ALEXANDRIA, Va., June 13 /PRNewswire-USNewswire/ — Low and slow reimbursement under the Medicare Part D prescription drug plan has dramatically undermined the viability of thousands of independent community pharmacies, and driven many out of business. For the first time since the inception of the program on January 1, 2006, hard data on independent community pharmacy operations reveals the disproportionate negative impact of the program on these vital community health resources.
The National Community Pharmacists Association (NCPA) today released preliminary data from its annual NCPA-Pfizer Digest — a comprehensive financial and demographic survey of the nation’s independent community pharmacies — showing a downturn in several key economic measures for the first time in a decade. The most troubling Digest figures from 2006 are a multitude of store closings, stagnation in the average total prescription sales, and plummeting net operating income.
The only significant factor in the marketplace to explain these precipitous changes was the launch of the Center for Medicare and Medicaid Services’ (CMS) prescription drug plan under Medicare Part D. The program’s “low and slow” reimbursements force many community pharmacies to take out large loans to maintain cash flow. In this negative environment pharmacy owners have been forced to consider curtailing services or even going out of business.
“The Digest numbers paint a disturbing picture of the viability of many community pharmacies since Medicare Part D’s implementation,” said Bruce Roberts, RPh, executive vice president and CEO of NCPA. “Patient access to medication is jeopardized when stores are forced out of business by government programs. This contradicts Part D’s original intent of ensuring drug coverage to all Medicare recipients. In fact, former CMS Administrator Mark McClellan once proclaimed Part D’s ‘access requirements will only be satisfied with broad participation of community pharmacies.’ That goal can only be met if Congress passes legislation ensuring community pharmacies are paid promptly and have business negotiations rights.”
The Digest was first compiled more than 70 years ago and is supported through an unrestricted educational grant from Pfizer Inc. Surveys continue to be received and tabulated by the Seattle, Washington firm Business Resource Services, Inc. Final figures, which could show slightly different results based on a larger pool of survey responses, will be released in conjunction with the NCPA 109th Annual Convention and Trade Exposition this October in Anaheim, California.
The business model of community pharmacies has increasingly focused on both streamlining and diversification to better compete with mail order and large drug store chains. Regardless of the hardships caused by Medicare Part D, many community pharmacies continue to provide innovative services to their patients in the form of medication therapy management, compounding, and durable medical equipment among other things. According to Digest statistics, financial stability, much less growth, became more elusive in 2006 even with community pharmacies continued efforts to be health care industry leaders.
For example, in the last year the number of community pharmacies shrank from 24,500 to 23,348, which is a loss of 1,152 stores or 5 percent. After years of steady growth in the number of community pharmacies, this is a development that hurts patients and reduces competition in the pharmacy marketplace.
The Digest also revealed the average community pharmacies prescription drug sales are flat with the number rising from $3.48 million to $3.49 million in the past year. This is a significant departure from 10 years of slow but steady growth.
Every small business owner has a financial bottom line they watch meticulously. Last year community pharmacies’ average gross profits declined from 23.6 percent to 22.8 percent. A true warning sign of economic peril is revealed by net operating income being down 30 percent, from 3.7 percent to a record low 2.6 percent. Between hefty loans to maintain cash flow due to slow reimbursement, and increased pharmacy administrative cost to process Medicare Part D claims, operating expenses increased.
“Community pharmacies have always shown a remarkable ability to adapt to emerging challenges and continue to provide for the health care needs of their patients,” said NCPA President John Tilley, RPh, a pharmacy owner in Downey, California. “But Medicare Part D, as currently configured, is a challenge that can’t be overcome by sheer business acumen and ingenuity. The preliminary Digest numbers confirm the anecdotal evidence that has poured in over the past year. Part D reimbursements are bleeding community pharmacies dry. Sadly, the forecast for next year’s Digest findings will be even more bleak if CMS’ pending cuts targeting Medicaid pharmacy reimbursement cuts are not corrected.”
To view fact sheet of the preliminary Digest data go to: http://www.ncpanet.org/pdf/2006ncpapfizer-prelimdata.pdf
The National Community Pharmacists Association, founded in 1898, represents the nation’s community pharmacists, including the owners of more than 24,000 pharmacies. The nation’s independent pharmacies, independent pharmacy franchises, and independent chains dispense nearly half of the nation’s retail prescription medicines. To learn more, go to http://www.ncpanet.org/.
National Community Pharmacists Association
CONTACT: Robert Appel, Senior V.P., Communications of National CommunityPharmacists Association, +1-703-838-2682, [email protected]
Web site: http://www.ncpanet.org/
Comments