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Rx groups ask HHS for relief from effects of AWP cuts

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ALEXANDRIA, Va. — Following a court ruling earlier this month that lets insurers reduce the rate at which they reimburse pharmacies for filling prescriptions, industry advocates have appealed to federal regulators for help.

In a letter to Health and Human Services Secretary Kathleen Sebelius, the National Association of Chain Drug Stores, National Community Pharmacists Association (NCPA) and National Alliance of State Pharmacy Associations (NASPA) have asked the department to ensure that state Medicaid programs adjust their reimbursement schemes to offset the lower rates that went into effect on September 26.

Under the federal court ruling, 1,442 drugs are affected. And First DataBank Inc. and Wolters Kluwer Health Inc.’s Medi-Span division — the two companies that publish drug prices — have said they will also reduce the average wholesale prices (AWPs) used to calculate reimbursement rates on 7,000 more medications.

First DataBank has said that it will stop publishing AWPs within the next two years as well.

NACDS, NCPA and NASPA say the reduced reimbursement rates will threaten patients’ access to pharmacies.

“We strongly urge you to please act now to instruct states to modify their Medicaid pharmacy reimbursement rates such that access to pharmacy services can be maintained,” the letter to Sebelius says.

“If states do not adjust their payment rates, reimbursement will be artificially reduced by about 4% below the states’ best estimate of pharmacies’ actual acquisition costs,” NACDS, NCPA and NASPA contend.

The associations’ appeal to Sebelius came less than a week after the U.S. Court of Appeals for the 1st Circuit upheld a district court ruling approving the controversial First DataBank and Medi-Span settlements.

As a result, the formula used to calculate the reimbursement rate paid to pharmacies was lowered to 120% of the wholesale acquisition cost (WAC), a move that the pharmacy associations say will have devastating consequences for retailers.

Although they initially said that the cuts could cost community pharmacies $350 million a year, further research by the groups puts the figure at more than $550 million annually.

The appeals court ruling may signal an end to the pharmacy associations’ three-year quest to get what they feel is a fair reimbursement rate.

The lower rates stem from a settlement between First DataBank and Medi-Span and several pharmacy benefits managers over the publishing of reduced AWPs.

The settlement between the publishing companies and PBMs came after a district court in Massachusetts found that First DataBank and Medi-Span had fraudulently conspired to raise AWPs for prescription drugs, to the detriment of payers and consumers.

The ruling required the publishers to reduce AWPs for the 1,442 drug codes from 125%
of WAC to 120% of WAC by September 26.


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