LTC pharmacies deserve fair payment and a level playing field to negotiate with Medicare Part D plans and PBMs. This is the only way to ensure essential pharmacy services for millions of Americans who rely on long-term care.
Lower drug prices are good for consumers. And Congress certainly did not intend lower prices to harm LTC pharmacies, much less threaten access to pharmacy care and services for seniors. But now Congress must act to avoid the unintended consequences these drug pricing policy changes have created.
The LTC Pharmacy Fix is the right solution to save senior access to meds. By passing this legislation, Congress will ensure that Medicare Part D payments for LTC pharmacy services better reflect the actual cost of essential and legally required services and account for cost increases over time. This commonsense solution will also address both the problem of inadequate dispensing fees and the problem of unfair contracts and predatory market practices driven by disproportionate PBM market power.
The LTC Pharmacy Fix is a targeted solution to a specific problem facing LTC pharmacies. If passed, it will ensure Part D plans (PDPs) and PBMs fairly reimburse the costs LTC pharmacies incur to comply with the Medicare and Medicaid pharmacy services requirements, including the Part D LTC pharmacy service criteria. The PDPs will be required to offer LTC pharmacies contract terms that allow LTC pharmacies nationwide to remain viable businesses.
Specifically, the legislation includes the following provisions:
LTC PHARMACY SUPPLY FEE
Congress must create a new LTC pharmacy supply fee for all drugs subject to negotiated prices. When Congress changed the Medicare Part B payment model in 2003, dispensers of certain Part B drugs suffered severe and unanticipated financial damage. Congress responded by creating a new supply fee to save the dispensers and the patients who depend on them. The same goes for the unintended consequences of well-intentioned drug pricing policies included in the American Rescue Plan and the Inflation Reduction Act on LTC pharmacies.
By creating a new LTC pharmacy supply fee on drugs subject to maximum fair price (MFP) negotiations, Congress can ensure a sustainable payment model for the essential and legally required services LTC pharmacies provide.
LTC PHARMACY-SPECIFIC PBM REFORM
Congress must adopt LTC pharmacy-specific PBM reform that gives CMS the direction and authority to level the contract negotiation playing field. Broad and meaningful PBM reform has long been needed to combat the profit-driven, predatory practices of these drug pricing middlemen. However, coupled with new Medicare Part D price negotiation policies, the need for LTC pharmacy-specific PBM reform is now crucial to keep LTC pharmacies serving the two million residents in LTC facilities nationwide.
Medicare treats LTC pharmacies differently than retail pharmacies, including how they require PDPs to establish network adequacy and how they interpret statutory and regulatory provisions. The LTC Pharmacy Fix acknowledges the essential differences between LTC and retail pharmacies by requiring CMS to define “reasonable and relevant” LTC pharmacy contract terms that will level the negotiation playing field. This will ensure PDPs and PBMs cannot continue their abusive business practices.
There is no substitute for the essential services LTC pharmacies provide to millions of patients. Many Americans will lose access to the care they need without a solution to this crisis.
Congress must act to protect LTC pharmacies and the millions of Medicare beneficiaries they serve before the first negotiated Medicare drug prices take effect on January 1, 2026.
