Pharmacy groups seek speedy hearing in bid to overturn Medicaid payment rules

ALEXANDRIA, Va. Ratcheting up their high-stakes legal campaign to halt the Bush Administration’s plan to dramatically cut Medicaid prescription reimbursements next year, chain and independent pharmacy leaders have asked a federal court to speed up its review of a lawsuit they filed last week.

In a motion filed jointly today in U.S. District Court for the District of Columbia, the National Association of Chain Drug Stores and the National Community Pharmacists Association sought an expedited review of a suit they filed Nov. 7 against the U.S. Department of Health and Human Services and the Centers for Medicare & Medicaid Services. The last-ditch legal action—which comes less than three months before a new Medicaid payment formula for generic drugs is set to go into effect Jan. 30, 2008—seeks an injunction against the imposition of the new payment plan.

The suit—which also names HHS Secretary Michael Leavitt and CMS acting administrator Kerry Weems—seeks to overturn the new reimbursement rule as a violation of laws governing Medicaid payments under the Social Security Act.

NACDS and NCPA are also asking the court to halt a CMS plan to publish “misleading” drug price information on a public web site.

CMS’ new reimbursement formula for generic prescriptions dispensed under Medicaid is based on the average manufacturer’s price of the generic drug, plus a dispensing fee. The government’s new payment program also includes a plan to publish the AMP-based prices of generics on the Internet.

The new reimbursement formula will force pharmacies to operate at a loss, the suit contends, and could lead to the disruption of service to Medicaid patients and even to the closing of many pharmacies.

In a joint statement issued today, NACDS president and chief executive officer Steve Anderson and NCPA executive vice president and chief executive officer Bruce Roberts cited the need for urgency. “In less than three months, the pending rule put forth by CMS will go into effect, resulting in drastic reimbursement cuts for retail pharmacies,” they noted. “The injunction seeks to obtain an expedited review of the lawsuit given the short time frame pharmacies are facing.

“We cannot stress enough the importance of a remedy that will allow low-income patients to have access to their medications,” the two industry group leaders added. “We continue to move forward with our two-prong approach—both legally and legislatively—in finding a remedy to these cuts. While we are hopeful to have a success in court, it is imperative to encourage Congress to work with community pharmacy to find more appropriate and long-term cost-based models for reimbursement under Medicaid.”

In support of the effort to halt the AMP-based payment plan, the motion also includes a new report on the possible economic impact the new plan could have on the nation’s community pharmacies. The author of the report, Stephen Schondelmeyer, contends that the Medicaid reimbursement cuts could devastate pharmacies that serve large populations of Medicaid patients in rural or inner-city urban areas.

Those cuts could lead to the loss of as many as 10,000 to 12,000 pharmacies nationwide, predicts Schondelmeyer.

“The economic report by Dr. Schondelmeyer, filed today, is further evidence of both the illegality and anticipated harm of the final CMS rule,” Anderson and Roberts asserted. “It is worth noting that CMS has relied on [his] expertise and analysis previously, having hired him to prepare six reports for the agency.”

Schondelmeyer, who heads the Department of Pharmaceutical Care & Health Systems at the College of Pharmacy at the University of Minnesota, also warned that “flawed data related to this rule might be published online as early as December 2007,” they noted.

“In general, transparency of price information is usually a good thing for consumers and for the market,” Schondelmeyer reported. “However, when disclosed information is complex, confusing, or even inaccurate, the transparency loses its value or even becomes counterproductive.”