Independent pharmacies are sounding the alarm on Medicare Part D’s drug price negotiation program.
The program, created under the 2022 Inflation Reduction Act (IRA), lets the Centers for Medicare and Medicaid Services (CMS) work with drugmakers to set lower costs for select Part D drugs in hopes of lowering healthcare costs for patients.
But up to 93.2% of independent pharmacy owners said they either will no longer carry Part D drugs or are considering not carrying them, as owners anticipate the negotiation program would “cause massive financial losses,” according to a survey of 8,000 pharmacy owners and managers conducted by the the National Community Pharmacists Association (NCPA), a trade group representing the nation’s roughly 19,000 independent pharmacies.
How it works. Under the current payment model, pharmacies pay drug wholesalers for medications, then pharmacy benefit managers (PBMs) reimburse the pharmacies a previously agreed-upon amount for each claim covered by a customer’s health insurance plan. It usually takes about 14 days for PBM reimbursement to reach pharmacies, according to Ronna Hauser, SVP of policy and pharmacy affairs at NCPA.
Under the new model, pharmacies will still pay wholesalers the same price to buy the drugs, but PBMs will reimburse pharmacies based on the updated negotiated prices, Hauser told Healthcare Brew. The negotiated drug prices are anywhere from 38% to 79% lower than the original list prices, according to the White House.
Drugmakers will then make up the difference. For example, if a pharmacy spends $500 to buy a drug, a PBM may pay the pharmacy $200, and then the drugmaker would reimburse the other $300 in the form of a manufacturer refund.
The new rules state drugmakers are required to reimburse pharmacies within 14 days of receiving confirmation that a prescription was dispensed to a Part D beneficiary, according to CMS. But pharmacy owners are concerned it will take longer as the new payment system gets set up, Hauser said.
In effect, pharmacies find themselves having “to float thousands of dollars every month waiting for refunds from the manufacturers,” NCPA CEO B. Douglas Hoey warned in a statement.
“I don’t have the cash flow or the financial stability to be able to ride those expensive drugs for that length of time,” Bill Osborn, president of independent pharmacy Osborn Drugs in Oklahoma, as well as president of the Oklahoma Pharmacists Association, told Healthcare Brew. “My question is, why are they not charging us up front the rebate price? Why are they making us carry it when we are the least financially viable?”
Navigate the healthcare industry
Healthcare Brew covers pharmaceutical developments, health startups, the latest tech, and how it impacts hospitals and providers to keep administrators and providers informed.
Osborn, who used to serve as NCPA’s president, is among those considering not stocking Part D drugs in his pharmacies, he said, which could lead to some patients in his community being unable to receive their prescriptions.
“It will be a hardship mostly on the patients because if they want to use us…they’ll have to find another place to get that one medicine,” Osborn said. “Hopefully they’ll stay with us, but that’s a risk.”
The financial effects. Part D drugs typically make up a significant portion of business for many independent pharmacies—about 35% on average for NCPA members, Hauser said.
If drugmakers reimbursed pharmacies seven days after the pharmacies receive their PBM reimbursements , pharmacies would have roughly $10,800 less cash on hand per week, according to a February analysis from healthcare consulting firm 3 Axis Advisors, commissioned by the NCPA. Annually, the analysis projected independent pharmacies could lose up to $46,475 in revenue.
Hauser said the NCPA and other pharmacy organizations have brought these concerns to CMS since the price negotiation program was first created in 2022. NCPA has asked CMS to freeze the program until they can find a way to implement it that wouldn't cause financial hardship on pharmacies. While the agency has acknowledged the issues, it has claimed it doesn’t have the authority to change the IRA’s statutes, according to Hauser.
When asked for comment, CMS directed Healthcare Brew to a statement the agency released in January, saying it was “committed to incorporating lessons learned to date from the program and to considering opportunities to bring greater transparency in the negotiation program.”
Healthcare Brew reached out to several drugmakers with medications on the negotiated prices list that’s going into effect Jan. 1, 2026, but did not receive responses.
A broader implication. Approximately 10% of independent pharmacies in rural areas closed between 2013 and 2022, and Osborn said he’s concerned the new payment system will lead to even more closures.
“Here we are trying to maintain pharmacist access in rural environments, and now we’re going to make it to where it’s going to be even less accessible,” he said. “I worry about these rural locations that we could lose.”