Restore pharmacy choice in Medicare drug plans

B. Douglas Hoey“Underlying most arguments against the free market is a lack of belief in freedom itself.”
- Milton Freidman

There was no more ardent defender of the free market than renowned economist Milton Friedman. He always decried the intrusion of forces that unduly influenced the business cycle, where success or failure is supposed to be determined by performance. Occasionally, distorted markets can return to a normal state when corrective action is taken. This is currently needed with Medicare.

In this case, the Centers for Medicare and Medicaid Services (CMS) shows that it is allowing manipulation of the free market in the way it continually signs off on exclusionary “preferred pharmacy” plans in the Medicare Part D prescription drug program. These plans offer co-pay discounts to Medicare beneficiaries who use a pharmacy that the plan chooses. Other pharmacies are disadvantaged, especially locally owned community pharmacies that are not offered the opportunity to participate in these preferred plans in the first place.

Confusion and worse

The terminology and sorting between “preferred pharmacies” and “network pharmacies” has confused beneficiaries and pharmacies alike. Making matters worse, some beneficiaries have had to switch from an independent community pharmacy they have used for decades to a less convenient Big Box pharmacy, which may be lacking in services or knowledge of that senior’s medication needs. In rural areas, beneficiaries may face a 20-mile trip to reach a “preferred” pharmacy, particularly in the approximately 1,800 rural communities where independent pharmacies are the sole pharmacy providers.

Congress has already passed “any willing provider” into law; however, it has not been enforced. In January, CMS announced that it was considering allowing any willing pharmacy willing to accept the same terms and conditions to participate in a preferred network, but unfortunately, as a result of a political fight, CMS was forced to set aside enforcement of “any willing provider” for now. It became collateral damage in an election-year controversy primarily fought over an unrelated proposal to ease requirements that Medicare drug plans cover certain “protected class” drugs.

Legal obligation

Now more than ever, action by Congress and CMS is needed to alleviate concerns about beneficiary access.

Congress should enact legislation making it clear that community pharmacies can participate as “preferred” providers if they are willing to accept the terms and conditions consistent with the original law. Significant bipartisan support already exists for the “any willing provider” provision in the U.S. House of Representatives, where 28 members organized by Representatives Morgan Griffith (R-Va.) and Peter Welch (D-Vt.) signed a letter to CMS about this issue.

In making the case, proponents should point to the support of consumer-oriented groups such as Families USA and Medicare Rights Center, as well as the California Alliance for Retired Americans (CARA), National Consumer League, the Service Employees International Union (SEIU), and U.S. PIRG.

In addition, CMS has a legal obligation to address this issue. Although “preferred pharmacy” plans are championed as cost-savers, Medicare officials studied the data and found that in many instances preferred plans were actually increasing the costs to Medicare and taxpayers. This violates the Social Security Act requirement that such arrangements not increase the costs to the government. CMS is required to uphold that law.

Greater need

The National Community Pharmacists Association (NCPA) conducted a survey of 400 independent community pharmacies that provided additional insight from those working on the front lines of healthcare delivery. Over 90% of respondents said that drug plans do not offer them the opportunity to participate as preferred pharmacies, and nearly 100% claimed that their patients experienced confusion about the differences between preferred and non-preferred pharmacies.

More competition should drive costs down. Furthermore, with 10,000 baby boomers becoming eligible for Medicare Part D each day, there is a need for more, not fewer participating pharmacy providers. Consequently, the free market would be restored for all businesses, no matter their size, and for consumers who wish to choose the pharmacies they frequent.

Exclusionary preferred pharmacy plans are not only an affront to the main pillars of the free market; they weaken the delivery of healthcare services to seniors without providing the purported savings they tout.

B. Douglas Hoeyis CEO of the National Community Pharmacists Association (www.ncpanet.org).