Retail Pharmacy Facing Medicaid Cuts

WASHINGTON The retail pharmacy industry is contesting a proposal put forth Monday by the Bush administration to significantly lower Medicaid drug reimbursements. In an attempt to cut $8.4 billion from the Medicaid program over the next five years, the proposal, a provision of the Deficit Reduction Act of 2005, will base the government‘s calculation of drug prices on the average manufacturer‘s price (AMP), the average price manufacturers charge wholesalers, rather than the current average wholesaler‘s price (AWP), the average price wholesaler‘s charge pharmacists for drugs. The new prices are likely to be lower than the current prices, thus lowering the amount that the government reimburses pharmacists for the drugs. In addition, the National Association of Chain Drug Stores, Alexandria, Va., stated that the proposal may cost taxpayers more that it saves because it exempts higher cost brand-name drugs, which would preserve the higher reimbursement on those drugs and possibly discourage the dispensing of lower-priced generic drugs. “Under this plan, pharmacists would be losing an average of $3 to $4 for every generic prescription dispensed,” said Bruce Roberts, executive vice president and chief executive officer of the National Community Pharmacists Association, Alexandria. Roberts warned that the cuts could force many independent pharmacies out of the Medicaid program. It is expected to take effect in February. -- Wendy Toth