recover.

This is a glaring problem for retail and specialty pharmacies alike. The design of the MTF was for all stakeholders to share in this process, but it appears the pound of flesh paid by pharmacies is being measured with someone pressing their thumb firmly on the scale. The Centers for Medicare and Medicaid Services (CMS) defines what fees should cover but has left the actual amount to be determined by pharmacy benefits managers (PBMs) in negotiation, so the result is not shocking.⁷ The fox was left to guard the henhouse, and now the chickens are all gone. If this issue goes uncorrected, there will soon be no supper on the table for Medicare beneficiaries in terms of pharmacy choice. A January 2025 NCPA national survey of independent pharmacists found that 93.2% have already decided not to stock, or are considering not stocking, 1 or more of the first 10 Part D selected drugs, and 96.5% say PBM and plan reimbursement for Medicare Part D threatens the viability of their business.⁸ This model will not be sustainable in the long run for community pharmacies that are not owned and operated by the very PBMs setting these fees.

The loss compression is far more severe at pharmacies like my own, which is in a rural location. PBMs have already gutted American pharmacy infrastructure, and the MTF could be the final coup de grâce for the rural pharmacy landscape. Between 2013 and 2022, approximately 10% of independent retail pharmacies in rural America closed, and a recent Health Affairs analysis found that more United States pharmacies closed than opened from 2018 to 2021, with independent pharmacies and those serving minority communities at greatest risk.^9,10 The newly launched University of Southern California-NCPA Pharmacy Access Initiative reports that roughly 1 in 8 US neighborhoods now meet criteria for pharmacy shortage areas, with shortage rates approaching 50% in some rural counties.¹¹ The problem with poor reimbursement is felt more acutely in rural pharmacies because we lack the volume to recover from losses. Approximately 19.2% of the rural population is over the age of 65, and Medicare beneficiaries account for roughly 32% of total retail prescription drug spending nationally.^12,13 These figures will only grow along with the medications enrolled in the MTF program, making the bleeding worse for rural pharmacies with no way to recoup these losses.

The burden compounds further for pharmacies that carry both challenges simultaneously, as mine does, where limited rural volume collides directly with the complexity and cost of specialty dispensing. When rural pharmacies close, it is not the PBMs or manufacturers who lose access to their medications; it is the Medicare beneficiaries who had nowhere else to go. In my experience, the response is to convert these patients to mail order, which only widens the gap between the beneficiary and the personalized care they deserve from their pharmacy.

To make matters worse, specialty pharmacies face additional complexities beyond their retail counterparts: cold chain logistics and specialized patient management on top of standard pharmacy operations. My specialty practice operates within a rural critical access hospital, which is exceedingly rare in the specialty market but produces meaningful patient outcomes in a forgotten area of the country. I will be honest that the COD rate of $90.50 seems a little low when most of our logistics occur in hard-to-reach places. A ranch located 50 miles from any settlement of note is going to cost more in shipping than moving packages from one neighborhood to another in any major American city.

This worsens the rural-urban divide in American health care and makes access to specialty medications far more difficult than it should be for older Americans who may not be as tech savvy as younger Americans. Most large-scale specialty pharmacies rely on call centers and technology to reach patients, but this only works if the end user can actually use those services, which the older population often struggles with. The cash-flow strain compounds the problem: an NCPA-sponsored 3 Axis Advisors analysis estimates that pharmacies dispensing MFP drugs face manufacturer refund delays exceeding 21 days, which translates into roughly $11,000 in weekly cash-flow loss and $43,000 annually per pharmacy.¹⁴

Having established the depth of this reimbursement gap, what prescriptions do we have to correct it? Pharmacists, after all, ought to have a prescription for whatever ails the profession. We need professional organizations, as well as individual pharmacists, to advocate to both federal and state officials on our behalf, guiding their efforts to ensure that whatever emerges is beneficial to the community pharmacy industry.

