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University of Texas Study Details Lengthy Payment Delays for Medicare Part D Prescription Drug Claims, Confirming Need for Legislative Fix
Date:9/6/2007

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The delayed payments hurt community pharmacies the most because over 90 percent of their revenue comes from prescription drugs. Ever since Part D's implementation on Jan. 1, 2006, these pharmacies have experienced cash-flow problems that have necessitated the need for loans in the tens to hundreds of thousands dollars. The need for these loans is occurring despite the pharmacy benefit managers (PBMs), who are responsible for administering the various Part D plans, getting paid in advance by the federal government. This study presents strong evidence that PBMs are 'gaming the system', making interest on the 'float' they get by not paying pharmacies in a timely manner. The study found that only 0.7 percent of the claims are paid within two weeks, which is typically how often community pharmacies have to pay their wholesalers.

The result of the unfortunate payment dynamic can be found in preliminary data from the annual NCPA-Pfizer Digest -- a comprehensive, nationwide look at the financial picture of community pharmacies -- that was released in May. Last year broke a multi-year trend of stability in the overall number of stores with 1,152 or 5 percent of community pharmacies closing. Part D was the only new factor introduced into the market place, which means it played a prominent role in these small business owners going out of business.

"The University of Texas study should dispel any lingering doubts about the unacceptably slow payment of Part D claims," said Bruce Roberts, RPh, executive vice president and CEO of the National Community Pharmacists Association. "The question the PBMs should ask themselves is would they want to operate under a system where they had financial obligations at least every two weeks, but are not being reimbursed for their services within that time? The answer to that question is clear and is why both the House and Senate should act before adjourning for this year."

S.1954 was introduced before Congress' August
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SOURCE National Community Pharmacists Association
Copyright©2007 PR Newswire.
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