Study finds collective bargaining rights for independent pharmacists could cost Medicare and commercial payors $29.6 billion over five years

A key legislative priority championed by the independent drugstore lobby, HR 971, that would provide pharmacists with new, sweeping collective bargaining rights could increase prescription drug costs for Medicare and commercial payors by 11.8 percent, or $29.6 billion, over five years, according to a new analysis from CRA International released by the Pharmaceutical Care Management Association (PCMA).

PCMA is the national association representing America's pharmacy benefit managers (PBMs), which administer prescription drug plans for more than 210 million Americans with health coverage provided through Fortune 500 employers, health insurance plans, labor unions, and Medicare Part D.

"The independent drugstore lobby wants a license to collude so that it can demand higher prices from patients and payors and reap more profit for themselves," said PCMA President Mark Merritt. "Independent pharmacists already have a number of legitimate avenues to negotiate with PBMs. This legislation would instead result in employers reducing health insurance coverage for their employees to compensate for increased prescription drug costs."

Among the key findings from the CRA International analysis of HR 971, "the Community Pharmacy Fairness Act," sponsored by Reps. Anthony Weiner (D-N.Y.) and Jerry Moran (R-Kan.):

-- Direct costs to payers, including commercial payors and Medicare could increase by $29.6 billion over five years, an increase of 11.8 percent of prescription costs at independent pharmacies; -- Costs to the Medicare Part D program and its beneficiaries could increase by $6.4 billion over five years as a result of new pharmacy collective bargaining rights; and -- Cost increases resulting from collective bargaining would likely be passed on to health insurers, employers, and consumers. As costs increase, employers would likely scale back, reduce, or even eliminate health care coverage for their employees.

Both Medicare and private insurers require pharmacy network access standards for their enrollees that already provide pharmacies -- particularly rural pharmacies -- extensive negotiating power with PBMs. In addition, most independent pharmacies already belong to large purchasing groups known as Pharmacy Service Administrative Organizations (PSAOs) that enhance their negotiating power.

"Calls for antitrust exemptions to allow independent pharmacies to negotiate collectively are unwarranted," said Monica Noether of CRA International. "The Federal Trade Commission and Department of Justice monitor competition and provide means of redress for legitimate antitrust complaints. In providing a legislative circumvention of the FTC and DOJ, antitrust exemptions for independent pharmacies would place inflationary pressure on pharmaceutical reimbursements increasing costs for Medicare Part D alone by up to $6.4 billion over five years."

http://www.pcmanet.org