AWP ruling triggers urgent appeal as pharmacy leaders petition HHS

WASHINGTON In an urgent appeal following a court ruling last week that upheld a settlement of a longstanding dispute over the wholesale prices paid for prescription drugs, three national pharmacy groups are asking the nation’s top federal health official for help in their bid to stave off anticipated state cuts in Medicaid prescription payments.

The National Association of Chain Drug Stores, National Community Pharmacists Association and National Association of State Pharmacy Associations hand-delivered a letter to Health and Human Services Secretary Kathleen Sebelius in a high-stakes bid for relief from a new round of anticipated cuts in Medicaid pharmacy reimbursements. The letter, dated Sept. 8, asks Sebelius to intervene quickly on behalf of community pharmacies to avoid “major Medicaid cuts that threaten patient access to pharmacies.”

The request comes in the wake of a federal court ruling handed down Sept. 3. In that ruling, the U.S. Court of Appeals rejected an appeal from retail pharmacy advocates and upheld a lower court's settlement of a class-action lawsuit filed by a group of health plan sponsors against two drug data publishers, First DataBank and Medi-Span, along with drug wholesalers. The plaintiffs – which included union pension funds, teachers’ unions and other health plan sponsors – alleged that the publishers and wholesalers illegally conspired to inflate the markup between Wholesale Acquisition Cost and average wholesale price from 1.20 to 1.25. “This resulted in higher costs to patients and third party payers,” noted NCPA earlier this year. 

Under terms of the settlement, both publishers agreed to reduce the published AWP figures used in pharmacy reimbursement contracts, beginning with new drug pricing data released Sept. 26. But without intervention by the HHS secretary, the pharmacy groups warned in their appeal to Sebelius, the reduction “will result in significant cuts to the pharmacy reimbursement rates in all states that base their reimbursement methodology on AWP.

“We are concerned that many state Medicaid programs are not acting to make changes to their pharmacy reimbursement rates to compensate for a change in the way that the pharmacy reimbursement benchmark…is being calculated and reported,” noted NACDS, NCPA and NASPA. “This AWP benchmark is the one which is most frequently used by state Medicaid programs to reimburse pharmacies for most single source drugs and some multiple source drugs.”

Added the letter, “We strongly urge you to please act now to instruct states to modify their Medicaid pharmacy reimbursement rates such that access to pharmacy services can be maintained.” If states do not adjust their payment rates, noted the pharmacy groups, “reimbursement will be artificially reduced by about 4% below the states’ best estimate of pharmacies’ actual acquisition costs.”

The court’s affirmation of the settlement creates what NACDS president and CEO Steve Anderson calls a “fragile situation” regarding pharmacy reimbursements. In a statement that seems to mingle resignation over the ruling with a determination to shift the battle to other venues outside the courtroom, Anderson vowed to continue pressing the fight to protect pharmacy reimbursement levels.

“For three years, the National Association of Chain Drug Stores and allied organizations have been successful through legal action in preventing reductions to published average wholesale prices for prescription drugs,” Anderson noted. “This has prevented subsequent reductions in reimbursement to pharmacies for the patient care they provide, and thus has been a three-year campaign that was worth waging on behalf of pharmacies and the patients they serve.  

“The appellate court’s ruling…that now allows the reduction of AWPs does not signify the end of the campaign, but rather shifts the urgency for action to other arenas,” added NACDS’ chief executive. “The fact remains that reduction of AWPs threatens to cut pharmacy reimbursement for drugs below their costs – an untenable position for any healthcare provider and for any business.

“Fortunately, some private payers are taking steps to remedy this situation by making appropriate reimbursement adjustments. Likewise, we renew our call today to state Medicaid programs to take the only viable course for patient care and to address the flawed reimbursement that the reduced AWPs will create.”