Senate Asks CMS to Stop Implementation of Medicaid Rule That May Harm Pharmacies

Nearly half of the United States Senate, 46 Senators, signed a letter to the Centers for Medicare and Medicaid Services expressing deep concern over CMS’ proposed rule to cut pharmacy Medicaid reimbursement for generic drugs. As a grassroots organization representing more than 20,000 neighborhood pharmacists, the Association of Community Pharmacists Congressional Network (ACP*CN) applauds the Senate for taking this action and recognizing the severe impact this rule will have on Medicaid patients’ access to retail pharmacy services.

“Again and again, we see the Bush Administration attacking the best healthcare delivery system in the world with misguided policies,” said Mike James, Vice President, Governmental Affairs, ACP*CN. “By reimbursing pharmacies below the actual costs they incur for generic drugs dispensed to Medicaid beneficiaries, CMS will be forcing pharmacies out of business because no healthcare provider can afford to continually offer services to patients at a loss,” added James.

As part of the Deficit Reduction Act of 2005, Congress asked CMS to create a rule that clearly defines average manufacturer price (AMP) which is used to set pharmacy reimbursement for generic drugs. Instead of using data that reflects the real costs retail pharmacies pay for drugs, CMS has proposed an AMP definition based on mail order drug sales operated by pharmacy benefit managers (PBMs) who receive discounts on drugs pharmacies don’t.

A recent Government Accountability Office (GAO) report found that CMS’ proposed new formula for calculating new pharmacy reimbursement rates for generic drugs dispensed to Medicaid patients would on average be 36% below the actual costs pharmacies pay for the drugs. This rule would in effect create a disincentive for pharmacies to dispense cost-savings generic drugs, which save both the government and patients’ money.

It is misguided policy for the Bush administration to keep asking hometown pharmacies to subsidize government healthcare programs such as Medicaid and Medicaid Part D at the expense of patient access to critical medication services. In a letter to Acting CMS Administrator Leslie Norwalk, 46 US Senators urged CMS to “revise the proposed rule to equitably reimburse pharmacies, protect beneficiary access to necessary drugs and create incentive for cost-saving drug usage.”

The letter also requested CMS delay issuing AMP pricing in the next few weeks until it can use more reliable data to calculate generic drug pricing. Last July, CMS delayed issuing AMP because of inconsistencies in the way manufacturers calculated AMP. ACP*CN thanks the Senate for recognizing the acute impact this rule would have on patient access to pharmacy services, particularly in rural parts of America where one pharmacy serves an entire community and looks forward to our collaborative efforts to stop its implementation.