AARP senior policy advisor James McSpadden has written an AARP “spotlight” report on how pharmacy networks affect drug access and pricing for older adults. The report also examines what the shift to preferred pharmacy networks means for older adults’ cost sharing and whether current standards of network accountability are sufficient. It concludes with steps that policymakers can take to make sure pharmacy networks continue to serve older adults.

Simply put, pharmacy networks administer a health insurance plan’s prescription drug benefit to its enrollees, McSpadden explains. In practice, he writes, health insurers and employers (plan sponsors) contract with third parties known as pharmacy benefit managers (PBMs) to build pharmacy networks. PBMs negotiate agreements with hundreds or thousands of pharmacies each year to be in a plan’s network.

Under these agreements, pharmacies accept certain reimbursements from the plan when they fill prescriptions and fulfill the terms of a plan’s benefit, including: what an enrollee pays for a drug (copay or coinsurance); any restrictions, such as prior authorization, on the drug (utilization management); and whether the drug is on the plan’s formulary and can be filled (coverage). In return, pharmacies expect that a portion of enrollees will use their services.

And that's just the beginning. Learn more in this report from AARP's Public Policy Institution's Medication Literacy Series:

To read an article about the report, click here

To download the full report, click here

To download a an infographic, "How pharmacy networks can affect you," click here