There are few things that fit into the category of bipartisan agreement, but anger at the health insurance industry is one of them, and it is time for pharmacy to capitalize on this moment. If we do not, there may not be a future with community pharmacy as we know it to capitalize on whatever moment may come next. The “any willing pharmacy” and “reasonable and relevant” framework has existed in Part D since program inception, but for the first time in the program’s 20-year history, the Consolidated Appropriations Act of 2026, signed into law on February 3, 2026, directs CMS to define what those terms mean, enforce them with monetary penalties of up to $10,000 per day for non-compliance, and establish an appeals pathway for pharmacies.¹⁵ This is the statutory hook the profession has been waiting for. Now is the time to bring CMS a rate floor that actually reimburses pharmacies for their labor. Pharmacists should engage in the CMS rulemaking comment process and work through the NCPA and American Society of Health-System Pharmacists to ensure that when CMS defines “reasonable,” the definition reflects the actual cost of the work we do.

There is a long tradition in pharmacy of giving services away, as we all do our very best for our patients even when it comes at a cost to ourselves and our businesses. We need to set the floor not just for ourselves but for the future of a profession in a great state of flux. We have been handed a beautiful tradition of practice that we have an obligation to preserve and pass to the next generation with the same luminosity and intensity that it was given to us. Realistically, the floor for retail and specialty should be set at $16 and $100, respectively. The $16 figure modestly exceeds the 2024 NCPA Digest cost of dispensing of $15.00, providing minimal margin for a sustainable retail dispense; $100 is similarly close to the inflation-adjusted specialty COD and aligns with peer benchmarks such as the Mark Cuban Cost Plus Drug Company $12 dispensing fee, which itself was raised from $8 in late 2024 in response to NCPA cost-of-dispensing survey data.¹⁶

The floor must also be indexed for inflation in the pharmacy sector specifically, as indexing to overall national inflation may not be sufficient to address this issue moving forward. This is a reasonable concern given that medical care prices have grown approximately 1.4 times faster than overall consumer prices between 2000 and 2024, increasing 121.3% versus 86.1% for all consumer goods.¹⁷ An inadequate floor today simply sets the stage for the same fight in 5 years, with a larger gap to close, and not indexing to a realistic inflation number only compounds the problem. These numbers are defensible and ensure that pharmacies can operate profitably to sustain the continuing operation of the business.

We are in a difficult spot in American health care, and we need to ensure that while we are fixing a broken system, we do so in a manner that actually fixes the problem rather than pushing expense onto an underrepresented part of the overall industry, like pharmacy. Unlike manufacturers, payors, and even medical providers, pharmacy lacks the lobbying clout to avoid being the medical cost scapegoat for the industry. The Federal Trade Commission’s 2 interim staff reports on PBMs, released in July 2024 and January 2025, document the structural reality: the 3 largest PBMs control approximately 80% of all US prescriptions, their affiliated pharmacies extracted more than $7.3 billion in excess revenue on specialty generic drugs alone from 2017 through 2022, and below-cost reimbursement of independent pharmacies is a recurring contractual feature.¹⁸

The current issue for pharmacy is that we have bent under the pressure of declining reimbursement for years. At some point, bending turns to breaking, and unfortunately, we are far closer to that precipice than all of us would like to admit. We must, as a profession, argue for fair and just reimbursement for our labor, or there may not be a profession to defend for much longer.

REFERENCES

1. Millman J. Operational and policy considerations in the effectuation of Medicare’s maximum fair drug prices for Part D. USC Leonard D. Schaeffer Institute for Public Policy & Government Service. October 16, 2025. Accessed June 8, 2026. https://schaeffer.usc.edu/research/medicare-drug-prices-mfp-effectuation/

2. Medicare Part D Dispensing Fees (PY2022). Milligram Health. February 2022. Accessed June 8, 2026. https://milligram-health.com/insights/2022-02-medicare-part-d-dispensing-fees/

