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Transition Period Necessary to Ensure Patient Access to Pharmacy Services, Stakeholders Tell HHS

April 9, 2014

ARLINGTON, Va. — Emphasizing implementation challenges that could impact patient access to pharmacy services, a coalition is urging Secretary of Health and Human Services (HHS) Secretary Kathleen Sebelius to allow a one-year transition period for states to fully implement the Medicaid average manufacturer's price (AMP)-based federal upper limits (FULs) for prescription medications.

“Given CMS’ expectation that states adjust both the drug reimbursement and dispensing fees for Medicaid reimbursement by July 2014, we are concerned that many states are not ready to make such a quick transition,” the groups stated in the letter.  “Therefore we are requesting that CMS allow states a transition period for implementation of the FULs and corresponding dispensing fee changes to be one year from the time the states have everything they need for implementation from CMS.”

The letter was signed by the American Pharmacists Association, Food Marketing Institute, Generic Pharmaceutical Association, Healthcare Distribution Management Association, National Association of Chain Drug Stores, National Alliance of State Pharmacy Associations and the National Community Pharmacists Association.

In November 2013, the Centers for Medicare & Medicaid Services (CMS) announced final publication of the National Average Drug Acquisition Costs (NADACs) and indicated that the final AMP-based FULs would be published in July 2014.  CMS also stated that the final AMP rule would be released in May 2014.  However, there are concerns that the final rule release date may be delayed.  But CMS has maintained that the July 2014 publication of the final AMP-based FULs is a hard deadline and CMS expects immediate state implementation of those new FULs.

“While CMS may be ready to implement changes to the ingredient side of the formula immediately in July 2014, states face additional obstacles that hinder their ability to be so expedient. Most states require legislative or regulatory changes, have short legislative sessions this year that do not allow for Medicaid reimbursement changes, will have to do a cost-of-dispensing-fee study prior to implementing a dispensing fee change, and/or will have to file a State Plan Amendment to implement such a change,” the letter stated.

The groups that signed the letter have long-held that AMP is an inaccurate benchmark for pharmacy reimbursement, and there is no correlation between the weighted AMP and pharmacy acquisition costs.

In the letter, the organizations also cited a September 2013 letter by the National Association of Medicaid Directors (NAMD) to CMS requesting that CMS provide states with a transition period of up to one year for implementation of AMP-based FULs in order to protect access to pharmacy services for Medicaid beneficiaries, “We share NAMD’s concern about beneficiary access to pharmacy services.”

“While we remain hopeful that CMS will utilize the rulemaking process to implement Medicaid pharmacy provisions in a manner that will ensure that pharmacies are not reimbursed below cost, we are still concerned with the flawed AMP-based methodology and CMS’ timeline for implementing the new AMP-based FULs,” the groups concluded in the letter.

ABOUT NACDS

NACDS represents traditional drug stores and supermarkets and mass merchants with pharmacies. Chains operate more than 40,000 pharmacies, and NACDS’ 125 chain member companies include regional chains, with a minimum of four stores, and national companies. Chains employ more than 3.8 million individuals, including 175,000 pharmacists. They fill over 2.7 billion prescriptions yearly, and help patients use medicines correctly and safely, while offering innovative services that improve patient health and healthcare affordability. NACDS members also include more than 800 supplier partners and nearly 40 international members representing 13 countries. For more information, visit www.NACDS.org.

ABOUT HDA

HDA is the national association representing primary healthcare distributors, the vital link between the nation’s pharmaceutical manufacturers and healthcare providers. Each business day, HDA member companies ensure that over 15 million prescription medicines and healthcare products are delivered safely and efficiently to more than 200,000 pharmacies, hospitals, long-term care facilities, clinics and others nationwide. HDA and its members work daily to provide value and achieve cost savings, an estimated $42 billion each year to our nation’s healthcare system.

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