WASHINGTON — Testifying for the Food Marketing Institute, Arlington, Va., Ed Hagan, director of pharmacy, Associated Food Stores, Salt Lake City, told the House Committee on Small Business this month that a new rule covering Medicaid reimbursement will face supermarket pharmacies served by the wholesaler with the choice of “leaving the program or going out of business.”
The new rule of the Centers for Medicare and Medicaid Services bases pharmacy reimbursements on the Average Manufacturer Price rather than Average Wholesale Price, which is now used. Pharmacies will lose money under the AMP policy, Hagan said.
“Depending on how states and various private payers react to the implementation of AMP as a benchmark, my rough estimate is that the policy being implemented has the potential to decrease pharmacy margins by five to seven percentage points — which would cause many of the small stores represented by Associated Foods to lose money. Even if the damage is limited solely to Medicaid, this would be a devastating cut for retail pharmacy and could result in the failure of some of our small-business members,” Hagan said.
“The use of AMP as a reimbursement measure represents a significant threat to pharmacies and the Medicaid beneficiaries they serve. FMI believes that the Congress must act to address this threat,” he said.