3. Hayes T, Mejia P, Suzuki S. Generic drug pricing under Part D. Medpac. April 12, 2024. Accessed June 8, 2026. https://www.medpac.gov/wp-content/uploads/2023/10/Generic-prices-Part-D-April-2024-SEC.pdf

4. NCPA releases 2025 digest report. National Community Pharmacists Association. October 19, 2025. Accessed June 8, 2026. https://ncpa.org/newsroom/news-releases/2025/10/19/ncpa-releases-2025-digest-report

5. Cost of dispensing study. Abt Associates. January 2020. Accessed June 8, 2026. https://www.nacds.org/pdfs/pharmacy/2020/NACDS-NASP-NCPA-COD-Report-01-31-2020-Final.pdf

6. Medical care in US city average, all urban consumers, not seasonally adjusted. June 8, 2026. Accessed June 8, 2026. https://data.bls.gov/timeseries/CUUR0000SAM

7. 42 CFR § 423.100. Definitions. Accessed June 8, 2026. https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-423/subpart-C/section-423.100

8. NCPA to CMS: a third of independent pharmacies won’t carry drugs in the negotiated price program, and 60 percent more are considering dropping out. News release. National Community Pharmacists Association. January 27, 2025. Accessed June 8, 2026. https://ncpa.org/newsroom/news-releases/2025/01/27/ncpa-cms-third-independent-pharmacies-wont-carry-drugs-negotiated

9. Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies. US Federal Trade Commission Interim Staff Report. July 2024. Accessed June 8, 2026. https://www.ftc.gov/system/files/ftc_gov/pdf/pharmacy-benefit-managers-staff-report.pdf

10. Guadamuz JS, Alexander GC, Kanter GP, Qato DM. More US pharmacies closed than opened in 2018-21; independent pharmacies, those in Black, Latinx communities most at risk. Health Aff (Millwood). 2024;43(12):1703-1711. doi:10.1377/hlthaff.2024.00192

11. NCPA and USC launch first publicly available tool to identify pharmacy shortage areas across America. National Community Pharmacists Association. News release. November 4, 2025. Accessed June 8, 2026. https://ncpa.org/newsroom/news-releases/2025/11/04/ncpa-and-usc-launch-first-publicly-available-tool-identify

12. Who lives in rural America? US Federal Housing. December 23, 2024. Accessed June 8, 2026. https://www.fhfa.gov/blog/insights/who-lives-in-rural-america

13. National Health Expenditure Data. Centers for Medicare & Medicaid Services. Updated September 22, 2025. Accessed June 8, 2026. https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data

14. New analysis finds the Medicare drug price negotiation program threatens financial stability of American pharmacies. National Community Pharmacists Association. News release. January 30, 2025. Accessed June 8, 2026. https://ncpa.org/newsroom/news-releases/2025/01/30/new-analysis-finds-medicare-drug-price-negotiation-program

15. McCrear S. PBM reforms signed into law, reshaping Medicare Part D drug pricing transparency. AJMC. February 3, 2026. Accessed June 8, 2026. https://www.ajmc.com/view/pbm-reforms-signed-into-law-reshaping-medicare-part-d-drug-pricing-transparency

16. Hoey BD. Cuban’s pharmacy model—worth a shot? National Community Pharmacists Association Executive Update. Published December 6, 2024. Accessed May 6, 2026. https://ncpa.org/newsroom/executive-update/2024/12/06/cubans-pharmacy-model-worth-shot

17. Peterson Center on Healthcare and KFF. How Does Medical Inflation Compare to Inflation in the Rest of the Economy? Peterson-KFF Health System Tracker. Updated August 2024. https://www.healthsystemtracker.org/brief/how-does-medical-inflation-compare-to-inflation-in-the-rest-of-the-economy/

18. Federal Trade Commission. Specialty Generic Drugs: A Growing Profit Center for Vertically Integrated Pharmacy Benefit Managers. Second Interim Staff Report. Washington, DC: FTC; January 2025. https://www.ftc.gov/system/files/ftc_gov/pdf/PBM-6b-Second-Interim-Staff-Report.pdf