SCPC Highlights Devastating Impact of Medicare Drug Price Negotiations On LTC Pharmacies

DATE: March 7, 2024

The Senior Care Pharmacy Coalition (SCPC), the leading national voice for the long-term care pharmacy (LTC) community, released a statement today highlighting the disproportionate and devastating impact Medicare drug price negotiations will have on LTC pharmacies. This looming crisis will only be exacerbated by President Biden’s recently announced proposal to significantly increase the number of drugs targeted for annual negotiations.

“SCPC and our members support lower drug prices for consumers, but long-term care (LTC) pharmacies must not become be collateral damage in the drug pricing debate,” said Alan Rosenbloom, President and CEO of SCPC. “Negotiating Medicare Part D drug prices may lower out of pocket costs for some consumers, but it will have an unanticipated and adverse impact on LTC pharmacies. Eight of the ten drugs currently under negotiation are heavily prescribed to patients in long-term care settings and account for significant LTC pharmacy revenues. Due to the monopolistic market power and unfair trade practices of PBMs and the Part D Plans they represent, LTC pharmacies are paid less than their acquisition costs for most drugs and receive dispensing fees less than the cost of their services. LTC pharmacies must rely on thin margins from a handful of drugs just to operate. Current price negotiations materially impact their net margins and will result in LTC pharmacy reimbursements dropping to unsustainable levels, threatening our very existence.”

The Inflation Reduction Act (IRA) mandates pharmacies provide these drugs to patients at the negotiated price, which means zero margins for LTC pharmacies that dispense these medications to patients. The first round of government mandated drug prices will take effect on January 1, 2026.

“We are working hard to educate lawmakers and government officials about the dire threat posed by these new pricing policies – and the impact it could have on LTC pharmacies, which will worsen each year as Medicare adds to the list of drugs targeted for price negotiations.” added Rosenbloom. “We have a short window to assure that LTC pharmacies receive fair and adequate compensation for their services so that lower drug prices for consumers do not prevent those who need LTC from accessing essential medications. LTC pharmacies did not create high prices, or the perverse drug pricing system Medicare hopes to fix. And they shouldn’t bear the cost of fixing it. We must have a sustainable LTC pharmacy payment system that considers the unique services we provide to our patients.”

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