The Service Line

Reimbursement: CMS asks the industry to define what a “fair” Part D pharmacy contract actually looks like

CMS published the formal follow-through to the meeting this newsletter covered two weeks ago, opening a request for information that asks the pharmacy industry to help write the actual definition of a “reasonable and relevant” Medicare Part D pharmacy contract. The request, filed under docket CMS-2026-3037, gives stakeholders until November 23 to weigh in on the questions the Pharmacy Coalition, led by the National Community Pharmacists Association, has been pressing since its September 3 meeting with the agency: what counts as a pharmacy benefit manager affiliate, how pharmacy benefit managers should be paid, and whether independent and long term care pharmacies should be guaranteed reimbursement covering acquisition cost, a dispensing fee, and a fee for pharmacist services. Under Section 6223 of the Consolidated Appropriations Act, 2026, whatever standards CMS eventually adopts will govern Part D network pharmacy contracts starting the 2028 plan year, effective January 1, 2029, so this comment period is the last real chance for pharmacies and pharmacy benefit managers to shape language that will bind them for years. Confidence: High on the request’s publication, docket number, and comment deadline, from the Federal Register notice itself. Low on what CMS ultimately adopts, since the request only opens the comment period. Sources: CMS’s Federal Register request for information on Medicare Part D reasonable and relevant pharmacy contracting standards, supplemented by NCPA’s own account of the Pharmacy Coalition’s meeting with CMS.

Enforcement: A drugmaker just showed hospitals how little a winning lawsuit protects them

Merck notified 340B covered entities on September 23 that, starting October 1, hospitals and consolidated health center covered entities without their own in-house outpatient pharmacy will be limited to a single designated contract pharmacy for Merck’s 340B priced drugs, and that a wholly owned contract pharmacy only qualifies if it sits within 40 miles of the covered entity’s parent site. Merck frames the change as its own 340B Program Integrity Initiative, citing what it calls a lack of transparency and heightened risk of statutory noncompliance in contract pharmacy arrangements. The timing lands in the middle of an active multistate legal fight over exactly this kind of restriction: the same week, a federal court denied drug manufacturers’ motion for a preliminary injunction against New Mexico’s contract pharmacy access law, a federal appeals court denied rehearing in a similar Missouri case, and Arkansas moved its own contract pharmacy dispute into federal court, so state protections keep holding up in court even as individual manufacturers keep narrowing which pharmacies qualify to dispense their own specific drugs. For hospital and health system pharmacy operators, a state can win its lawsuit and a manufacturer can still shrink the network unilaterally, drug by drug. Confidence: High on the letter’s contents and effective date, corroborated across independent summaries of Merck’s own notice. Medium on how the restriction gets enforced day to day, since it had not been challenged in court as of this issue. Sources: Merck’s 340B Program Integrity Initiative letter, supplemented by the National Law Review’s weekly tracker of state contract pharmacy litigation.

Who’s Buying: The drug wholesalers are becoming the most profitable part of the biosimilar trade, not just the middlemen moving it

Drug Channels’ preview of its forthcoming 2026-27 wholesaler economic report, published September 22, found that provider-administered biosimilars now generate more than 4 billion dollars in gross profit for the Big Three wholesalers, up from 1.4 billion in 2022, even though those same biosimilars still account for only 6 percent of wholesaler drug distribution revenue. That 4 billion dollars is roughly 23 percent of the wholesalers’ total distribution gross profit, up from a rounding error a few years ago, while traditional generics, still 52 percent of gross profit, have fallen from 68 percent in 2022 as their margins compress. The shift helps explain why Cencora paid roughly 4.6 billion dollars for Retina Consultants of America and Cardinal Health paid 1.9 billion for the urology focused Solaris Health, deals that gave the wholesalers direct ownership of physician practices that decide which biosimilar a patient gets. For any specialty group negotiating with a wholesaler or a group purchasing organization this year, the wholesaler across the table increasingly also owns physician practices in the same specialty. Confidence: High on the gross profit and revenue percentages, from Drug Channels’ own report preview. Medium on the physician practice deals’ precise financial terms, which come from secondary market analysis rather than the parties’ own disclosures. Sources: Drug Channels’ preview of its 2026-27 wholesaler economic report, supplemented by IntuitionLabs’ analysis of wholesaler consolidation into physician practice management.

Clinical Policy: Half a million seniors are already on Medicare’s new GLP-1 discount, and the eligible pool is nearly eight times that

CMS Administrator Mehmet Oz told reporters at an August 31 briefing that enrollment in the agency’s GLP-1 Bridge demonstration had reached roughly 600,000 Medicare beneficiaries, after KFF Health News and Modern Healthcare data put the count at just over 500,000 by the end of August, up from about 250,000 in July, the program’s first month. That is roughly 15 percent of the 3.8 million beneficiaries KFF estimates could qualify for the 50 dollar monthly copay on Wegovy, Zepbound, or Foundayo, a fast ramp for a program CMS itself modeled anywhere from 1.3 billion to 10 billion dollars in Medicare spending depending on uptake. The Bridge only covers beneficiaries whose qualifying condition is obesity; an estimated 5.9 million more Medicare enrollees with a GLP-1 relevant diagnosis such as type 2 diabetes or sleep apnea remain on standard Part D cost sharing, a split that matters for any practice managing GLP-1 utilization across a mixed Medicare panel. Confidence: High on the enrollment figures and program terms, cross confirmed by CMS’s own briefing and KFF Health News’ independent count. Low on where enrollment lands by the program’s December 2027 end date, since this is a snapshot four months into an 18 month run. Sources: Medical Daily’s report on Medicare GLP-1 Bridge enrollment, supplemented by CMS’s GLP-1 Bridge program page.

The Operator Metric: Over 80 percent

Over 80 percent of hospital pharmacy directors reported a perceived shortage of experienced pharmacy technicians, according to the American Society of Health-System Pharmacists’ national workforce survey, published this year in the American Journal of Health-System Pharmacy based on responses from pharmacy directors at 1,497 general and children’s medical-surgical hospitals. About 60 percent of directors also reported perceived shortages of clinical specialists and clinical coordinators, meaning the workforce gap runs from the technician bench through the clinical pharmacist ranks, not just the entry level roles most coverage focuses on. Technician pay itself ran 16.57 to 24.53 dollars an hour as of the last national technician survey, and pay was the factor technicians themselves cited most often as the fix that would keep them in the profession, which means the shortage this survey measures is substantially a wage problem operators can choose to solve, not a pure labor supply problem they cannot. For any specialty group or long term care pharmacy network depending on adherence programs or in-house dispensing, technician and clinical staffing capacity, not shelf space or software, is this year’s binding constraint. Confidence: Medium. The ASHP survey’s 16.7 percent response rate is typical for this kind of national survey but still leaves room for the true national shortage rate to differ, and the wage figures come from a separate, earlier technician-side survey rather than the same instrument. Sources: the ASHP National Survey of Pharmacy Practice in Hospital Settings: Clinical Services and Workforce, 2024, in the American Journal of Health-System Pharmacy, supplemented by PTCB’s State of the Pharmacy Technician Workforce report.