Medicaid Limits on Generic Drug Reimbursement Renew NCPA Concerns about Patient Access

Published Online: Friday, November 11, 2011
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In response to a new, second set of limits on generic drug pharmacy reimbursement that were recently proposed by federal Medicaid officials, the National Community Pharmacists Association (NCPA) reiterated its concerns with the methodology being used by the Centers for Medicare and Medicaid Services (CMS) to determine the payment caps. NCPA has requested a meeting with CMS officials on the matter.

Last month, NCPA sent a letter to CMS about the Average Manufacturer Price (AMP) data the agency is utilizing to calculate new caps, known as Federal Upper Limits (FULs), on Medicaid pharmacy reimbursement for many generic drugs. On October 21, another set of draft FULs were published, but no adjustments were made to these cuts. In response, NCPA has sent a second letter to CMS expressing a sense of urgency to address the issue before irreparable harm is done to the prescription drug benefit of Medicaid, as well as other health plans that follow suit.

NCPA CEO B. Douglas Hoey, RPh, MBA, issued the following statement:

"These draft FULs are a disaster in the making for Medicaid recipients and the independent community pharmacists who serve them. In order to prevent a scenario whereby independent community pharmacies are forced to consider limiting their participation in Medicaid or leaving the program altogether, CMS should do three things. First, scrap the draft FULs. Second, produce a final AMP definition to serve as a guide for future FULs. Third, restart the implementation process with an understanding that low federal reimbursements, coupled with state Medicaid cuts, endanger Medicaid patients' access to generic prescription drugs. Those objectives can be achieved while still following the intent of the Affordable Care Act, which mandates the revised reimbursement formula.

"In addition, we reiterate the need for CMS to exercise its authority to increase FULs for independent pharmacies beyond 175 percent of the weighted AMP. This would not only help ensure access for patients in underserved rural and inner-city areas who rely on their independent community pharmacies, but also mitigate the fact that independents, despite aggressive efforts to negotiate lower acquisition costs, buy prescription drugs at a higher price than is available to national chains, as a recent Office of Inspector General report highlights.

"If CMS doesn't intervene then it should prepare for a highly preventable amount of Medicaid patients suddenly having to turn to more expensive emergency rooms and doctors' offices to take care of health care complications that arise from a lack of access to prescription drugs and counseling at their local pharmacies. NCPA stands ready to help and requests an urgent meeting with CMS to find workable solutions going forward."

NCPA's outreach to CMS comes on behalf of complaints raised by member pharmacists who saw hundreds of reimbursement caps on the second list of FULs that are well below even their pharmacy's acquisition costs, as was the case with the first list of FULs. An NCPA analysis finds the following differences in Medicaid reimbursement:

  Current Level Proposed Level Reduction Percentage
Low-volume pharmacy $59,019 $36,712 38%
Medium-volume pharmacy $89,796 $54,755 39%
High-volume pharmacy $196,233 $122,109 38%
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