Challenging the First DataBank and Medi-Span settlements that reduce average wholesale prices (AWPs) for prescription drugs, the National Association of Chain Drug Stores and the Food Marketing Institute have filed their principal legal brief with the U.S. Court of Appeals for the First Circuit.


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NACDS, FMI file principal arguments in AWP lawsuit

June 9th, 2009
NACDS CEO Steve Anderson

ALEXANDRIA, Va. – Challenging the First DataBank and Medi-Span settlements that reduce average wholesale prices (AWPs) for prescription drugs, the National Association of Chain Drug Stores and the Food Marketing Institute have filed their principal legal brief with the U.S. Court of Appeals for the First Circuit.

The enactment of the AWP cuts would slash prescription reimbursements for many pharmacies, according to the two industry groups. They said the appeal brief contends that it's inappropriate to harm pharmacies that weren't defendants in the original lawsuit because they did nothing wrong.

NACDS and FMI said they were joined in the brief by pharmacy operators that would be impacted by the AWP reductions.

The Court of Appeals has granted a motion to expedite the schedule for the appeal, meaning that a decision on the NACDS-FMI appeal could be issued before the cuts occur on September 26.

As a result of the settlements, First DataBank and Medi-Span will reduce the AWPs of drugs to 120% of the wholesale acquisition cost on September 26. First DataBank and Medi-Span also plan to stop publishing AWPs, which are used as a drug pricing benchmark.

First DataBank, a subsidiary of Hearst Corp., and Medi-Span, a unit of Wolters Kluwer Health, were defendants in a class action filed in 2007, in which Medi-Span was charged with negligently publishing AWP information wrongfully inflated by First DataBank, a previous Medi-Span owner.

NACDS and FMI said the AWP reductions would cut Medicaid reimbursements by about $68 million each year. Pharmacies unable to renegotiate their private-sector reimbursement contracts also would face a net 4% reduction in AWP-based reimbursement, the organizations said.

“Patient access to pharmacy is at risk if the pending settlements are implemented, as they will cut Medicaid reimbursement rates for many pharmacies to devastating levels,” NACDS president and chief executive officer Steve Anderson said in a statement. “Patient access should not be compromised. In filing the appeal, we urge that the court not penalize pharmacies but instead rule on the side of patients.”

Deborah White, FMI senior vice president and chief legal officer, commented, “The District Court's approval of a judicial settlement that unconstitutionally punishes every pharmacy in the country was an egregious error. We are pleased that the First Circuit Court granted our motion to consider this matter quickly and we encourage the First Circuit to overturn the District Court's order.”

First DataBank, Medi-Span and the class-action attorneys are scheduled to file opposing briefs on June 29, according to NACDS and FMI. The two industry groups said they will then file a reply brief on July 13. The court is slated to hold a hearing with oral arguments during the week of July 27.

In April, NACDS and FMI filed a motion seeking a stay to halt implementation of the AWP reductions. Previously, both groups also filed a legal brief, including an economic analysis, to counter the proposed settlements. The brief and analysis detailed ways in which the proposed settlement’s cost savings and estimated impact were based on inaccurate economic analysis and would harm retail pharmacies.

 

MORE REIMBURSEMENT ISSUE COVERAGE:

AWP suit settlement appealed

NACDS, FMI weigh in on AWP suit

NACDS blasts AWP settlement

Walgreens to exit Delaware Medicaid program

Court delays further action in AMP case

Solution to Medicaid problem within reach

Washington state pursues cut in Medicaid

Judge blocks Medicaid cuts in Washington state

 

 

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