Suit by pharmacists calls impact of closed Part D networks ‘tragic’

March 6, 2012

Closed pharmacy networks are back and pharmacies are fighting them. That's the gist of a suit filed by four independent pharmacies against the federal government in U.S. District Court for the Eastern District of North Carolina last week.

Closed pharmacy networks are back and pharmacies are fighting them. That’s the gist of a suit filed by 4 independent pharmacies against the federal government in U.S. District Court for the Eastern District of North Carolina last week.

The 4 plaintiffs allege that rules allowing Medicare Part D Prescription Drug Plan sponsors to create preferred pharmacy networks are illegal. Pharmacists say these preferred networks have already vacuumed up about a third of all eligible Part D beneficiaries and moved them to Walmart and chain or big-box pharmacy operators.

“The impact on independents and their longtime senior or near-senior patients has been tragic,” said John Rector, legal advisor to the Association of Community Pharmacists Congressional Network. “The first such plan was offered in November 2010, for the 2011 year, and there are now 7 such plans approved by CMS (Centers for Medicare and Medicaid Services). So far, 6.3 million of 19.5 million Part D enrollees are in these preferred networks.”

The suit alleges that CMS violated the “any willing provider” section of the Medicare Part D act. As part of the final regulations implementing Part D, CMS created “differential cost-sharing for preferred pharmacies. The rule allows plan sponsors to reduce copays or coinsurance for covered drugs obtained through a preferred pharmacy rather than a non-preferred pharmacy.

“The Preferred Pharmacy Rule introduces concepts found nowhere else in the act of Congress the rule purports to implement,” the suit alleges. “Nowhere in the Medicare Part D Act is there any mention of ‘preferred pharmacy’ or ‘differential cost-sharing.’ The effect of the Preferred Pharmacy Rule is the formation of preferred pharmacy cartels or networks which exclude pharmacies willing to meet the terms and conditions that PDP sponsors afford to ‘network’ pharmacies.”

The suit cites what it calls the plain language of the Part D act as well as Congressional hearing reports requiring prescription drug plans to accept any willing provider. CMS has not yet responded to the suit.