Skip to main content

Budget cutters’ favorite target would again bear brunt

3/3/2008

ALEXANDRIA, Va. —The anti-pharmacy budget whackers at the Bush White House are at it again.

True to his apparent conviction that there’s no easier target for the budget axe than pharmacy, President Bush unveiled a federal budget proposal that slices another $1.1 billion from Medicaid prescription reimbursements.

Once again, the cuts fall disproportionately on pharmacies already hammered by dwindling profit margins and reimbursement cutbacks. And again, they take particular aim at lower-cost generic drugs rather than on higher-end branded medicines.

In his final year in office, the president has submitted a budget plan that would slice an estimated $1.8 billion in spending for the Medicaid program for the poor, but would increase funding for the State Children’s Health Insurance Program. Although some of the Medicaid savings would come through a cap on federal reimbursements to states to administer the program, the bulk of the projected savings would come via another attempted shakedown of community pharmacy.

Specifically, the 2009 White House budget would achieve those savings by reducing the federal upper limit for Medicaid prescription reimbursements to pharmacies, from 250 percent of the average manufacturer’s price of a generic drug to 150 percent.

Predictably, both the chain and independent retail pharmacy industries again are crying foul. “Even as pharmacies currently face drastic cuts under the Deficit Reduction Act of 2005, the president’s budget proposes cutting reimbursement by an additional $1.1 billion over five years,” stated the National Association of Chain Drug Stores.

NACDS president and chief executive officer Steve Anderson elaborated, but added an olive branch by pledging that the chain drug store industry was ready to help cut rising costs for Medicaid and Medicare. “For the third-straight year, the president’s budget calls for further cuts to a reimbursement formula that already underpays pharmacies,” Anderson said. “We are deeply troubled by these proposed cuts. However, we are eager to work with Congress and [the U.S. Department of Health and Human Services] on provisions that will increase the availability of money-saving generic medications.”

Speaking for independent drug store owners, the National Community Pharmacists Association warned that the plan to cut Medicaid “significantly limits the ability of small business owners to serve their communities and patients.

“The Government Accountability Office has already calculated that a FUL reimbursement set at a maximum 250 percent of AMP will lead to reimbursements falling 36 percent below acquisition costs,” NCPA noted. “Using a reduced 150 percent figure will likely cause reimbursement to fall more than 50 percent below the costs of the drugs themselves, without even considering the costs to dispense drugs.”

“A patient’s medical needs don’t diminish just because their community pharmacy is threatened. In underserved rural and urban communities these patients lack options other than expensive emergency rooms and doctors’ offices,” Roberts added. “The proposed savings are fictional. If adopted, the healthcare costs would actually rise because community pharmacies would not be there for their patients.

“We urge Congress to reject, as it has the last two years, this ill-advised gutting of Medicaid,” he said.

Thus far, Democrats in Congress have shown little inclination to support the White House proposals. If enacted, the spending plan would allocate roughly $515 billion to defense spending—not including $70 billion already sought by the administration to fund the wars in Iraq and Afghanistan—and push the federal debt to an estimated $5.9 billion.

X
This ad will auto-close in 10 seconds