State News

NCPA Stands Up for Texas Pharmacies That Provide LTC Services

by John Norton | May 31, 2016

Earlier this month the National Community Pharmacists Association (NCPA) sent a letter to the Centers for Medicare and Medicaid Services (CMS) imploring the agency to reject a Texas Medicaid state plan amendment proposal for long-term care (LTC) pharmacies.

NCPA expressed concern with the proposed move to (National Average Drug Acquisition Cost) NADAC minus 2.4% for both brand and generic prescription drugs for LTC pharmacies. According to the 2015 NCPA Digest, sponsored by Cardinal Health, there are nearly 1,600 independent community pharmacies in Texas. If the Lone Star State mirrors the rest of country, approximately 40% of that LTC market is serviced by independent community pharmacies, and over half have a service radius of 50 miles.

NCPA believes the methodology used to arrive at the pricing benchmark is flawed to begin with because:

This proposal is based off of data provided by only closed-door LTC pharmacies who do not provide any retail services. Many of our LTC members are considered ‘combo shops' that provide pharmacy services to both retail customers and LTC facilities.

In addition, Texas wants to set the dispensing fee at $7.93 + 1.96% of the ingredient costs for all pharmacies. As a result, one unfortunate pricing proposal is being joined by another misguided proposal. The problem is this figure does not acknowledge that providing prescriptions to LTC patients is a more expensive proposition than in a retail pharmacy setting. For example, a 2013 Virginia Commonwealth University study commissioned by NCPA's LTC Division found that, "LTC pharmacy costs to dispense are, on average, 25% higher than that of a retail pharmacy."

NCPA has consistently explained to elected and regulatory officials about the unintended consequences of severe cuts to pharmacy reimbursements. Those initial savings will likely pale in comparison to the potential back-end costs, especially in a program like Medicaid that often serves the most vulnerable populations of patients. The financially unsustainable squeeze will cause independent community pharmacies to either limit or completely exit a program like Medicaid. When those hard decisions occur, patients lose access to these pharmacies, medication adherence plummets, and the resulting health complications can lead to expensive emergency room visits or hospitalizations. It's a classic case of being penny-wise and pound foolish. Whether in Texas or elsewhere, extreme caution should be exercised when flawed proposals are submitted to cut pharmacy reimbursements, because all too often those cuts are too deep.