OLYMPIA, Wash. – On Thursday, April 29, the National Association of Chain Drug Stores (NACDS), the Washington State Pharmacy Association (WSPA) and the National Community Pharmacists Association (NCPA) filed a lawsuit against the Secretary of the U.S. Department of Health and Human Services and the Centers for Medicare & Medicaid Services (CMS) Administrator to challenge the recent approval of Washington State’s unlawful, below-cost Medicaid pharmacy reimbursement plan – which may jeopardize both reliable patient access to care and pharmacy viability alike.

In the complaint – which was filed under the Administrative Procedure Act in federal district court in Washington State – the pharmacy groups noted that “Washington State reimburses its pharmacies serving Medicaid beneficiaries at the lowest rate in the country” and that “ts rate is less than one-half the rates paid by all neighboring states.”

The groups argued that the federal approval of the “State Plan Amendment” was “arbitrary and capricious,” in part because Washington State failed to conduct a cost of dispensing survey or use other reliable data to create a reimbursement rate consistent with federal Medicaid rules.

“Pharmacies have and will continue to be reimbursed at a rate that is unlawfully too low because [the rate] fails to consider or account for the actual costs associated with filling the prescriptions for Medicaid beneficiaries as required by law,” the groups stated.

Of critical importance, NACDS, WSPA and NCPA emphasized that over the past several years – from 2017 through the end of 2020 – CMS has taken the consistent position that Washington State’s reimbursement rate violates federal law. As a result, the acting CMS Administrator’s unexpected approval of the rates on the last day of the prior administration – January 19, 2021 – is inconsistent with the federal agency’s previous position on and actions related to the issue.

The pharmacy groups are urging the Court to reverse the approval as unlawful and remand the “State Plan Amendment” back to the Centers for Medicare & Medicaid Services for a final decision on its fate compliant with the law.

As background, in 2016, CMS put in place a new rule changing how states must reimburse pharmacies. A key part of the rule indicates that states must reimburse pharmacies for their actual costs in dispensing drugs to Medicaid beneficiaries. Since that time, NACDS, WSPA and NCPA, until January 19th, had successfully argued that Washington State failed to comply with that rule, maintaining its below-cost dispensing fees, and CMS had agreed.

Indeed, NACDS, WSPA and NCPA urged the federal Centers for Medicare & Medicaid Services to take final action to reject Washington State’s below-cost Medicaid pharmacy reimbursement plan, in accordance with an Administrative Law Judge’s decision.