/publications/career/2008/Careers_2008-08/Careers_2008-08_8010

State and Federal Issues Affecting Community Pharmacy

Author: Mike James, RPh


Mr. James is the vice president of government affairs at the Association of Community Pharmacists and is a pharmacist at Person Street Pharmacy, Raleigh, North Carolina



Mike James, RPh

Mike James, RPh

Pharmacies today are more and more dominated by state and federal regulations as well as legislative directives. In the past, practicing pharmacy was purely about the health and well-being of the patient, and the economics of pharmacy took care of itself. Those days no longer exist.

Today, pharmacy finds itself facing Medicaid issues, National Provider Identifier (NPI) regulations, pharmacy workforce problems, tamper-resistant prescription pads, and efforts to implement electronic prescribing among others. Some of these issues are for the good of pharmacy, but many are directly related to government intervention.

The Deficit Reduction Act and AMP

The Deficit Reduction Act enacted in February 2006 created huge issues at the state level, particularly in reference to Medicaid. This act initiated the evolution of using Average Manufacturer Price (AMP) as a metric for setting a federal maximum on Medicaid reimbursement for generic drugs. AMP will replace other metrics, such as average wholesale price and wholesale acquisition cost. The use of lowest AMP as the basis for generic drug reimbursement significantly underpays pharmacies and threatens Medicaid beneficiary access to pharmacies.

AMP is a shock to pharmacy revenue and was responsible for creating several state efforts to reimburse pharmacies at a higher fee rate to compensate for low reimbursements caused by AMP. This state effort has to be approved at the federal level by the Centers for Medicare & Medicaid Services (CMS). The first request was filed with CMS in early 2006, and to this date, none of the states have won approval.

The Congressional Budget Office projected in December 2006 a total national reduction in pharmacy reimbursement of $8 billion in fiscal years 2007-2011. The US General Accountability Office projected in December 2006 that AMP-based reimbursement will be 36% below pharmacies' cost to acquire drugs and 65% below cost of more expensive generic medications. The Office of Inspector General reported in June 2007 that half of drug samples reviewed would be reimbursed at 50% below pharmacies' acquisition costs. At the administration level, the president's 2009 budget proposes cutting Medicaid reimbursement by an additional $1.1 billion over 5 years.

The proposed cuts will directly impact pharmacies on several levels, all directly related to incoming revenue versus cost of overhead. Pharmacies are already struggling with cash flow, and as reimbursements are lowered due to federal and state regulations, pharmacies will be forced to cut jobs, expenses, and possibly pharmacy hours. The possibility of pharmacies being reimbursed less than the cost for the actual drug for Medicaid prescriptions jeopardizes access to medications for Medicaid beneficiaries, and just as importantly, jeopardizes access to the pharmacist of their choice for health care counseling.

Personal Importation

The members of Congress continue to react to their constituents as they push for personal importation of drugs. The United States has an extensive safety net to ensure the safety of the domestic market. Foreign suppliers and Web sites cannot ensure how medication is prepared if the medication is not stored in compliance with US law. This absolutely degrades the patient?pharmacist relationship. US manufacturers are the only entity that may reimport drugs into the United States.

Congress has introduced numerous importation bills that are waiting to be given a committee hearing. The Federal Health and Human Services Secretary must certify, after a bill is passed allowing reimportation, that the medication poses no additional risk to public health and will result in a significant reduction in the cost of drugs to the American consumer.

BTC Drugs


Congress is addressing the behind-the-counter (BTC) class of drugs. This change, if enacted, will change pharmacy and allow pharmacists to dispense designated medication that currently can only be dispensed by a written prescription. These medications would be placed behind the pharmacy counter, and the pharmacist would determine the need of the patient. Economically, BTC drugs would create questions on a practical basis of payment and coverage by insurance companies and the status of liability protection, as well as monitoring and regulations that might in turn be set by states.

Patient safety would be paramount, as pharmacists would make decisions on dispensing these medications and would have to have clear clinical protocols defining eligibility and treatment. BTC drugs would place the pharmacist into a new and challenging phase of pharmacy that could benefit millions of people by giving them the ability to receive quick and effective treatment.

Tamper-resistant Prescription Pads

As of April 1, 2008, pharmacies were required to become compliant with the tamper-resistant prescription pad requirement. A prescription pad must contain at least one or more industry-recognized features designed to prevent unauthorized copying of a completed or blank prescription form, erasure or modification of information written on the prescription by the prescriber, and the use of counterfeit prescription forms. Prescription pads must include all 3 features by October 1, 2008, or the pads will be in violation of the federal act. This CMS directive makes pharmacists responsible for recognizing these features on the prescription pad. Once again, CMS and the federal government have placed another responsibility on pharmacists.

Electronic Prescribing

Electronic prescribing (e-prescribing) is a positive program that states have approved to enable physicians and pharmacists to be better stewards for their patients. E-prescribing is preferable to paper and oral prescribing, because it improves accuracy and increases patient safety. Direct communication between the prescribers and pharmacists increases efficiency and, in turn, helps the pharmacist provide better patient care. E-prescribing is growing across the nation as more and more physicians and pharmacy practices are realizing the many benefits.

Why Advocacy Is Necessary

Federal and state laws will be more onerous as governments strive to overcome the cost of health care, which is bankrupting their budgets. Pharmacists must help these governments understand that they are an integral member of the health care team. Surveys show that > 65% of respondents said it was important to have the opportunity to interact directly with their pharmacist. Pharmacists are the medication experts who are available in emergencies, and their pharmacies are a huge source of local jobs and generate large tax revenues.

While pharmacy students must learn the integral parts of pharmacy practice, they also must turn their attention to the politics of pharmacy. Federal and state governments are more involved in the practice of pharmacy now than they have ever been. To this end, it is the necessity of students to learn what they must do in order to be politically informed practicing pharmacists.

Two North Carolina associations—the Association of Community Pharmacists and the North Carolina Association of Pharmacists—in tandem have taken a step to help pharmacy students become more aware at a congressional level. The Washington Rotation Program was developed to allow pharmacy students to spend a 2-month rotation interning in a congressional office. This enables the pharmacy student to work with pharmacy issues as well as general health issues at the congressional level. This rotation, which has been praised by congressional offices, also helps the congressional office better understand pharmacy issues and allows the office to work with a health care expert.

More than 56,000 pharmacies across the nation dispense >3 billion prescriptions, and those pharmacies employ >2,800,000 workers—not just workers, but health care providers. It is imperative to understand that federal and state laws are designed and passed by members of Congress that are looking for cost savings and probably do not understand the unintended consequences they are creating. It is up to you, the pharmacist, the expert, to be the messenger to Congress and your local state government and help them understand that cost-cutting in the pharmacy is depriving patients access to better health care.