New Analysis Finds the Medicare Drug Price Negotiation Program Threatens Financial Stability of American Pharmacies
The analysis warns that the implementation of the MDPNP represents a fundamental shift in pharmacy operations and reimbursement practices for many of Medicare's most widely used prescription brand medicines. Under the MDPNP, pharmacies face lost revenue and significant disruption in cash flow — without adequate protection to help absorb these changes.
Findings from the analysis further revealed that these policy changes will result in:
Payment delays: Pharmacies will face prescription payment settlement delays of at least seven additional days for negotiated drugs, exceeding current Medicare Part D prompt pay requirements.
Weekly cash flow shortfalls: Each pharmacy stands to lose nearly $11,000 in weekly cash flow due to delayed payments.
Annual revenue losses: Pharmacies could forfeit an average of $43,000 in annual revenue — roughly equivalent to a pharmacy technician's yearly salary.
These financial impacts could lead to significant consequences, such as pharmacy closures, reduced medication availability and staffing cuts, ultimately causing disruptions for seniors at the pharmacy counter. The financial disruptions come at a time when community pharmacies are closing at an unprecedented rate. Over 7,000 pharmacies have closed in less than 10 years.
Furthermore, as explored in the analysis, 340B covered entities may have less revenue available for charitable care or expanded health care services (i.e., dental care) as a result of the MDPNP. Additionally, while 340B contract pharmacies may receive a fixed amount per 340B prescription, the reduction in revenues may result in reduced dispensing fee payments or carveouts (i.e., removal of MFP drugs from 340B relationships between covered entities and contract pharmacies).
'Like many government programs, the intent is good, but the unintended consequences undermine the goal,' said NCPA CEO B. Douglas Hoey, pharmacist, MBA. 'That's exactly the case here. Everyone wants to reduce drug costs for seniors and taxpayers. But, as our research shows, the program is structured in a way that will force many independent pharmacies out of the Medicare Part D program. Drug costs may come down, but there will be a shortage of pharmacies to dispense medicine. Seniors will be stranded without a pharmacy, and they won't get the benefit of lower drug prices.'
The MDPNP was introduced under the Inflation Reduction Act of 2022 with the stated goal of lowering Medicare prescription drug costs. The program grants Medicare the authority to directly negotiate prescription drug costs with drug manufacturers for a select number of high-cost drugs covered under Medicare Part D (outpatient drugs) and, later, Medicare Part B (physician-administered drugs). Medicare has already completed negotiation for the first 10 medications whose prices, known as the Maximum Fair Price (MFP), will take effect Jan. 1, 2026. As established by the Inflation Reduction Act, additional drugs will be subject to negotiation each year. Earlier this month, the Centers for Medicare & Medicaid Services announced the 15 drugs that will be subject to negotiation in 2027. However, expanding the list of MFP drugs is already raising concerns for pharmacies, as a recent NCPA member survey revealed that 93.2 percent of independent pharmacies are either considering not stocking or have already chosen not to stock one or more of the first 10 drugs included in the MDPNP.
Unpacking the Financial Impacts of Medicare Drug Price Negotiation emphasizes that pharmacies bear significant financial strain under this policy. The analysis offers several recommendations for pharmacies to mitigate risks, including establishing short-term financing solutions, closely monitoring manufacturer settlement timelines, and proactively adjusting liquidity and financing strategies — none of which address the fundamental flaws in the program's design.
With the program set to take effect at the start of 2026, implementation is already underway across all the implicated stakeholders, including pharmacies. Accordingly, NCPA strongly urges the new administration and Congress to immediately freeze implementation until robust safeguards are in place to protect both pharmacies' financial viability and seniors' access to essential medications.
About Unpacking the Financial Impacts of Medicare Drug Price Negotiation
Unpacking the Financial Impacts of Medicare Drug Price Negotiation was developed by 3 Axis Advisors, with funding from NCPA, to assess the financial and operational impact of the Medicare Drug Price Negotiation Program, as enacted by the Inflation Reduction Act, on pharmacies. The findings highlight the urgent need for reforms that protect pharmacies — especially smaller, community-based businesses — and ensure they can continue to provide critical health care services to seniors. You can read the full analysis here and executive summary here.
Founded in 1898, the National Community Pharmacists Association is the voice for the community pharmacist, representing over 18,900 pharmacies that employ more than 205,000 individuals nationwide. Community pharmacies are rooted in the communities where they are located and are among America's most accessible health care providers. To learn more, visit www.ncpa.org.
About 3 Axis Advisors
3 Axis Advisors is an elite, highly specialized consultancy that partners with private and government sector organizations to solve complex, systemic problems and propel industry reform through data driven advocacy. With a primary focus on identifying and analyzing U.S. drug supply chain inefficiencies and cost drivers, 3 Axis Advisors offers unparalleled expertise in project design, data aggregation and analysis, investigative research, and public education. 3 Axis Advisors arms clients with independent data analysis needed to spur change and innovation within their respective industries. To learn more about 3 Axis Advisors LLC, visit.
Copyright Business Wire 2025.
PUB: 01/30/2025 11:25 AM/DISC: 01/30/2025 11:25 AM
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