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April 30, 2014
Pharmacy Groups Seek Delay of Medicaid Generic
Drug Formula Washington, D.C.—With just a few months before a controversial new formula mandated under the Patient Protection and Affordable Care Act is required to be implemented by the states, pharmacy groups are asking for a 1-year transition period. The formula, Medicaid average manufacturer’s price (AMP)–based federal upper limits (FULs) for prescription medications, significantly reduces Medicaid reimbursement rates for generic drugs. It is scheduled for implementation in July. The potential reduction in rates was calculated last summer by the Office of Inspector General of Health & Human Services (HHS): Federal reimbursement limits mandated by the ACA are 22% below the current state amounts and could save Medicaid up to $1.2 billion per year. In a letter earlier this month to then-HHS Secretary Kathleen Sebelius, seven pharmacy groups requested the 1-year grace period, which would push implementation to 2015. “Given CMS’ expectation that states adjust both the drug reimbursement and dispensing fees for Medicaid reimbursement by July 2014, we are concerned that many states are not ready to make such a quick transition. Therefore we are requesting that CMS allow states a transition period for implementation of the FULs and corresponding dispensing fee changes to be one year from the time the states have everything they need for implementation from CMS,” states the letter signed by the American Pharmacists Association, Food Marketing Institute, Generic Pharmaceutical Association, Healthcare Distribution Management Association, National Association of Chain Drug Stores, National Alliance of State Pharmacy Associations and the National Community Pharmacists Association. In November 2013, the Centers for Medicare & Medicaid Services (CMS) announced final publication of the National Average Drug Acquisition Costs (NADACs) and indicated that the final AMP-based FULs would be published in July 2014, with the final AMP rule released in May 2014. Despite concerns that the final rule release date might be delayed, CMS has not backed down on the July 2014 publication of the final AMP-based FULs and says it expects immediate state implementation of them. “While CMS may be ready to implement changes to the ingredient side of the formula immediately in July 2014, states face additional obstacles that hinder their ability to be so expedient,” the letter points out. “Most states require legislative or regulatory changes, have short legislative sessions this year that do not allow for Medicaid reimbursement changes, will have to do a cost-of-dispensing-fee study prior to implementing a dispensing fee change, and/or will have to file a State Plan Amendment to implement such a change.” Late last year, the National Association of Medicaid Directors (NAMD) also requested a transition period of up to 12 months so that access to pharmacy services would be protected for Medicaid beneficiaries. “We share NAMD's concern about beneficiary access to pharmacy services,” the pharmacy groups write in their recent letter. “While we remain hopeful that CMS will utilize the rulemaking process to implement Medicaid pharmacy provisions in a manner that will ensure that pharmacies are not reimbursed below cost, we are still concerned with the flawed AMP-based methodology and CMS' timeline for implementing the new AMP-based FULs,” the letter also states. Major pharmacy associations maintain that AMP is an inaccurate benchmark for pharmacy reimbursement, and no relationship exists between the weighted AMP and actual pharmacy acquisition costs.
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