Pharmacists group pushing for expanded ‘preferred’ Medicare networks

Source: Arizona Business Daily

At its 2016 Congressional Pharmacy Summit last week, the National Community Pharmacists Association (NCPA) prioritized a year-old bill that would force Medicare Part D benefit managers to expand their preferred networks despite concerns it would raise drug prices.

The NCPA is pushing Congress to pass the Ensuring Seniors Access to Local Pharmacies Act of 2015 (ESALPA), which requires benefits managers to accept any pharmacy into its preferred network that agrees to the terms and conditions set by those managers. Preferred networks typically offer Medicare Part D subscribers to receive lower copays than going to a pharmacy outside of the network.

Devon Herrick, senior fellow with the National Center for Policy Analysis, told Arizona Business Daily that preferred networks are at the root of how benefits managers have lowered drug costs for Medicare recipients.

“Medicare Part D drug plans … were purposely set up to be private and are administered by private firms that … drive hard bargains with drugmakers as well as pharmacies to get the price as low as possible,” Herrick said. “Part of the reason for a narrower, or preferred, network is to drive business to those firms who are willing to cut you a better deal.”

In a statement on the bill, the NCPA argued that expanding the network would increase competition, which would drive down prices.

“Many patients in these plans, whether they like it or not, must change pharmacies or pay higher copays to stick with their current pharmacy,” the group wrote. “Independent community pharmacies are often excluded by health plans from such arrangements.”

Herrick said, however, that the Federal Trade Commission (FTC) has already disagreed with that idea. In a 2014 memo responding to a request from the Center for Medicare and Medicaid Services, the FTC said that adding what is commonly referred to as an “any willing pharmacy” provision would impact not only Part D subscribers, but all American consumers.

“If some subset of plans are not achieving the expected costs savings, that does not mean that the basic premise of selective contracting is unsound or that an any willing pharmacy rule is the solution,” the FTC wrote.

With 1.1 million people enrolled in Medicare programs, Arizona ranks as the 18th largest Medicare market in the U.S., according to an analysis from the Kaiser Family Foundation.

Proponents, however, argue that part of the bill’s focus is to increase access for seniors with mobility and transportation issues, for whom a preferred pharmacy is not close enough. The NCPA and others point to a 2014 report from Centers for Medicare and Medicaid Studies which found 54 percent of Part D “preferred” networks didn’t meet government “accessibility” standards.

Herrick, however, said the problem is overstated.

“I talked to seniors who I know and I’ve asked them, ‘How narrow is your network on your drug plan?’” Herrick said. “And they have all told me, ‘It is not narrow at all.’ Every pharmacy in my neighborhood is in the network.”

The latest effort by the NCPA is unique in its federal focus, Herrick said. He said pharmacies have typically worked to affect pricing through amendment or passage of state-level laws. In Oklahoma, for example, pharmacies groups push to pass a law Maximum Allowable Costs to be contested for being too low.

“Medicare Part D is a federal program, but I’ve seen several similar type of cat grabs at the state level in state after state,” Herrick said.

ESAPLA was introduced by U.S. Rep. Griffith Morgan (R-VA) in February 2015. The bill has sat with the House Subcommittee on health since Feb. 27, 2015..”