Photo credit: Getty Images News
Photo credit: Getty Images News

President Biden in his State of the Union address last week vowed to end “Big Pharma’s” grip on prescription drug pricing and cut costs for seniors and taxpayers by another $200 million.

But the president’s plans to expand his administration’s first-ever Medicare drug price negotiations could spell big trouble for the pharmacists who support seniors living in long-term care settings, advocates warned in response.

“Americans pay more for prescription drugs than anywhere else. It’s wrong and I’m ending it,” Biden told Congress Thursday night. “For years, people have talked about it. But I finally got it done and gave Medicare the power to negotiate lower prices for prescription drugs just like the VA does for our veterans.”

In 2023, the White House began negotiating with drugmakers to determine the price Medicare will pay for 10 widely prescribed drugs used to treat heart disease, arthritis and more. Biden called them some of the costliest drugs on the market.

Drugmakers last week submitted their first counteroffer for prices, a step that is expected to kick off discussions in earnest. If all parties can agree on a maximum fair price, Medicare will start paying those new prices in 2026. The effort is highly popular with voters, especially seniors who pay for drugs out of pocket. 

And Biden Thursday said “it’s time to go further,” outlining plans to negotiate 50 drug prices annually in the future. It’s an effort he said could save taxpayers $200 billion over 10 years.

But those who represent long-term care pharmacies are warning that the drug-pricing train is speeding along without considering an important constituency: Medicare beneficiaries who receive their medications through their skilled nursing facility via a long-term care pharmacy partner.

Price cutting will have a “disproportionate and devastating impact” on the long-term care pharmacies who serve most nursing homes, because of the way they are paid, the Senior Care Pharmacy Coalition said last week.

“SCPC and our members support lower drug prices for consumers, but long-term care pharmacies must not become collateral damage in the drug pricing debate,” organization President and CEO Alan Rosenbloom said in a statement.

PBMs blamed on several levels

Rosenbloom noted that eight of the 10 drugs currently under negotiation are heavily prescribed to patients in long-term care settings and account for “significant” LTC pharmacy revenues. Losing money on those drugs, when some pharmacies already provide other drugs and services at less-than cost, could disrupt the entire LTC pharmacy sector.

“Due to the monopolistic market power and unfair trade practices of [pharmacy benefit managers] and the Part D plans they represent, LTC pharmacies are paid less than their acquisition costs for most drugs and receive dispensing fees less than the cost of their services,” he explained. “LTC pharmacies must rely on thin margins from a handful of drugs just to operate. Current price negotiations materially impact their net margins and will result in LTC pharmacy reimbursements dropping to unsustainable levels, threatening our very existence.”

SCPC, the American Society and Consultant Pharmacists and others raised these concerns as the first round of drug pricing negotiations got under way last fall, but their points have been largely ignored in the rush to move forward with the popular consumer initiative.

Courts have so far failed to stop negotiations, and another federal court Thursday seemed disinclined to intervene on behalf of pharmaceutical companies who argue the tactic established by the Inflation Reduction violates their constitutional rights.

The impact on long-term care pharmacies “will worsen each year as Medicare adds to the list of drugs targeted for price negotiations,” Rosenbloom said. 

“We have a short window to assure that LTC pharmacies receive fair and adequate compensation for their services so that lower drug prices for consumers do not prevent those who need LTC from accessing essential medications,” he added. “LTC pharmacies did not create high prices, or the perverse drug pricing system Medicare hopes to fix. And they shouldn’t bear the cost of fixing it. We must have a sustainable LTC pharmacy payment system that considers the unique services we provide to our patients.”