ANTI-GENERIC PAYMENT PLAN DRAWS FIRE

Controversial changes proposed by theCenters for Medicare & Medicaid Services(CMS) to alter the pharmacy reimbursementformula for generic medications arebeginning to raise eyebrows—and hackles—on Capitol Hill. The changes are partof a CMS plan to cut $8.4 billion inMedicaid costs over the next 5 years.Significantly, however, pharmacy leadersnote that more than 90% of those cuts areexpected to come from slashing pharmacyreimbursement for lower-cost genericprescription medicines.

Officials at the National CommunityPharmacists Association (NCPA) contendthat such reimbursement cuts "wouldhave a disproportionate impact on thenation's 24,000 independent communitypharmacies, because 92% of their businesscomes from prescription drugs, andindependents serve large populations ofMedicaid recipients in urban and ruralareas."

NCPA is not alone in its criticism of theplan. A recent Government AccountabilityOffice (GAO) study found that the proposedregulations would force pharmaciststo accept Medicaid reimbursementfor generic drugs that is, on average, 36%below their acquisition cost. In responseto that study, a bipartisan group of 74members of Congress fired off a letter toCMS, warning that the "proposed paymentformula will be devastating to manycommunity retail pharmacies, Medicaidbeneficiaries, and the financing of theMedicaid program itself."

Citing the GAO findings, the congressionalleaders told CMS that the proposedanti-generic reimbursement change"would clearly fail to cover the pharmacy'scosts of purchasing generic medications.In fact, the formula would create adisincentive to dispense generic drugsand would deny the Medicaid programand beneficiaries the savings gained fromgeneric medications."