Ed Lamb

Mr. Lamb is a freelance pharmacy writer living in Virginia Beach, Virginia, and president of Thorough Cursor Inc.

Changes to the formulas used to determine what the federal government will pay for medications community pharmacists dispense to Medicaid beneficiaries will not take effect at the end of this month as scheduled.

On December 19, a judge for the US District Court for the District of Columbia ruled that the Centers for Medicare & Medicaid Services (CMS) could not implement the rule because it did not comply with the Deficit Reduction Act of 2005 and would be “likely … to cause plaintiffs to suffer irreparable harm for which no adequate remedy at law exists.”

The plaintiffs in the case being heard by Judge Royce C. Lamberth are the National Association of Chain Drugstores and the National Community Pharmacists Association (NCPA). Acting on behalf of their members, the associations sued CMS, the Department of Health and Human Services, and those agencies’ directors to prevent having Medicaid reimbursements for generic drug be based on Average Manufacturer Prices (AMPs). Analyses conducted by the Government Accountability Office showed that basing reimbursements on AMPs would result in pharmacists receiving payments that were as much as 36% below what certain drugs cost to acquire.

Under the terms of the injunction, CMS cannot apply AMP to pharmacy payments until the rule is rewritten. CMS can continue collecting data from drug manufacturers and use an AMP-based formula to determine the rebates manufacturers must pay states.

Commenting on the judge’s ruling, Bruce Roberts, RPh, NCPA executive vice president and chief executive officer, said, “We are very gratified that Judge Lamberth has stopped CMS from implementing its ill-conceived rule on AMP. We hope that CMS uses the redrafting process to make the next final rule far less onerous on community pharmacy.”

Roberts also said that his association and other pharmacy and patient groups will “use this reprieve to convince Congress of the need for structural improvements in the Medicaid reimbursement system that will not handicap community pharmacies by paying them substantially less than their acquisition costs.”

Congress is currently on break. When regular legislative business resumes on January 20, representatives and senators will be asked to consider HR 3140, the Saving Our Community Pharmacies Act, and S 1951, the Fair Drug Medicaid Payment Act. Both bills were introduced in 2007 and are intended to ensure that drug reimbursements under Medicaid reflect pharmacists’ acquisition and dispensing costs.

For other articles in this issue, see:

OTC Mevacor Denied--Again

Racial Gaps Exist in Painkiller Rxs

Boutique Drugs Could Help Big Pharma Stay Afloat

Drug Makers Dropping Patent Applications in India

Poor Don’t Get Benefit of Drug Samples

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