By Mark Merritt
June 20, 2014 at 5:00 am ET
The drugstore lobby is pressuring a growing number of rural lawmakers to choose between wealthy drugstore owners and Medicare seniors. The lobby wants so-called “any-willing-pharmacy” legislation (H.R. 4577) to ban the popular Medicare Part D plans that offer low premiums to seniors by partnering with lower cost pharmacies.
While lawmakers are told that this will “support community pharmacy,” the legislation’s mandate to include all pharmacies in preferred networks is really just the latest scheme to protect expensive drugstores profits while crippling the ability of pharmacy networks to offer deep discounts on Part D prescription drugs.
Entitling “any” drugstore (regardless of pricing) to join such networks eliminates any incentive drugstores have to offer discounts and eliminates discount networks.
The evidence is also clear that “any willing pharmacy” policies will raise costs on beneficiaries and the Part D program. In a recent letter to the Centers for Medicare & Medicaid Services (CMS), the Federal Trade Commission explained that preferred pharmacy networks lower costs.
The letter states:
“Requiring prescription drug plans to contract with any willing pharmacy would reduce the ability of plans to obtain price discounts.”
Even more clever is the drugstore lobby’s effort to soft-pedal this legislation by applying it to Medically Underserved Areas and Populations or Health Professional Shortage Areas. While this approach may sound reasonable on the surface, a closer look reveals several glaring problems. First, these are terms the government uses to describe areas that suffer from a shortage of providers such as doctors and dentists. It in no way measures or reflects the number of pharmacies in given areas and these areas encompass all or part of at least 75 percent of U.S. counties, not just a few distressed areas.
Secondly, there is no shortage of pharmacies. America has more pharmacies than McDonald’s, Wendy’s, Burger Kings, Pizza Huts, Taco Bells, KFCs, Domino’s Pizza and Dunkin’ Donuts combined. Third, the average pharmacy owner earns approximately $245,000 per year and doesn’t need government protections from lower cost competitors. In comparison, the average senior makes only $33,000 and can’t afford higher premiums.
The bottom line is that Medicare seniors love discount pharmacy networks. Along with providing excellent pharmacy access for seniors, the top five Part D plans with the lowest average premiums all have preferred pharmacy networks, according to an analysis conducted by Avalere Health. Of all Part D plans with national or near-national status, seven of the top 10 with the lowest average premiums have preferred pharmacy networks.
Furthermore, the Part D program has a 90 percent approval rating and has beaten original budget projections year after year. A recent survey shows that 80 percent of seniors would be disappointed if their lower cost pharmacy plan is eliminated.
If the government stops Part D plans from getting discounts from pharmacies, premiums will increase and seniors will be left to finance this windfall for pharmacy owners.
So the drugstore lobby is forcing rural lawmakers to choose between two important constituencies. On one side are a handful of affluent drugstore owners who want government protections from lower-cost competitors. On the other side are thousands of local seniors who don’t want to lose their Part D plan, can’t afford to pay drugstores more and will be less likely to vote for candidates who support legislation that increases their costs and reduces their options in Medicare.
Instead of trying to pick winners and losers, the best option is to let seniors continue to choose the Part D plans that work best for them.
Mark Merritt is the President and CEO of the Pharmaceutical Care Management Association.