U.S. Chamber lends support in Medicaid payments battle

WASHINGTON

Pharmacy and congressional leaders opposed to the new Medicaid prescription payment rules that threaten community pharmacies picked up a powerful ally last month, when the U.S. Chamber of Commerce expressed strong support for current moves in the House and Senate to overturn those rules.

Siding with chain and independent pharmacy owners, the chamber has sent letters to the key sponsors of two pieces of legislation, endorsing their efforts to address the new pharmacy reimbursement formula for Medicaid generic prescription drugs. The letters, dated Aug. 17, went to Sen. Max Baucus, D-Mont., prime sponsor of S.1951, the Fair Medicaid Drug Payment Act of 2007, and to Reps. Nancy Boyda, D-Kan., and Jo Ann Emerson, R-Mo., prime sponsors of H.R.3140, the Saving Our Community Pharmacies Act of 2007.

“According to the Government Accountability Office, the new Medicaid reimbursement formula will not cover pharmacies’ costs of buying many drugs,” wrote R. Bruce Josten, the chamber’s executive vice president of government affairs, in his endorsement letters. “Combined with the costs of dispensing drugs, pharmacies will face serious financial losses.

“If affordable medications are not accessible to Medicaid beneficiaries, decreased wellness could lead to devastating cost increases for beneficiaries, the Medicaid program and other payers,” Josten continued. “It is in the best interest of the federal and state governments who fund Medicaid, and the business community … that those medications be reasonably available and affordable.”

Leaders of both the National Association of Chain Drug Stores and the National Community Pharmacists Association have been quick to praise the chamber for its support. “This is a breakthrough moment that adds a major voice on a major issue,” said NACDS president and chief executive officer Steve Anderson. “The statement is clear that fixing the CMS Medicaid rule merits action now for the good of patients, for the good of health care and for the good of community pharmacy.”

Added Bruce Roberts, NCPA executive vice president and chief executive officer, “The U.S. Chamber of Commerce has lent [its] considerable weight to the growing chorus who support congressional intervention to change the unfair Medicaid generic prescription drug formula for pharmacy reimbursement.”

Added Bruce Roberts, NCPA executive vice president and chief executive officer, “The U.S. Chamber of Commerce has lent [its] considerable weight to the growing chorus who support congressional intervention to change the unfair Medicaid generic prescription drug formula for pharmacy reimbursement.”

Both the Senate and House bills are aimed at easing some of the cost burdens leveled on retail pharmacy by the Deficit Reduction Act of 2005, and assuring that enough community pharmacies continue to serve Medicaid patients, particularly in low-income rural and urban areas.

The DRA prompted a major overhaul of the old Medicaid prescription payment model by the Bush administration and the Centers for Medicare and Medicaid Services. Responding to the budgeting mandates imposed by Congress in that legislation, CMS introduced a new, broadly based market-driven pricing system for generic drugs dispensed under the Medicaid system.

Pharmacy leaders predict the cost-cutting provisions of the DRA—along with the new drug pricing system—will cost U.S. pharmacies a total of $8 billion in reduced Medicaid dispensing fees over the next five years. They also assert the new payment model—which is set to take full effect Jan. 30, 2008—will end up costing U.S. taxpayers more for Medicaid prescriptions by reducing financial incentives for pharmacists to dispense generics.

Both the Baucus and Boyda/Emerson bills would force a major change in direction for CMS. The most recently introduced bill, the Baucus measure, would redefine the “average manufacturer price” provision of the new Medicaid pharmacy payment plan issued in July by CMS, by removing “discounted mail-order and pharmacy benefit manager prices that are unavailable to community pharmacies,” in the words of the National Community Pharmacists Association. Including those prices, NCPA asserts, would “unfairly lower the overall AMP formula” and lead to severe underpayments to retail pharmacies.

Both the Baucus and Boyda/Emerson bills would force a major change in direction for CMS. The most recently introduced bill, the Baucus measure, would redefine the “average manufacturer price” provision of the new Medicaid pharmacy payment plan issued in July by CMS, by removing “discounted mail-order and pharmacy benefit manager prices that are unavailable to community pharmacies,” in the words of the National Community Pharmacists Association. Including those prices, NCPA asserts, would “unfairly lower the overall AMP formula” and lead to severe underpayments to retail pharmacies.

Along those lines, the Baucus measure redefines the new prescription payment guidelines with a new pricing benchmark for generics, based on their average acquisition costs. It would also increase Medicaid reimbursements from 250 percent of the AMP to 300 percent, and set federal upper limits on Medicaid drug payments only when there are three or more equivalent drug products on the market.

The bill, also known as S.1951, also promotes generic substitution by requiring prior authorization for the prescribing and dispensing of off-patent, brand name drugs when a generic equivalent is available. The bill would not, however, require or encourage doctors or pharmacists to substitute therapeutically similar drugs when no generic is available; in other words, S.1951 does not promote therapeutic substitution, as some branded drug manufacturers had feared.

“The language in the bill supports generic substitution, not therapeutic substitution,” a spokeswoman for NACDS pointed out.

Increasingly, Baucus is making his mark as a pharmacy-friendly legislator. Last month, he also joined with Iowa Sen. Charles Grassley, the ranking Republican on the Senate Finance Committee, to introduce the Pharmacy Access Improvement Act of 2007. The bill, also known as S.1954, would require that electronically submitted Medicare Part D pharmacy reimbursement claims be paid within 14 days by electronic funds transfer. Paper prescription claims for Medicare patients would have to be paid within 30 days.