Medicare Drug Price Negotiations Raise Concerns for Pharmacies

The Centers for Medicare and Medicaid Services (CMS) has announced negotiated prices for 15 drugs, marking the second phase of the Medicare Drug Price Negotiation Program. This new initiative aims to provide substantial savings for Medicare, with estimates suggesting nearly $6 billion in savings for the first ten drugs and $12 billion for the entire set by 2025. These negotiated prices will take effect in January 2026. However, as the implementation approaches, various stakeholders have expressed concerns regarding the potential impact on pharmacies and patient access.

Over the past year, I have worked with the Senate Finance Committee, which oversees CMS, and witnessed significant apprehension among pharmacists and patient advocacy groups. The complexity of this negotiation program is profound, and many within the healthcare sector may not fully grasp its implications. The new payment model includes a manufacturer-issued refund, which pharmacies will receive in addition to regular reimbursements for the dispensed drugs. This model raises fears among pharmacies that the refunds may be inadequate or delayed, potentially leading them to refuse to stock or dispense these drugs altogether.

Concerns have been voiced by organizations such as the National Community Pharmacists Association and the American Society of Consultant Pharmacists. They warn that inadequate reimbursement could lead to pharmacy closures, staff reductions, and a reluctance to provide the newly negotiated drugs. A bipartisan group of 26 lawmakers has urged the Department of Health and Human Services to urgently address these issues. To this end, Representative Beth Van Duyne from Texas has introduced a bill aimed at compensating pharmacies for potential revenue losses related to this program.

While CMS has taken steps to alleviate these concerns—such as providing guidance on refund calculations and enabling pharmacies facing cash-flow issues to identify themselves—the measures may not suffice. For example, CMS has communicated to health plans that they are expected to continue coverage for the negotiated products. Despite these assurances, the financial sustainability of pharmacies remains uncertain.

The health care system must monitor the performance of Part D plans closely. Although CMS guidance emphasizes monitoring manufacturer compliance, the compliance of insurers is equally essential. By law, Part D plans must cover negotiated drugs; however, CMS guidance from May indicates that there are no explicit expectations regarding how these drugs are managed within formularies. This lack of oversight could lead to plans incentivizing the discouragement of dispensing negotiated drugs, which may result in patients being denied access to essential medications.

To ensure patient safety and maintain the expected savings from the program, CMS must implement a robust monitoring system. This should include quarterly reviews of dispensing records, wholesaler transactions, and pharmacy stock levels. If claims for negotiated drugs are denied, patients may be forced to seek alternatives, which could be more costly or less effective.

Pharmacies are at the forefront of this initiative, and their concerns are echoed loudly across the sector. A pharmacy student recently shared their hesitance to pursue a career as a community pharmacist due to the daunting reimbursement challenges. These issues are exacerbated for independent pharmacies and long-term care pharmacies, which already operate under tight financial constraints.

If pharmacies opt not to stock or dispense negotiated drugs, older adults—particularly in rural areas—may struggle to obtain vital medications. The consequences of these decisions could deepen health disparities in pharmacy deserts, where access to care is already limited.

CMS needs to act decisively. A comprehensive monitoring program should track the utilization of negotiated drugs and the financial health of pharmacies. This includes identifying trends in pharmacy closures, especially in the context of the upcoming inclusion of community oncology clinics in 2028. Ongoing partnership between CMS and pharmacy stakeholders may also yield valuable insights into the financial dynamics at play, enabling timely interventions.

As CMS prepares to launch this ambitious program in January, it must establish protocols to monitor trends in dispensing records, payment timeliness from health plans and manufacturers, and pharmacy closure rates. Delays and data lags could have severe repercussions for patient care and undermine the anticipated savings for taxpayers. With rising healthcare costs impacting patients, the need for effective oversight has never been more critical.

Congress should collaborate with CMS Administrator Mehmet Oz to facilitate a successful rollout of this program. Stakeholders across the healthcare spectrum are closely watching, eager for a resolution to the complexities surrounding Medicare drug pricing and its implications for pharmacies and patients alike.