Pharmacists seek to block Medicaid drug pay rule

Washington Pharmacists are urging lawmakers to rewrite a Bush administration rule that would reduce their Medicaid payment for many generic drugs to below acquisition costs, possibly reducing Medicaid enrollees' access to prescriptions.

Pharmacists' trade associations celebrated in 2007 and 2008, when first a federal court and then Congress blocked the implementation of a Center for Medicare & Medicaid Services rule lowering federal Medicaid payment limits for generic drugs.

The rule -- required by the Deficit Reduction Act of 2005 -- would have lowered the pay for many generic Medicaid drugs to less than what the drugs cost pharmacists, according to a 2006 Government Accountability Office report. CMS disagreed with that conclusion, saying the GAO report did not account for other provisions in the act that would mitigate the rule's impact.

The CMS rule was a response to findings that federal upper payment limits were overly generous. For example, a 2007 report by the Dept. of Health and Human Services Office of Inspector General found that federal payment limits were at least twice as high as pharmacists' acquisition costs for 23 of the 25 drugs Medicaid spent the most on in 2005. The Congressional Budget Office estimated that the rule would have reduced Medicaid spending on drugs by $3.6 billion over five years.

But National Community Pharmacists Assn. spokesman John Norton said the CMS rule was an overcorrection and would force certain pharmacies to stop dispensing generic Medicaid drugs or to close entirely. For some pharmacies, especially in medically underserved areas, Medicaid provides the majority of their business, Norton said.

The U.S. District Court for the District of Columbia found the CMS rule to be inconsistent with Medicaid law and issued an injunction against the rule in December 2007. Congress issued a moratorium against the rule in July 2008. The moratorium expires Oct. 1.

But pharmacists may be able to breathe easier under the Obama administration. A CMS spokesman said the legal injunction against the rule is still in effect. Stephen Giroux, RPh, immediate past NCPA president and owner of eight pharmacies in upstate New York, said lawmakers and the administration are listening to NCPA's concerns.

NCPA had been hoping for quick adoption of the House health system reform bill. It includes a provision rewriting the Medicaid drug payment formula to more favorable terms, Norton said. The bill also would extend the moratorium until Dec. 31 while the HHS secretary drafts the new formula.