Washington, D.C. — The Inflation Reduction Act was sold as a win for patients — lower drug prices, more affordable prescriptions. But for the pharmacies that stock America’s nursing homes, it’s turning into a financial disaster that could leave the sickest seniors without the medications they need.
Long-term care pharmacies — the specialized suppliers that fill prescriptions for nursing home residents — are getting squeezed from both sides. The law caps reimbursement rates on brand-name drugs through maximum fair price rules, eliminating the profit margin those pharmacies relied on to cover losses elsewhere. The result: an estimated 20% to 25% revenue drop in 2026 alone, with a potential 30% total decline by 2027 as more drugs fall under the pricing rules.
“The payment model is unsustainable,” said Alan Rosenbloom, CEO of the Senior Care Pharmacy Coalition. “There is a continuing risk that the long-term care pharmacy market collapses.”
Who Gets Hurt
The math is stark. Pharmacies are losing about $15 per prescription on affected drugs. More than 80% of nursing home residents are expected to feel the impact, according to a survey by pharmacy associations. About 78% of long-term care pharmacies say they’ll have to lay off staff. And 84% plan to reduce services — or stop serving certain facilities and regions entirely.
That last part matters most in rural areas, where a single pharmacy often serves an entire region. When that pharmacy can’t make the economics work, it pulls out. And nursing homes that lose their pharmacy relationships face a serious problem — they’re legally required to provide pharmacy services to residents.
“Losing access to long-term care pharmacies could mean nursing home closures,” Rosenbloom said.
Most nursing homes don’t run their own pharmacies. They rely on outside “closed-door” long-term care pharmacies, said Chad Worz, CEO of the American Society of Consultant Pharmacists. These aren’t your typical CVS or Walgreens. They function more like hospital pharmacies — managing IV medications, emergency drug supplies, complex dosing schedules, and clinical oversight for residents who average 12 to 13 prescriptions each.
A Model Already Running on Fumes
The long-term care pharmacy sector wasn’t exactly thriving before the IRA hit. The business model already lost money on generic drugs, relying on brand-name drug margins — typically 2% to 3% profit — to stay afloat. Those margins are now gone.
On top of reduced reimbursements, some manufacturers are broadly lowering drug prices to match maximum fair price levels, cutting revenue across the board. Delayed manufacturer reimbursement payments are creating cash flow problems too, forcing pharmacies to take on debt just to stay current.
Rosenbloom expects larger chains to survive through consolidation — but warns that’s not good news for nursing homes either. Fewer pharmacy options mean facilities will have less negotiating power and face higher service rates. “It’s likely to mean that pharmacies will demand higher payment rates from facilities,” he said. “Facilities will have fewer options to shift to other pharmacies, which will increase facility costs, increase Part A spending.”
This situation unfolds against an already difficult backdrop for nursing home operators. The industry is still dealing with the recent bankruptcy of Omnicare, which fills prescriptions for millions of nursing home residents, adding further strain to an already fragile pharmacy supply chain.
What the Industry Wants
Pharmacy groups are pushing for three fixes: a temporary supplemental payment to offset losses through 2027, regulatory changes to rebalance the relationship between pharmacies and pharmacy benefit managers, and a broader overhaul of the long-term care pharmacy payment model.
Without action, the people who can least afford disruption — elderly, medically complex nursing home residents — face delayed medications, fewer service options, and in the worst cases, an empty spot where their pharmacy used to be.
“Our organization and our members want affordable access to the treatments that people need,” said Worz. “These lower prices are helping patients get more for their dollar, but we also want them to have access to what they need.”
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