Medicare Drug Price Negotiation Program Sparks Concerns Over Pharmacy Viability and Patient Access
The National Community Pharmacists Association (NCPA) has issued an urgent call for the immediate suspension of the Medicare Drug Price Negotiation Program (MDPNP), citing its potential to destabilize small and independent pharmacies across the United States. A groundbreaking analysis conducted by 3 Axis Advisors, titled Unpacking the Financial Impacts of Medicare Drug Price Negotiation, reveals that the program—established under the Inflation Reduction Act of 2022—poses significant financial risks to community pharmacies. These risks could disrupt seniors’ access to essential medications and vital pharmacy services.
The Growing Threat to Pharmacies and Patients
The MDPNP represents a fundamental shift in how pharmacies operate and are reimbursed for some of Medicare’s most widely prescribed brand-name drugs. While the program aims to reduce prescription drug costs for seniors, its implementation threatens to create severe financial instability for pharmacies, particularly smaller, independent ones. According to the analysis, the financial strain could lead to widespread pharmacy closures, reduced medication availability, and staffing cuts, ultimately jeopardizing patient care.
Key findings from the report highlight the following challenges:
- Payment Delays: Pharmacies will face prescription payment settlement delays of at least seven additional days for negotiated drugs. This exceeds current Medicare Part D prompt pay requirements, creating cash flow bottlenecks.
- Weekly Cash Flow Shortfalls: Each pharmacy could lose nearly $11,000 in weekly cash flow due to delayed payments, severely impacting their ability to cover operational expenses.
- Annual Revenue Losses: Pharmacies may forfeit an average of $43,000 in annual revenue per location—equivalent to the yearly salary of a pharmacy technician. For many small businesses, this loss could be catastrophic.
These financial pressures come at a time when community pharmacies are already struggling to survive. Over the past decade, more than 7,000 pharmacies have closed, leaving many rural and underserved communities without convenient access to medications and healthcare services.
Broader Implications for Healthcare Systems
The ripple effects of the MDPNP extend beyond independent pharmacies. The analysis also highlights concerns for 340B covered entities, which rely on discounted drug pricing to fund charitable care and expanded healthcare services like dental care. Under the MDPNP, these entities may see reduced revenues, limiting their ability to provide critical services to vulnerable populations.
Additionally, while 340B contract pharmacies may receive fixed payments for each prescription, the overall reduction in revenues could lead to lower dispensing fees or the removal of Maximum Fair Price (MFP) drugs from 340B relationships between covered entities and contract pharmacies. This could further strain the healthcare safety net.
Voices from the Industry
NCPA CEO B. Douglas Hoey, a pharmacist and MBA, emphasized the unintended consequences of the program: “While the intent is good—to reduce drug costs for seniors and taxpayers—the structure of the program undermines its goals. Our research shows that many independent pharmacies will be forced out of the Medicare Part D program. Drug costs may decrease, but there will be fewer pharmacies to dispense them. Seniors will face longer travel times to access medications, and some may go without the care they need.”
The first wave of negotiated prices, known as Maximum Fair Prices (MFPs), is set to take effect on January 1, 2026. Already, concerns are mounting among pharmacists. A recent NCPA member survey revealed that 93.2% of independent pharmacies are either considering not stocking or have already decided not to stock one or more of the first 10 drugs included in the MDPNP. This reluctance underscores the financial burden pharmacies anticipate under the new system.
Recommendations and Calls to Action
The analysis outlines several strategies for pharmacies to mitigate risks, such as establishing short-term financing solutions, closely monitoring manufacturer settlement timelines, and adjusting liquidity strategies. However, these measures do little to address the program’s structural flaws. Without meaningful reforms, the financial viability of community pharmacies remains at risk.
In light of these findings, the NCPA is urging the Biden administration and Congress to freeze implementation of the MDPNP until robust safeguards are enacted. These safeguards should protect pharmacies’ financial stability and ensure uninterrupted access to medications and services for seniors.
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Why Community Pharmacies Matter
Community pharmacies play a vital role in America’s healthcare ecosystem. Representing over 18,900 pharmacies and employing more than 205,000 individuals nationwide, these businesses are deeply embedded in the communities they serve. They provide personalized care, offer immunizations, and serve as trusted health advisors. For many seniors, especially those in rural areas, community pharmacies are the most accessible point of care.
The closure of even a single pharmacy can have devastating consequences for patients who rely on it for prescriptions, consultations, and other essential services. As the MDPNP moves forward, policymakers must weigh the long-term impact on both pharmacies and the communities they support.
A Crossroads for Medicare and Pharmacy Policy
The introduction of the MDPNP marks a pivotal moment in U.S. healthcare policy. While lowering drug costs is a laudable goal, the program’s design raises serious questions about its sustainability and unintended consequences. By failing to account for the financial realities faced by pharmacies, the MDPNP risks undermining the very system it seeks to improve.
As stakeholders prepare for the program’s rollout in 2026, the NCPA’s call for a freeze underscores the urgency of addressing these issues. Policymakers must act swiftly to implement reforms that balance cost savings with the preservation of pharmacy infrastructure. Without such measures, the nation risks trading lower drug prices for reduced access to care—a trade-off that no senior should have to endure.
