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Preferred Pharmacy Networks in Part D Plans

By August 5, 2013Commentary

There is a trend in pharmacy benefit plans to try to create preferred networks and narrower networks.  The Centers for Medicare and Medicaid Services commissioned an analysis of relative prices at preferred pharmacies and at non-preferred ones for Part D plan sponsors who had both preferred and non-preferred networks.   (CMS Analysis)   CMS allows Part D sponsors to offer lower cost-sharing to beneficiaries who use preferred pharmacies, but requires that offering such lower cost-sharing must not increase payments to the plans, which presumably could only happen if drug stores paid preferred pharmacies more or the lower cost-sharing increased utilization.  (As a side note, this policy of CMS’ seems counter to the CMS initiative to move to value-based purchasing.  Lower drug cost-sharing has been demonstrated in several pieces of research to increase adherence and lead to lower total health spending.)  Looking at pricing for the top 25 brand and top 25 generic drugs for March of 2012, the agency compared pricing for preferred and non-preferred pharmacies.  CMS calculated a weighted unit cost for each category of pharmacy network.  For the majority of sponsors, the aggregate weighted unit costs were lower in the preferred networks, with a range of savings from less than 1% to over 24%.  In 4 of 13 plans, however, these aggregate unit costs were higher for the preferred networks, ranging from 2% to 11% more.  The plans with higher costs in the preferred network covered about 11% of total stand-alone Part D beneficiaries, but since more preferred networks are being offered, CMS is concerned this number might grow.  CMS ended the analysis by saying it intended to consider options for rulemaking to ensure that higher prices aren’t resulting from the use of preferred networks.

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