Narrow pharmacy networks are booming. On the Medicare side, 75% of Medicare Part D beneficiaries have signed up for a prescription drug plan that uses a preferred pharmacy network this year. That’s up from 43% of seniors who opted for narrow network coverage in 2013.
On the commercial side, 70% of those who signed up for prescription drug coverage under the Affordable Care Act selected a plan that uses narrow provider networks.
“Plan-sponsor savings drive narrow networks,” said Adam Fein, PhD, president of Pembroke Consulting in Philadelphia. “Pharmacy savings drive plan savings, which is why pharmacies don’t like narrow networks.”
That’s not strictly true. Some pharmacies love narrow networks — if they happen to be among the pharmacies that made the cut.
CVS, Walmart, Walgreens, RiteAid, and other chains compete aggressively to gain preferred provider status. So do pharmacy services administrative organizations such as McKesson’s Health Mart and AmerisourceBergen’s Good Neighbor Pharmacy franchise brands.
Independent pharmacy is less enamored of preferred provider networks. One reason: Independent pharmacies and small chains are at an economic disadvantage when it comes to cutting copays and network prices.
These pharmacies are also at an administrative disadvantage. Plan sponsors and managed-care organizations obviously would rather negotiate a single contract that covers thousands of pharmacies than keep track of thousands of contracts that each covers a single provider.