Q&A: Medicare Price Negotiations Put Pharmacies, Patient Access at Risk | AAP 2025

The Medicare Drug Price Negotiation Program, introduced under the Inflation Reduction Act, allows the Centers for Medicare and Medicaid Services (CMS) to negotiate the prices of certain high-cost brand-name drugs in Medicare Part B and Part D. While the program's goal is to enhance medication access, a study from the National Community Pharmacists Association (NCPA) and 3 Axis Advisors highlights potential unintended consequences for independent pharmacies.¹

Q&A: Medicare Price Negotiations Put Pharmacies, Patient Access at Risk | AAP 2025 / Soru Epotok - stock.adobe.com

At the American Associated Pharmacies (AAP) Annual Conference, held April 10 to 12 in Austin, Texas, Drug Topics® sat down with Douglas Hoey, RPh, MBA, CEO of NCPA, to discuss some of the key findings from the Medicare Drug Price Negotiation Program study and what needs to change so the program does not hurt independent pharmacies.

READ MORE: Q&A: Douglas Hoey on PBM Reform, Optum Rx Cost-Plus Announcement | AAP 2025

Drug Topics: An analysis from NCPA in January found the Medicare Drug Price Negotiation Program exposes pharmacies to significant financial risk. CMS has signaled that it is willing to improve the program with help from stakeholders. What were some of the key findings from that analysis and what needs to change in the program so that it won’t hurt pharmacies?

Douglas Hoey, RPh, MBA: Just a quick background on this, because there's a lot of pharmacies that may not know that this is coming down starting January 1. Pharmacies have probably heard that the government is now negotiating for Medicare drugs, at least some Medicare drugs. Most pharmacy owners, and maybe most pharmacies, have seen the results of those negotiations, which is just the top 10 drugs that Medicare spends the most money on. They've already announced that there will be 15 more drugs starting in 2027, including Ozempic. The government has negotiated a lower price for these drugs. For example, the WAC [wholesale acquisition cost] on the drug might be close to $600 and the negotiated price is $200—I'm using those as examples, but those aren't too far off. The patient pays the $200 negotiated price, which is called the MFP, or maximum fair price. That starts on January 1. That sounds alright, except the pharmacies buying the drug from their wholesaler, at whatever is closer to that WAC level, closer to that $600 level. What NCPA has been focused on is, what will the pharmacy be reimbursed? What will the patient pay? How soon will the pharmacy get its money?

The study that we commissioned showed that pharmacies, as it's currently put forth by CMS, will be paid at least 7 to 10 days later than what they are required to be paid from the prompt pay legislation that we helped get passed 15 years ago. We're concerned about a strain on cash flow. The study found that that the cash flow could be $11000 per month, and that could result in $40000 per year in cash flow issues for pharmacies. That's a nonstarter right there. The other 2 components of this program I mentioned, the MFP, that's what the patient pays, that's what the PBM is going to pay. Then something around WAC is what the pharma company will pay. The way CMS has done this is they haven't required the PBM to pay MFP. Our concern is that they're going to pay less than MFP. The patient only pays MFP. In this example, where the MFP is $200, the patient's going to pay $200, but the PBM could pay less than $200. CMS also doesn't require what the manufacturer is going to pay. If it's $600 and the pharmacy is paying $590, the manufacturer could pay $575 or some number below.

By the way, our surveys of members have said, “Look, if I'm getting paid below my cost on these drugs, I'm not going to dispense the drug.” We think it could be a disaster waiting to happen. Our independent pharmacies dispense 34% of these top 10 drugs, so a third of all these drugs are going through independents. If the independents say they can't afford to dispense these, that's a lot of Medicare patients, who are going to have to scramble to be able to find these medications.

CMS could solve this very simply. Require manufacturers to pay WAC. Require PBMs to pay MFP. Require manufacturers and PBMs to pay the pharmacy within prompt pay rules. Three pretty simple things. Pay us at WAC. Pay us at the negotiated price. Pharmacies, I think, for the most part, would be satisfied. We're not going to be jubilant, but we'd be satisfied. CMS so far is basically taking a devil may care attitude. They're saying the marketplace will work it out. That may be. We haven't seen the contracts from the PBMs yet. It may be that the marketplace works it out, and these seniors just don't get their drugs. That, of course, is anathema to everything we stand for. If they're requiring us to dispense drugs below our acquisition cost, we have no other choice.

We will see how this plays out, but we are certainly advocating hard with CMS, with the administration, sending them these studies showing where the problems are, meeting with them, talking to members of Congress. They still seem pretty hell bent on the marketplace will figure this out. We'll see if the marketplace figures out. I hope it does. I hope manufacturers pay at WAC, and PBMs pay at MSP. If they do, things will be okay. If they don't, it's a dumpster fire.

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References

1. New Analysis Finds the Medicare Drug Price Negotiation Program Threatens Financial Stability of American Pharmacies. News Release. NCPA. January 30, 2025. Accessed April 11, 2025. https://ncpa.org/newsroom/news-releases/2025/01/30/new-analysis-finds-medicare-drug-price-negotiation-program