CBO Analysis Suggests Allowing Pharmacies To Negotiate Contracts With Part D Plans Would Cost $681M Over Five Years

Main Category: Pharmacy / Pharmacist
Also Included In: Health Insurance / Medical Insurance
Article Date: 21 Jan 2008 - 8:00 PDT

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Legislation that would allow independent pharmacies to negotiate contracts directly with health insurers and pharmacy benefit managers in the Medicare prescription drug program would cost the government $681 million over five years, according to a Congressional Budget Office study, CQ HealthBeat reports. If the Community Pharmacy Fairness Act (HR 971) is passed, most of the cost increase over the next five years would come from an additional $540 million for the Medicare drug benefit, and $115 million in lost federal tax revenue. In addition, the cost of drugs would increase for the Federal Employee Health Benefits and Medicaid programs by $26 million, according to CQ HealthBeat.

Crystal Wright, a spokesperson for the Association of Community Pharmacists Congressional Network, noted the contrast between the CBO study and the findings of a 2007 Pharmaceutical Care Management Association report that showed the cost of the Medicare drug program would increase by $6.4 billion over five years under the measure, according to CQ HealthBeat. According to PCMA President Mark Merritt, the bill has changed slightly since that study. PCMA in a statement wrote that the measure "would give independent pharmacies a 'license to collude' to raise prescription drug prices."

According to the CBO study, drug prices at independent pharmacies would increase by 1% by 2010. The increased cost of drugs would increase premiums in group health insurance plans by less than 0.1%, with 60% of that increase offset by reductions to health insurance benefits. Wright said, "Over 1,100 independent pharmacies closed last year due to under-reimbursement" from the Medicare prescription drug benefit, adding, "Congress needs to act" (Straus, CQ HealthBeat, 1/16).

Lobbyists
In related news, The Hill on Thursday examined how the "annual battle between independent pharmacies and pharmacy benefit management companies is already nearing fever pitch." PCMA and three groups representing independent pharmacies have "been busy taking shots at each other" this month and are "spinning" the CBO report as "supportive of their positions," The Hill reports (Young, The Hill, 1/17).

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