Experts fear harm to long-term care pharmacies as CMS touts renegotiated drug prices

While the federal government on Thursday touted billions in savings that seniors could expect from renegotiated lower drug prices, pharmacies that supply long-term care facilities are warning of dire consequences.

The Centers for Medicare & Medicaid Services announced Thursday morning that it had reached an agreement with drug manufacturers to reduce the list prices that Medicare pays for 10 of the most expensive drugs commonly prescribed to seniors by 38 to 79 percent.

The medications are: Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara as well as Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen and NovoLog PenFill.

The new prices will come into effect on January 1, 2026.

In a press release from Health and Human Services (HHS) Secretary Xavier Becerra, a congressional budget expert predicted that the drug negotiations would result in savings of about $100 billion over 10 years, including $3.7 billion in the first year alone.

“Today we are announcing that we will save Medicare an estimated $6 billion in the first year of our negotiations and that Americans who pay out-of-pocket will save an additional $1.5 billion in the future,” Becerra said. “Giving Medicare the ability to negotiate prices not only strengthens the program for future generations, but also puts a stop to skyrocketing drug prices.”

Patients satisfied, providers skeptical

Consumer advocates such as AARP welcomed the announcement.

“AARP members from across the political spectrum have overwhelmingly identified lowering prescription drug costs as their top concern – and this first round of Medicare price negotiations will provide financial relief to millions of older Americans,” Nancy LeaMond, AARP's executive vice president and chief advocacy and engagement officer, said in a statement.

But leading advocates of long-term care pharmacies warned that while they support cutting costs for seniors, the deep discounts would put even more pressure on these businesses, which are already struggling to remain profitable.

“Our financial impact studies predict that these cuts will make it difficult for many long-term care pharmacies to stay in business and meet the unique needs of their patients,” said Alan Rosenbloom, president and CEO of the Senior Care Pharmacy Coalition, in a press release.[T]The lower prices will take effect against the backdrop of a perverse Medicare Part D reimbursement model driven by the increasingly abusive practices of pharmacy benefit managers.”

Long-term care pharmacies receive reimbursement from pharmacy benefit managers (PBMs) for about 25% of the costs incurred to provide legally mandated services. Rosenbloom said this payment structure leaves pharmacies relying on revenue from high-cost drugs to stay in business.

Drugs with the greatest hits

The biggest discount is for Januvia, used to treat diabetes. A 30-day supply for a Medicare Part D beneficiary costs $113, 79% less than the list price of $527, according to the CMS fact sheet released with the announcement. Last year, 843,000 Part D beneficiaries used the drug. The smallest discount is for Imbruvica, used to treat blood cancer. Its list price is reduced by 38% from $14,934 to $9,319 for a 3-day supply.

The most commonly prescribed drug – Eliquis, used to prevent and treat blood clots – was taken by nearly 4 million Part D enrollees last year and costs $231 for a 30-day supply, according to the fact sheet, after a 56% discount from the list price of $521. Jardiance, used to treat diabetes, heart failure and chronic kidney disease, is discounted 56% from the list price of $573 for a 30-day supply to $197. It was prescribed to 1.8 million Part D enrollees last year.

Overall, the 10 drugs accounted for about 20% of total Medicare Part D spending last year, and seniors enrolled in the program spent $3.4 billion out-of-pocket on them in 2022, the CMS press release said. Total spending on the selected drugs under Part D more than doubled from 2018 to 2022, according to the agency.

CMS is expected to announce up to 15 additional drugs by February 1, 2025, as part of a second round of negotiations to reduce drug costs. President Joe Biden vowed in his last State of the Union address to end Big Pharma's stranglehold on prescription drug prices in March 2024.

Rosenbloom previously said McKnights that prices for inhalers used by COPD patients are expected to fall next year, while insulin prices have already fallen by 70% in many drug lists.

PBMs mean trouble

In July, SCPC launched Save Senior Rx Care, a nationwide campaign to raise awareness of the significant costs long-term care pharmacies incur that commercial and independent pharmacies do not incur. That same month, the Federal Trade Commission released a report finding that six of the largest PBMs control nearly 95% of all prescriptions filled in the country.

This concentration of power has caught the attention of lawmakers, but they may not realize that restricting PBM tactics while suppressing prices on in-demand drugs for seniors could pull the rug out from under long-term care pharmacies, according to a report by McKnight's Long-Term Care News.

One of these PBMs handles drug negotiations for 47% of long-term care facility residents in the United States, the American Society of Consultant Pharmacists said.

An analysis by CliftonLarsonAllen found that the average long-term care pharmacy spends more than $15 per prescription on clinical, specialty and delivery services, while Medicare Part D pays just $4 per prescription. Pharmacies tend to lose money or barely make ends meet on drug delivery, so those working with nursing home patients can offset those losses by offering the more expensive drugs, experts say.

Now that the new drug prices have been announced, LTC pharmacies can begin calculating the true impact on their bottom line, said Chad Worz, CEO of the American Society of Consultant Pharmacists, in a statement to McKnights.

“From the beginning, we have focused on the potential negative impact on patients through access to medications and on pharmacies through reduced reimbursements that make it impossible to continue operating,” Worz said. “Beyond these prices and the negotiations, this new reality has shown that a professional dispensing fee for all prescriptions, especially in long-term care, is essential. Ensuring safe patient access to necessary and life-saving medications is of paramount importance and requires the skills and expertise of a pharmacist; their services should be appropriately compensated.”