Study Finds Long-Term Care Pharmacies Face Higher Dispensing Costs; Must Meet Specialized Patient Needs

PRESS RELEASE

2/22/13

Long-term care (LTC) pharmacies incur dispensing costs that are 25 percent higher than those of traditional retail pharmacies and provide additional services to meet the unique health needs of LTC residents, according to the findings of a new survey announced today by the National Community Pharmacists Association (NCPA) Long-Term Care Division.

NCPA's LTC Division and the NCPA Foundation joined with researchers Norman V. Carroll, PhD, and David A. Holdford, PhD, from the Virginia Commonwealth University (VCU) School of Pharmacy and Michael T. Rupp, PhD, from Midwestern University—Glendale to conduct research into the cost-to-dispense (CTD) for pharmacies that exclusively serve LTC residents—also known in the industry as "closed door" pharmacies. The results are available in a new report entitled Analysis of Costs to Dispense Prescriptions in Independently Owned Long-Term Care Pharmacies. The report is available free-of-charge to NCPA LTC Division members.

Among the survey's findings:

• A typical independently owned, closed-door LTC pharmacy incurs dispensing costs of $13.54 per prescription for a 30-day supply. That's about 25 percent higher than those of retail pharmacies, estimated at $10.64 by the State of Alabama and $10.72 by Oregon in their respective analyses. Compared to their retail counterparts, closed-door LTC pharmacies incur additional dispensing-related costs to serve residents' needs. These include services such as specialized packaging, 24-hour on-call pharmacy services and providing deliveries to LTC facilities several times a day on most (if not all) days of the week.
• Shorter-cycle medication supplies result in LTC dispensing costs that may be lower per-prescription but higher overall for a 30-day supply. A 14-day supply of medication resulted in an average dispensing cost of $11.63 per prescription. However, dispensing two 14-day cycles incurs nearly twice the costs of dispensing a one-month supply causing costs rise to $23.26.

"This important survey documents the higher dispensing costs incurred by long-term care pharmacies meeting patient needs and highlights the need for Medicare and other payers to ensure their reimbursement models account for the unique challenges faced by LTC pharmacies," said NCPA CEO B. Douglas Hoey, RPh, MBA.

"As payers consider new payment models such as average acquisition cost or AAC, it becomes even more vital that they account for the escalated costs of serving LTC patients," Hoey added. "In addition, while short-cycle dispensing is considered as a means to reduce wastage of expensive medications, this survey is a reminder that consecutive 14-day prescriptions may result in higher dispensing costs that must be factored into pharmacy reimbursement models."

In 2011, NCPA established a Long-Term Care division and added staff resources to help ensure that the views of independently owned LTC pharmacies are heard by federal and state policymakers.

"We're proud of the leading advocacy role that NCPA's LTC Division plays on behalf independent LTC pharmacies and really the industry as a whole," Hoey concluded. "With the continued support of its members, the NCPA LTC Division will keep working to ensure that policymakers are educated on how independent LTC pharmacies improve lives, enhance health outcomes and reduce costs."