‘Devastating consequences’ if LTC pharmacy subsidy doesn’t materialize

DATE: October 28, 2025

The average long-term care pharmacy will see its operating margin decline 35% by 2027, thanks to the financial effects of Medicare’s drug price negotiation program.

That’s according to a new analysis conducted by ATI Advisory on behalf of the Senior Care Pharmacy Coalition, one of several advocacy groups asking Congress to fix what they see as an unintended consequence of drug-pricing reform. The Inflation Reduction Act was designed to lower prices for beneficiaries, but its design didn’t take into account differences in delivery to people living in long-term care settings.

“LTC pharmacies support lower drug prices for consumers. However, policymakers must address the unintended, but significant consequences these policies will have on seniors’ access to prescription drugs [and] essential pharmacy services,” Alan Rosenbloom, president and CEO of SCPC, said in a statement Monday. “This new report confirms what we already know: LTC pharmacies and the patients they serve face devastating consequences in 2026 that will worsen appreciably in 2027 without immediate relief from policymakers in Washington.” 

In 2026, when the first new, lower prices kick in on 10 high-demand drugs, ATI estimates that LTC pharmacies will see their Part D revenues drop by 57%. 

Without relief from Congress, the impact will grow when another 15 drug prices are lowered in 2027. The second-year drugs account for $1.52 billion of LTC pharmacy revenue in the analysis, versus $2.77 billion for the first-year drugs whose new prices go into effect Jan. 1.

The IRA authorized the price negotiations and ultimately resulted in capped payment formulas that subject LTC pharmacies to compensation far below current reimbursement levels.

Leaders at the Senior Care Pharmacy Coalition and the American Society of Consultant Pharmacists have previously told McKnight’s Long-Term Care News that LTC pharmacists deliver eight of the 10 drugs whose prices were negotiated in the first round. Dispensing those name-brand drugs has traditionally helped offset the government’s general preference for lower-cost generics in long-term care; the lower negotiated prices on expensive brand-name medicines undercut the delicate payment balance.

Long-term care pharmacists also often incur uncompensated packaging, safety and management costs required for nursing home compliance purposes. SCPC member pharmacies reported that just 9% of their revenue was from dispensing fees, for example.

The IRA pricing threatens that model, the pharmacy groups have warned.

ATI estimates that, after the payment change, total shortfalls for pharmacies will range from $42.85 to $54.09 per Part D claim for a negotiated drug. The higher shortfall would be if the pharmacies no longer get drug manufacturer discounts and they see lower reimbursements from pharmacy benefits managers, as widely expected.

One purpose of the ATI analysis was to help determine how much of a subsidy LTC pharmacies would need to be made whole — and protect their livelihood — when the new prices kick in.

A bipartisan bill introduced in the House in August would establish a $30 add-on payment for LTC pharmacies for each Medicare Part D prescription in 2026 and 2027. It has picked up six additional co-sponsors since September, indicating some momentum.

An earlier SCPC survey of LTC pharmacies reported that the 2026 prices alone would cause 60% of SCPC members to close pharmacies, 90% to lay off workers and 80% to reduce services to seniors in LTC facilities.

That could mean a loss of service for many seniors and for the long-term care facilities where they live.

Rosenbloom said Monday the legislation “would avert the looming crisis.” 

Read the full article on the McKnight’s Long Term Care News here