Medicaid Cuts Premature; CMS Should Finish What It Started and First Complete FULs, Say Drug Stores, Pharmacists

Medicaid officials should modify and complete already proposed regulations to set future federal upper limits (FULs) for reimbursement of most generic drugs, before any new Medicaid cuts are made that could threaten patient access to prescription drugs and pharmacy services, the National Association of Chain Drug Stores (NACDS) and the National Community Pharmacists Association (NCPA) wrote to CMS in a recent letter.

In their letter, NACDS and NCPA expressed concerns with CMS’ proposal to again reduce Medicaid drug reimbursement that was included in President Obama’s fiscal year (FY) 2014 budget plan. According to the two groups, the new proposal is “premature” because CMS has not yet completed its ongoing rulemaking process by which it intends to establish new FULs that are based on Average Manufacturer Price (AMP). The FULs would apply to the vast majority of generic drugs (or “multi-sourced” generics).

“While the goal of this provision may be to decrease Medicaid costs, we believe it may in fact reduce access to prescription drugs and pharmacy services for Medicaid patients, resulting in increased overall healthcare expenditures,” said NACDS President and Chief Executive Officer Steven C. Anderson, IOM, CAE and NCPA CEO B. Douglas Hoey, RPh, MBA in their letter.

FUL Program

The FUL program was established to ensure that Medicaid is able to take advantage of lower market prices for multiple-source drugs (drugs that have an available generic version). CMS published a series of draft FULs for hundreds of drugs, but has not yet implemented them. NACDS and NCPA have objected to these draft FULs, claiming they require more adjustment. According to the two groups, CMS would pay pharmacies well below their costs of serving Medicaid patients and these cuts could potentially have the effect of forcing some pharmacies out of the Medicaid program as well as undermine the incentive to dispense cost-saving generic drugs.

“[A]dditional efforts by CMS are necessary to ensure that pharmacies are not reimbursed below their costs using the reimbursement formula created by the Affordable Care Act,” Anderson and Hoey added in their letter. “We urge the agency to utilize the rulemaking process to implement the Medicaid pharmacy provisions in a manner consistent with congressional intent, rather than pursuing policies that would further cut pharmacy reimbursement.”