Preferred Pharmacy Networks Are Not Always Cheaper

Negotiated prices at preferred retail pharmacies are sometimes higher. In a recent study, CMS compared the negotiated prices at non-preferred retail pharmacies for Part D sponsors with both preferred and non-preferred networks. CMS looked at a one-month sample of negotiated pricing for the top 25 brands and 25 generics in the Part D program. Pricing at preferred retail pharmacies is lower than at non-preferred network pharmacies, but when mail and retail pharmacy costs are included, some sponsors’ preferred network pharmacies offer somewhat higher negotiated prices compared to their non-preferred network pharmacies.

In March 2012, only about 11% of the beneficiaries in standalone Part D plans were enrolled in contracts that CMS identified as having higher preferred than non-preferred prices. In its report CMS added, “From 2012 to 2013, the enrolled population in PDPs with a preferred network has doubled. Thus, we believe the impact of higher preferred network prices on the program, as a whole is likely to become increasingly significant. Since we believe higher negotiated prices in network pharmacies violate the intent of § §1860D-4 (b)(1)(B), we are considering options for clarifying our requirements in future rulemaking.”

Last Updated 09/16/2020

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