Retail pharmacies excluded from Half D networks have been as a lot as 4.5 instances extra more likely to shut previously decade. Credit score: USC Schaeffer Middle
Retail pharmacies excluded from Medicare Half D networks maintained by drug advantages middlemen have been more likely to shut over the previous decade, in line with new analysis from USC printed in Well being Affairs.
Impartial pharmacies and people situated in low-income, Black or Latino communities have been extra more likely to be excluded from “preferred” pharmacy networks, placing them at larger danger of closure, researchers additionally discovered.
The research is the primary to look at how substantial progress of most popular pharmacy networks in Medicare’s prescription drug profit might have contributed to the struggles of retail pharmacies, which the researchers in an earlier research discovered have closed in unprecedented numbers. Pharmacy profit managers (PBMs), which management drug advantages on behalf of employers and insurers, steer beneficiaries away from non-preferred pharmacies by imposing larger out-of-pocket prices at these areas.
Using most popular pharmacy networks tripled to 44% amongst Medicare Benefit drug plans over the previous decade and grew from 70% to 98% amongst stand-alone Medicare drug plans, researchers discovered. This shift coincided with a wave of mergers involving the nation’s largest PBMs and retail pharmacy chains, which can have incentivized PBMs to nudge sufferers to pharmacies they’re affiliated with—and away from rivals
The Federal Commerce Fee, in an interim report final yr, alleged that PBMs “routinely create narrow and preferred pharmacy networks” to favor their very own pharmacies and exclude rivals, and Arkansas lately handed a first-in-the-nation legislation banning PBMs from proudly owning or working pharmacies.
“Our study demonstrates that pharmacy networks in Medicare Part D—which are designed by PBMs—are contributing to the growing problem of pharmacy closures, particularly in communities that already lack convenient access to pharmacies,” stated research senior creator Dima Mazen Qato, a senior scholar on the USC Schaeffer Middle for Well being Coverage & Economics and the Hygeia Centennial Chair on the USC Mann College of Pharmacy and Pharmaceutical Sciences.
Using most popular pharmacy networks tripled to 44% amongst Medicare Benefit drug plans over the previous decade and grew from 70% to 98% amongst stand-alone Medicare drug plans. Credit score: USC Schaeffer Middle
Disparities in community participation
Researchers analyzed pharmacy closures between 2014 and 2023. Amongst their key findings:
Pharmacies most popular by fewer than half of plans have been 1.7 instances extra more likely to shut than these most popular by most plans previously decade, after accounting for elements equivalent to possession and neighborhood demographics.
Pharmacies not taking part as most popular pharmacies for any Half D plan have been 3.1 instances extra more likely to shut, and pharmacies that have been solely out of community have been 4.5 instances extra more likely to shut.
Whereas 4 in 10 pharmacies had unbiased possession in 2023, simply 0.8% of those have been most popular by most plans. In the meantime, 70% of chain pharmacies have been most popular by most plans.
About 3 in 10 pharmacies in Black, Latino or low-income neighborhoods have been most popular by most plans that yr, in comparison with almost half of pharmacies in higher-income or white neighborhoods.
Community participation varies significantly throughout the nation. In a various group of 13 states that features New York and North Dakota, fewer than one-third of pharmacies have been most popular by most plans.
Coverage implications
“Our findings demonstrate that there is a need for federal PBM reform to expand preferred pharmacy networks,” stated the research’s first creator, Jenny Guadamuz, an assistant professor of well being coverage and administration on the College of California Berkeley College of Public Well being. “New legislation might prove elusive, but there may be room for regulator actions.”
The researchers level to actions the Facilities for Medicare and Medicaid Companies might take, together with contemplating provisions that guarantee Half D plans meet most popular pharmacy entry requirements and mandating most popular standing. Regulators and policymakers might additionally mandate will increase in pharmacy reimbursement, particularly for crucial entry pharmacies prone to closure and if they’re serving “pharmacy deserts.”
Extra data:
Jenny S. Guadamuz et al, Medicare Half D Most well-liked Pharmacy Networks And The Danger For Pharmacy Closure, 2014–23, Well being Affairs (2025). DOI: 10.1377/hlthaff.2024.01452
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College of Southern California
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Pharmacies excluded from most popular networks face a lot larger danger of closure, analysis finds (2025, Could 5)
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