Drug Pricing Law Worsens Access Crisis for Nursing Homes, Long-Term Care Pharmacies Amid Huge Reimbursement Gap

DATE: April 1, 2026

By Amy Stulick | Skilled Nursing News

With reimbursement for brand name drugs sharply decreasing under the Inflation Reduction Act, long-term care pharmacies are having to make difficult decisions that will have a lasting impact on nursing home residents.

The law disrupts long-term care pharmacies’ business model, capping payments for certain high-use brand name drugs through maximum fair price rules, said Alan Rosenbloom, CEO with the Senior Care Pharmacy Coalition (SCPC). Ripple effects from the law are already being felt, affecting margins and, in turn, services.

Such caps eliminate the margin long-term care pharmacies relied on from brand name drugs, he said. And although manufacturers are supposed to reimburse pharmacies for differences between acquisition cost and maximum fair price, the new system removes the profit cushion that subsidized losses elsewhere.

Financial fallout from the law could have serious implications for patient care and access, Rosenbloom said, with pharmacies forced to cut services like reducing delivery frequency. This can delay medications and potentially lead to hospitalizations, he said.

And in rural areas where service is more expensive, pharmacies may withdraw entirely.

“I think there is a continuing risk that the long-term care pharmacy market collapses. We had a precarious reimbursement model before the [Inflation Reduction Act] … the law is accelerating the collapse of the market,” said Rosenbloom. “It really does demonstrate that the payment model is unsustainable.”

Nursing homes are legally required to provide some level of pharmacy services, Rosenbloom said, which means losing access to long-term care pharmacies could mean nursing home closures. And most nursing homes rely on external “closed door” long-term care pharmacies rather than operating their own, said Chad Worz, CEO of the American Society of Consultant Pharmacists (ASCP).

Pharmacy industry groups are advocating for three main solutions to address potential access issues: the addition of a temporary supplemental payment to offset losses during this year and into 2027, regulatory reforms to rebalance negotiating power between pharmacies and pharmacy benefit managers, and an overhaul of the long-term care pharmacy payment model to ensure sustainability.

“Our organization and our members want affordable access to the treatments that people need,” said Worz. “These lower prices are helping patients get more for their dollar, but we also want them to have access to what they need.”

The cost of pharmacy services

Pharmacies are losing about $15 per prescription on affected drugs, which has contributed to an overall revenue decline of 20% to 25% this year alone, Rosenbloom said. Total revenue losses could exceed 30% over two years, with substantial drops in profitability.

About 78% of long-term care pharmacies say they will have to lay off staff as a result, while 84% plan to reduce services or stop serving certain facilities or regions altogether. More than 80% of nursing home residents will be affected by these changes, according to a survey conducted by pharmacy associations in December.

Rosenbloom expects large pharmacy companies to survive and may ask for higher rates being the only game in town.

“Larger players are the ones that are likely to survive because they have more efficiencies in their operations,” said Rosenbloom. “As there is more consolidation in the pharmacy sector, it’s likely to mean that pharmacies will demand higher payment rates from facilities, and facilities will have fewer options to shift to other pharmacies, which will increase facility costs, increase Part A spending.”

Over time, nursing homes will have to pay more for pharmacy services due to consolidation among long-term care pharmacies, Rosenbloom said.

Some manufacturers are lowering drug prices broadly to match maximum fair price as well, reducing revenue across other payment streams. And, delays in manufacturer reimbursement payments creates cash flow problems too – pharmacies are forced to rake on debt and incur interest costs in these cases, Rosenbloom said.

Impacts of the law and other pressures are still being measured, but early data suggests there will be further declines in 2027 when more drugs become subject to pricing rules.

A strained business model

Overall, the business model is strained, and the sector loses billions annually on generic drugs and services, Rosenbloom said. Historically, such losses were offset by higher margins on brand name drugs, which allowed pharmacies to remain financially viable with modest profit margins of 2% to 3%.

On top of the cost of drugs, the nursing home population is known for having a high degree of cognitive impairments, needing assistance in two or more activities of daily living while also heavily relying on prescription drugs, Rosenbloom said. Vendors in the sector face more responsibility and oversight, requiring more resources than a typical pharmacy.

“The average resident has between 12 and 13 prescriptions that have to be managed,” said Rosenbloom. “There’s a high degree of need and a lot of complexity around the drugs that a patient is taking. You have to make sure that they’re getting the drugs that they need at the right time, in the right dose, but you also have to take into account the risk of adverse drug interactions.”

There are also a variety of requirements imposed on long-term pharmacies, requirements imposed by law that make service different from normal retail pharmacies, Rosenbloom said.

Worz added that long-term care pharmacies function much like hospital pharmacies than retail pharmacies, offering specialized packaging including IV medications, emergency drug supplies and clinical oversight. Nursing homes often rely on a single pharmacy for efficiency and safety, so they don’t switch between multiple pharmacies for different patients.

This business model limits long-term care pharmacies’ ability to walk away from unfavorable insurance contracts, Worz said, and little negotiating power when reimbursement is inadequate.

In terms of payment, long-term care pharmacy revenues are split mostly between Medicare Part D at 75% and then 20% for Medicare Part A, Rosenbloom said. And, 90% of drugs are generics, with pharmacies getting reimbursed based on ingredient cost. Then there’s a dispensing fee, which should theoretically cover the cost of services.

“The ingredient cost reimbursement for generics is essentially break even. Then we look at the dispensing fee, and it costs about $15.50 for long-term care pharmacies to dispense a drug in compliance with the legal requirements,” said Rosenbloom.

But Part D only pays a dispensing fee of $3.90 on average, creating a large gap between coverage and what dispensing drugs actually costs in a nursing home, he said.

Read the full article on Skilled Nursing News here.