In a letter to key congressional committee chairmen, the National Association of Chain Drug Stores has voiced concern with pharmacy reimbursement provisions in House health care reform legislation.

National Association of Chain Drug Stores, Steve Anderson, Charles Rangel, Henry Waxman, George Miller, America's Affordable Health Choices Act, H.R. 3200, pharmacy reimbursement, AMP, health reform

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NACDS speaks up on Rx reimbursement in health reform

July 21st, 2009
NACDS CEO Steve Anderson

ALEXANDRIA, Va. – In a letter to key congressional committee chairmen, the National Association of Chain Drug Stores has voiced concern with pharmacy reimbursement provisions in House health care reform legislation.

NACDS president and chief executive officer Steve Anderson sent the letter this week to Charles Rangel (D., N.Y.), chairman of the Ways and Means Committee; Henry Waxman (D., Calif.), chairman of the Energy and Commerce Committee; and George Miller (D., Calif.), chairman of the Education and Labor Committee, regarding the America's Affordable Health Choices Act (H.R. 3200).

Anderson pointed to two pharmacy reimbursement provisions in the legislation: the definition of the average manufacturer price (AMP) and the 130% multiplier for dispensing drugs. He said in the letter that unless the provisions are modified, NACDS believes they could result in unsustainable pharmacy reimbursement in Medicaid and, in turn, limit patient access to affordable prescription drugs and important pharmacy services.

"We believe a crucial component of a reformed average manufacturer price-based reimbursement system is an accurately defined AMP," Anderson wrote. "The AMPs currently reported to CMS [Centers for Medicare and Medicaid Services] by drug manufacturers do not reflect the AMP definition, the average price paid by wholesalers for drugs distributed to the retail class of trade. H.R. 3200 rightfully removes pharmacy benefit manager rebates from the AMP definition, as these discounts are not available to retail pharmacies, and makes several other important improvements.

"However, additional changes to the AMP definition are needed," he noted. "For example, sales of certain drugs to hospitals, physicians and clinics remain part of the AMP definition. Clearly, these entities are not part of the retail class of trade, and inclusion of these sales skew the AMP benchmark downward. While we recognize that an AMP may need to be calculated for these sales for the purposes of rebate collection, they should not be used to set federal upper limits for pharmacy reimbursement."

Anderson also urged lawmakers to rethink the 130% multiplier proposed in the legislation. "Keeping in mind dispensing fees that reimburse pharmacies well below their costs to dispense, this multiplier will result in insufficient reimbursement to pharmacies for dispensing generic drugs in the Medicaid program," he said in the letter. "We are concerned that this reimbursement will end the incentives to dispense generic medications, which are so critical to reducing prescription drug expenditures in the Medicaid program. In the 110th Congress, NACDS supported H.R. 3700, the Fair Medicaid Drug Payment Act, sponsored by Rep. Frank Pallone, which proposed a multiplier of 300% and is clearly key to appropriate pharmacy reimbursement."

In addition, Anderson addressed provider reimbursement in the public health coverage plan proposed by the bill. "The legislation permits the Secretary of Health and Human Services to negotiate pharmacy reimbursement rates for prescription drugs in the public plan," he explained. "We are concerned that this could result in insufficient national or regional pharmacy reimbursement rates. These insufficient rates might discourage participation by pharmacies, possibly compromising access to prescription drugs and pharmacy services.

"We urge Congress to be mindful that there are two components of pharmacy reimbursement — product reimbursement as well as a dispensing fee — to cover the costs of dispensing a medication," Anderson added. "A national study conducted by the accounting firm Grant Thornton found that the actual cost to dispense is approximately $10.50. In order to create a robust pharmacy network for public plan beneficiaries, fair and accurate pharmacy reimbursement for product cost as well as cost to dispense is critical."