CMS Should Protect the Financial Health of Pharmacies When Implementing the IRA

By Tim Dube, SVP, Policy and Regulatory Insights, Pharmaceutical Care Management Association

If the community pharmacy lobby is right, America's Medicare beneficiaries may not be able to access the 10 medications selected for government negotiations through the Inflation Reduction Act (IRA).

Make no mistake, under the regulatory construct devised by the Biden Administration, pharmacies are at the mercy of drug companies for payments for these drugs. If that happens, 90 percent of pharmacists recently surveyed by the National Community Pharmacy Association stated they will not dispense the 10 prescription drugs for which the government recently negotiated prices.

Unfortunately, the pharmacy lobby is mistakenly pointing the finger at pharmacy benefit managers for this situation. The law clearly holds that drug companies are solely responsible to reimburse pharmacies for any difference between the price they acquire the drugs for and the new Medicare price set by the government.

It's become all too common to blame PBMs for pharmacy-related issues without evidence to support the criticisms. The current situation is particularly unproductive and concerning because PBMs have nothing to do with the reimbursement pharmacies receive for the drugs with prices set by the Medicare program.

As background, the Centers for Medicare & Medicaid Services (CMS) issued final guidance in October to guide the IRA's drug negotiation provision, set to begin in 2026. This provision requires that Medicare beneficiaries have access to the price set by Medicare for 10 drugs starting on January 1st. But because Medicare can't force big drug companies to actually drop their list prices, they are achieving this by putting the burden on pharmacies to chase down discounts that big drug compares will be loath to provide. In short, CMS intentionally designed a program where pharmacies are at the mercy of big drug companies to make them whole when patients fill prescriptions for drugs with CMS-set prices.

The IRA prohibits Medicare Part D plans from reimbursing pharmacies more than the CMS-set final drug price, which is in place to ensure that beneficiaries receive the full value of CMS's negotiated price. PBMs will then pay pharmacies fees for dispensing drugs along with reimbursing the amount set by the Medicare program.

PBMs and the Medicare Part D plans they work for value a strong relationship with pharmacies and are committed to helping patients access the drugs they need. We share the concern of pharmacies and have called this out numerous times for CMS and offered to be helpful in finding a solution that protects access for America's seniors. This situation could have been avoided and was easy to see from a mile away. In fact, in our comments to CMS on the proposed guidance to implement the pharmacy reimbursement design, we said:

"Pharmacies should not be exposed to potential financial shortfalls because of a [drug] manufacturer's preference on how to implement a statutory obligation. Moreover, any friction that pharmacies encounter in accessing the MFP will necessarily be felt by beneficiaries as pharmacies may adjust their drug purchasing and inventory policies, thereby affecting beneficiary's access."

In addition, earlier this year we also raised with CMS that pharmacies may find that the estimated refund amounts are lower than expected, or that manufacturer disputes are burdensome and time consuming, and may decline to participate in all or some Part D networks going forward.

We urge CMS to prioritize developing a system where pharmacies are not at the mercy of drug companies who can delay and dither on reimbursing pharmacies under the final guidance. CMS should develop a simpler, fairer model for pharmacies and the patients they serve to ensure that their access to prescription drugs is uninterrupted. PBMs have offered recommendations for how this can happen, and we stand ready to be collaborative partners in ensuring these obvious and very serious consequences are addressed appropriately.

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PCMA is the national association representing America's pharmacy benefit companies. Pharmacy benefit companies are working every day to secure savings, enable better health outcomes, and support access to quality prescription drug coverage for more than 275 million patients.