Long-term care pharmacies have significantly higher dispensing costs than traditional retail pharmacies and provide extra services to meet the health needs of LTC residents, according to a new survey by the National Community Pharmacists Association's Long-Term Care Division.


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NCPA study sheds light on LTC pharmacy dispensing costs

February 25th, 2013

ALEXANDRIA, Va. – Long-term care pharmacies have significantly higher dispensing costs than traditional retail pharmacies and provide extra services to meet the health needs of LTC residents, according to a new survey by the National Community Pharmacists Association's Long-Term Care Division.

NCPA said Friday that for the study, its LTC Division and the NCPA Foundation joined with researchers Norman Carroll and David Holdford from the Virginia Commonwealth University School of Pharmacy and Michael Rupp from Midwestern University-Glendale to conduct research into the cost-to-dispense for pharmacies that exclusively serve LTC residents, also known in the industry as "closed door" pharmacies.

A typical independently owned, closed-door LTC pharmacy incurs dispensing costs of $13.54 per prescription for a 30-day supply, which is about 25%  higher than those of retail pharmacies, estimated at $10.64 by the state of Alabama and $10.72 by Oregon, according to the study, titled "Analysis of Costs to Dispense Prescriptions in Independently Owned Long-Term Care Pharmacies."

Compared to their retail counterparts, closed-door LTC pharmacies incur added dispensing-related costs in order to serve residents' needs. These include services such as specialized packaging, 24-hour on-call pharmacy services and deliveries to LTC facilities several times a day on most — if not all — days of the week, the study revealed.

What's more, the research showed that 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, yet 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," NCPA chief executive officer B. Douglas Hoey said in a statement.

"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 stated. "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."

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