Medication Study Series: The Role of the Pharmacy Market in Prescription Drug Access and Purchase.

Health insurance plans combine chemical networks each year by contracting with pharmacies to act as access points for enrollees to fill prescriptions. These pharmacy networks have a large influence on how older adults – who fill more than four prescriptions per month on average and rely on retail pharmacies to fill most of their prescriptions – getting the necessary medicine.

In this Spotlight report, the AARP Public Policy Institute (PPI) continues its Medication Education Series by examining how plans create pharmacy networks and how these networks affect older adults. . In particular, PPI considers what the change is selected pharmacy network mean adult cost-sharing and whether the current network liability rates are adequate.

It also identifies steps that policy makers can take to ensure that pharmacy networks continue to serve older people.

Pharmacy Networks

Chemical networks offer medical benefits to people who enroll. In fact, health insurers and employers (plan sponsors) contract with third parties known as pharmacy benefit managers (PBMs) to create pharmacy networks. PBMs negotiate agreements with hundreds or thousands of pharmacies each year to be part of a plan’s network (ie, network).

Under these agreements, pharmacies receive certain payments from the plan when they fill prescriptions and meet the plan’s benefit requirements, including: what the enrollee pays for the drug (copay or coinsurance); any restrictions, such as prior approval, on the drug (use restriction); and whether the drug is in the plan’s scope and can be filled (allotment). On the other hand, pharmacies expect that a certain proportion of their subscribers will use their services.

Typically, health plans structure their drug networks into one of three types:

• Open – includes any pharmacy willing to accept the terms of the plan’s contract.
• Limited or closed – requires subscribers to use only online pharmacies.
• Preferred – creating preferred contracts with a group of in-network pharmacies to create two levels (ie, preferred and non-preferred) within the network.

Preferred Pharmacy Networks

The main form of the pharmacy network has become a popular network. By adopting select networks, which rely on select contracts between a subset of network pharmacies and plans, health plans can reduce their drug use by encouraging enrollees to use cheap pharmacies. Under preferred network contracts, plans use more power to negotiate lower reimbursements with these pharmacies, which reduces cost-sharing for consumers who are meant to drive higher business than favorite pharmacies.

Effect of Pharmacy Network Design on Consumers

Although consumers pay less at their preferred pharmacy than they would at other online pharmacies, the savings can vary depending on that a special pharmacy is used. Negotiations between pharmacies, PBMs, manufacturers, and other retail organizations can result in drug price differences across retail pharmacies. Thus, an enrollee in a plan with a preferred network may find that the annual out-of-pocket cost of a drug at one preferred pharmacy is lower than the annual cost of the drug one in different favorite pharmacy. . The difference can be hundreds of dollars, depending on the drug and plan.

Recent research conducted on adults has shown that safety, convenience and cost – factors related to the plan’s pharmacy network – have greatly influenced the customer’s choice of pharmacy. Whether the chemist was online in their plan was the top factor (64 percent), followed by proximity to where they live (59 percent), store hours (44 percent), and lower costs for orders (40 percent).

However information about drug networks does not always reach subscribers, and may not be valid.

Check out the infographic for how consumers can learn about their pharmacy network.

Preferred Care Pharmacy Networks

If a network does not include enough drugs, or includes a limited number of pharmacies in a particular area, consumers may not have consistent access to the medications they need. Therefore, federal and state officials have set standards for the adequacy of the plan’s pharmacy network that seek to ensure adequate access for all plan enrollees.

Those values, however, do not measure access within the preferred network. There are no federal or state standards that require the plan to be choose The pharmacy network meets the same access standards as the plan in detail the internet.

Policy Solutions

As plans continue to build pharmacy networks and diversify them, policymakers need to find ways to improve the network so that adults they can continue to get cheap medicine.

Federal and/or state laws should:

• Hold projects accountable for accessing popular networks
• Support mail order options
• Encourage pharmacies to create a strong strategic network
• Improve network visibility

Information about pharmacy networks and related cost sharing remains unknown to many adults. Greater transparency and better care and management can help ensure that older people continue to get and pay for the medicines they need.