LTC pharmacies provide specialized services for vulnerable patients in long-term care. But without a critical fix to the broken LTC pharmacy payment model before January 1, 2026, many will not survive.
Long-term care (LTC) pharmacies deserve fair payment and a level playing field to negotiate with Medicare Part Plans (PDPs) and pharmacy benefit managers (PBMs). This is the only way to assure essential pharmacy services for the millions of Americans who rely on long-term care.
Lower drug prices are good for consumers, but the recent Medicare policy changes driving them have unintended consequences for LTC pharmacies, facilities, and patients, threatening access to medicines and essential pharmacy services, increasing costs, and encouraging more anticompetitive consolidation in health care.
The impact on LTC pharmacies will be severe unless Congress acts swiftly. Many small LTC pharmacies—which represent more than 90% of the sector—will be forced to close their doors in 2026 without a solution to this looming crisis.
New policies included in the American Rescue Plan and Inflation Reduction Act intended to lower drug prices unintentionally threaten the future of many LTC pharmacies and the millions of vulnerable patients they serve.
Given the way Medicare Part D Plans and PBMs force LTC pharmacies to subsidize inadequate payment for their specialized services with revenues from expensive brand-name drugs, these well-intentioned policy changes inadvertently break the LTC pharmacy payment model. LTC residents rely heavily on insulin, inhalers, and 8 of the first ten drugs subject to Medicare-negotiated prices, leaving LTC pharmacies to face unsustainable financial losses from dispensing these medications.
This problem is unique to LTC pharmacies because they rely on Medicare Part D for more than 75% of their revenue and do not benefit from retail sales that traditional pharmacies use to offset losses from inadequate PBM reimbursements.
If the flawed payment model isn’t fixed, most LTC pharmacies may not survive, and many seniors will lose access to essential services. The problem will only get worse as more branded drugs are subject to price negotiations each year.
New policies included in the American Rescue Plan and Inflation Reduction Act intended to lower drug prices unintentionally threaten the future of many LTC pharmacies and the millions of vulnerable patients they serve.
Given the way Medicare Part D Plans and PBMs force LTC pharmacies to subsidize inadequate payment for their specialized services with revenues from expensive brand-name drugs, these well-intentioned policy changes inadvertently break the LTC pharmacy payment model. LTC residents rely heavily on insulin, inhalers, and 8 of the first ten drugs subject to Medicare-negotiated prices, leaving LTC pharmacies to face unsustainable financial losses from dispensing these medications.
This problem is unique to LTC pharmacies because they rely on Medicare Part D for more than 75% of their revenue and do not benefit from retail sales that traditional pharmacies use to offset losses from inadequate PBM reimbursements.
If the flawed payment model isn’t fixed, most LTC pharmacies may not survive, and many seniors will lose access to essential services. The problem will only get worse as more branded drugs are subject to price negotiations each year.
