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New ‘Affordable Health Choices’ bill fails to allay reimbursement concerns


ALEXANDRIA, Va. The National Association of Chain Drug Stores is again raising concerns in Congress about the future of Medicaid pharmacy reimbursements under a health overhaul plan making its way through the House of Representatives.

NACDS president and CEO Steven Anderson voiced the industry’s alarm over Medicaid average manufacturer price, payment rates in a letter to three influential committees. That letter – sent to Charles Rangel, D-N.Y., chairman of the Committee on Ways and Means; California Democrat Henry Waxman, chairman of the Committee on Energy and Commerce; and George Miller, the California Democrat who chairs the Committee on Education and Labor – comes in reaction to H.R. 3200, the America’s Affordable Health Choices Act.

Anderson praised Congress’ overall health reform efforts and reiterated his group’s commitment to reducing costs, improving quality care and increasing access to services. But he voiced concern over the language in the bill addressing Medicaid prescription payments.

Specifically, NACDS remains opposed to the current definition of AMP. “We believe a crucial component of a reformed average manufacturer price-based reimbursement system is an accurately defined AMP,” Anderson told the committee heads. “The AMPs currently reported to CMS by drug manufacturers do not reflect the AMP definition, the average price paid by wholesalers for drugs distributed to the retail class of trade.

“H.R. 3200 rightfully removes pharmacy benefit manager rebates from the AMP definition, as these discounts are not available to retail pharmacies, and makes several other important improvements,” he added. “However, additional changes to the AMP definition are needed.”

For instance, said NACDS’ top manager, sales of certain drugs to hospitals, physicians, and clinics remain part of the AMP definition.

“Clearly, these entities are not part of the retail class of trade, and inclusion of these sales skew the AMP benchmark downward.” As a result, he said, “they should not be used to set FULs [Federal Upper Limits] for pharmacy reimbursement.”NACDS is also “extremely concerned” about the formula contained in the bill for reimbursing pharmacies at 130% of cost for dispensing generic medications.

“Keeping in mind dispensing fees that reimburse pharmacies well below their costs to dispense, this multiplier will result in insufficient reimbursement to pharmacies for dispensing generic drugs in the Medicaid program,” Anderson admonished lawmakers.

Such a payment level is far below the 300% level envisioned in a bill that failed to pass last year’s session, the Fair Medicaid Drug Payment Act sponsored by New Jersey Democratic Rep. Frank Pallone, Anderson pointed out. Worse, he added, it “will end the incentives to dispense generic medications, which are so critical to reducing prescription drug expenditures in the Medicaid program.”

The Affordable Health Choices Act also enables creation of a federally sponsored health plan for Americans who don’t wish to participate in a private insurance offering. The legislation permits the secretary of Health and Human Services to negotiate pharmacy reimbursement rates for prescription drugs in this public plan, but Anderson also voiced concern “that this could result in insufficient national or regional pharmacy reimbursement rates.”

The pharmacy leader cited a national study conducted by the accounting firm Grant Thornton, which pegged the actual cost to dispense is approximately $10.50. “We urge Congress to be mindful that there are two components of pharmacy reimbursement – product reimbursement as well as a dispensing fee – to cover the costs of dispensing a medication,” he wrote.

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