Pharmaceutical Groups Seek Delay of New Generic Drug Payment Rate
In a letter sent last week to HHS Secretary Kathleen Sebelius, a coalition of drugmakers and pharmacists requested that CMS implement a one-year transition period before states implement a new provision under the Affordable Care Act that would significantly reduce Medicaid reimbursement rates for generic prescription drugs, Modern Healthcare reports.
Medicaid currently determines such reimbursements based on the average wholesale price, or AWP. In 2005, CMS attempted to swap the AWP with a payment calculation system based on the drugs' average manufacturer price, or AMP. However, industry stakeholders successfully sought an injunction in 2007.
The ACA reintroduced the AMP system in 2010, prompting CMS to issue a new rule in 2012 that used the ACA's language. In November 2013, the agency informed states' Medicaid programs that they would have to implement the new formula by July 2014.
In August 2013, the HHS Office of Inspector General reported that the new federal payment limits under the ACA are, on average, about 22% lower than current state Medicaid generic drug reimbursement limits. OIG said the difference could potentially save Medicaid up to $1.2 billion annually.
In the letter, the American Pharmacists Association, the Generic Pharmaceutical Association and five other pharmacist and pharmaceutical groups said drugmakers and pharmacists would need the additional time to comply with the new reimbursement calculation formula.
They added that in some cases adopting the new rates would require legislative and regulatory changes. In addition, the groups said a one-year delay would give states more time to develop new dispensing fees, or the charges that pharmacies levy for providing certain professional services. Some pharmacists argue that the new rates would only allow them to break even on Medicaid generics, rather than turn a profit (Dickson, Modern Healthcare, 4/15).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.