New Medicare Rule Could Be Trouble for Neighborhood Pharmacies

The Association of Community Pharmacists Congressional Network (ACP*CN) is up in arms over actions of The Centers for Medicare and Medicaid (CMS) that they say will reduce Medicaid reimbursements states’ pay to pharmacies for generic drugs. Click the link to read about medicaid asset protection trust.

Their opinion is that the new rule issued July 6th, fails to provide a clear definition of Average Manufacturers Price (AMP), the basis used by states to calculate the Medicaid generic drug reimbursement rate for pharmacies. If there is no clearly stated price for each drug, there will be confusion for sure, with the druggest not knowing what to charge. Charge too little, you can lose money, charge too much and the payment will be denied.

From Mike James, Vice President Governmental Affairs, ACP*CN. “Sadly, this latest development combined with the already severe under- reimbursement independent pharmacies receive from Pharmacy Benefit Managers (PBMs) for Medicare D drugs may threaten patient access to medication services by bringing financial ruin to the corner drug store,” added James.

The medicare system which is the responsibility of CMS to watch over, is grossly over complicated, with many of the patients not knowing if they are coming or going. The Average Manufacturer Price (AMP) is the price drug manufacturers charge wholesalers for the pills. The wholesalers then sell the drugs to pharmacies. AMP has never been used before as a basis for pharmacy reimbursement. What happens for instance if a pharmacy pays more than the AMP for the drug and can only collect the medicare portion based on the lower figure, simple math says they will loose money. This is particularly harmful to the small local pharmacist who does not have the backing of a large corporation that can get the pills at a lower price simply because they can order in large quantities. An average price does not present a true picture of the cost of the product.

Pharmacies will be losing money on every generic Medicaid drug they dispense. If they cannot make money on generic drugs, pharmacies will have to dispense higher priced brand name drugs, drop Medicaid or go out of business due to the low reimbursement. Who would benefit from the increased sales of the higher priced drugs? Not the patient, not medicare and not the pharmacy. The cost of the product does not reflect the profit % a store makes on products. In many cases, the store makes a bigger % on a lower priced item Take it from someone who spent the better part of 40 years is the retail field.

The CMS, in its own press release states “the new payment calculations could result in some reduction in drug-related payments to pharmacies.”