When the Medicare D prescription drug coverage benefit began in January 2006, it provided seniors greater peace of mind by protecting them from high drug costs and unexpected drug expenses. But, researchers say Medicare also has contributed to the closing of independently owned rural retail pharmacies.
Results of a study show a rapid decline in pharmacy closings from May 2006 through April 2008. In the United States, 998 independently owned rural pharmacies closed (6.8 percent); in that same period, 495 pharmacies opened in rural communities, resulting in a net loss of 503 independently owned rural pharmacies (from 7,395 to 6,892).
Another key finding of the study was 158 independently owned rural pharmacies closed, leaving communities with no retail pharmacy or pharmacy services. In Nebraska, there were 164 independently owned rural retail pharmacies in May 2006. By April 2008, 22 of them were closed. Independently owned retail pharmacies usually are small and privately owned.
The study, published by the University of Nebraska Medical Center in a policy brief this month, provides policy makers and researchers information about the closure of rural independently owned pharmacies from 2003 to 2008. It was funded by the Rural Health Research and Policy Analysis Center at the University of North Carolina – Chapel Hill through the federal Office of Rural Health Policy.
The number of rural independently owned retail pharmacies in the United States was relatively constant from 2003 to 2006, peaking around May 2006. During the time frame, two major policies were implemented related to payment for prescription medications: Medicare prescription drug discount cards were introduced in January 2004, and the Medicare prescription drug benefit began January 2006.
“There’s been a real loss in access to prescription drugs and pharmacy services in rural areas. While Medicare Part D has provided access to drug coverage for some previously uninsured patients, and mail order prescriptions to patients without access to a pharmacy, there also may have been some unintended consequences associated with the program,” said Keith Mueller, Ph.D., director of the Rural Policy Research Institute Center for Rural Health Policy Analysis at the University of Nebraska Medical Center (UNMC) in Omaha, and principal investigator of the study.
“It’s obvious that Medicare D triggered something. It’s not the sole cause though. If we can agree it’s of value to be able to talk to pharmacists about medications or other health issues, we’ve lost it.”
Dr. Mueller said the solution for rural communities isn’t as simple as getting prescriptions through the mail.
“There’s an important distinction between being able to get prescription drugs and receiving pharmacy services,” Dr. Mueller said. “You can’t rely on getting drugs though mail when you need them quickly. If the only pharmacy in a small community closes, you have no pharmacy services left. You could drive to another pharmacy in another town, but you have the added time and gas cost.”
He said the trend for private insurance companies to pay less to pharmacies has now found its way into Medicare.
“Independently owned pharmacies were already in some trouble because of the existing low payments from insurance. Passing the costs of staying in business as an independently owned pharmacy in a remote location to consumers is difficult if nearly all the pharmacy’s customers are enrolled in an insurance plan that limits payment. Medicare Part D could have been the nail in the coffin.”
Other services provided by independent pharmacies in rural communities include providing medications as needed (not waiting for mail order), overseeing administration of drugs to nursing homes and hospitals, and patient consultation.
Lead author of the study, Don Klepser, Ph.D., whose expertise is pharmacy economics and access to pharmacy services, said he has been overwhelmed by the number of pharmacists in Nebraska that provide pharmacy services to the local hospitals, long term care facilities or clinics. “Access is threatened and if we think access is important, there’s probably something that needs to be done,” he said. “We have a different system for rural hospitals to insure access to services. Do we needs something like that in pharmacy services to maintain that access?”
J.D. Nein, a registered pharmacist, owns Nein Pharmacy in Bridgeport, Nebraska, in western Nebraska, population 1,594. He knows the pain Medicare Part D has caused. He bought a pharmacy in Mitchell, Neb., one year before Medicare D went into effect. In November 2006, he had to close the pharmacy. It left the town without a pharmacy or services.
“We didn’t do the volume that was feasible with lower payments and payments that weren’t timely,” Nein said. “We were struggling after Medicare Part D was implemented. The timely payment probably would have helped us. We had a backlog of not getting paid forever. It seemed to really dampen things. Our suppliers expected payment every 15 days.”
He said among late payments were those for things like $1,200 shots. It would be 60 days until we’d get paid.
He said before Medicare Part D, about 80 percent of his customers were cash-paying customers – the ideal way to receive payment. After Medicare was enacted, 80 percent of his customers were Medicare Part D and those with other insurance.
“We had no more cash customers. We were going to close but someone offered to buy our prescription files.”
That buyer was Walgreens, which served those customers from Scottsbluff, about 10 miles away. Nein said before he closed his pharmacy in Mitchell, they served the nursing home and customers in town – making deliveries twice a day.
“It didn’t help the community. A lot of people were shut-ins. You just don’t get the service a small town pharmacy provides. You feel bad about having to make the decision to close, but it’s wasn’t viable anymore with the overhead we had.”
Data for the study was obtained from the National Council for Prescription Drug Programs of more than 70,000 pharmacies in the United States.
RUPRI provides unbiased analysis and information on the challenges, needs, and opportunities facing rural America. Its aim is to spur public dialogue and help policymakers understand the rural impacts of public policies and programs.
To see a copy of the brief, go to: http://www.unmc.edu/ruprihealth/. Co-authors of the brief also included Liyan Xu, and Fred Ullrich, both of the UNMC College of Pharmacy.
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