The Centers for Medicare & Medicaid Services is forging ahead with its proposal to set pharmacy reimbursement levels under Medicaid at average sales price plus 6% for drugs, despite opposition from industry groups and state governors.

On Aug. 5, the Bush Administration sent draft Medicaid reform legislation to the House Energy & Commerce and Senate Finance Committees.

Echoing the President's FY 2006 budget language, HHS said the proposal "more closely aligns pharmacy reimbursement with pharmacy acquisition costs."

"Currently, the Medicaid program is overpaying for prescription drugs while pharmacies and Medicare can buy drugs wholesale at a lower price," HHS said.

In January, Medicare Part B began reimbursing physicians for the drugs they administer at ASP+6% to more closely reflect acquisition costs; the agency has also proposed changing to ASP-based reimbursement for outpatient drugs administered at hospitals and dialysis facilities.

The Administration's plan to replace average wholesale price-based reimbursement with ASP+6% in the pharmacy setting has drawn criticism from groups such as the American Pharmacists Association, the National Association of Chain Drug Stores and the National Governors Association.

APhA said it is concerned that the bill does not include a dispensing fee for pharmacies in addition to the drug cost payment. Pharmacy groups have also argued that the ASP formula is not reflective of pharmacies' acquisition costs and would cause them to lose money on each transaction (¹ Also see "Increasing Medicaid Rebates 5% Would Save $3 Bil. Over Five Years – CBO" - Pink Sheet, 27 June, 2005., p. 28).

The President's FY 2006 budget also included a proposal to exchange "best price" for a flat rebate in calculating manufacturer payments to state Medicaid programs. Although the provision is absent from the language CMS circulated Aug. 5, the agency said it will submit the proposed rebate reform bill to Congress later this year.

CMS Administrator Mark McClellan has said the agency is considering a flat rebate greater than 15% of the average manufacturer price (² Also see "Medicaid “Best Price” Would Be Eliminated Under Bush Budget Proposal" - Pink Sheet, 14 February, 2005., p. 28).

Medicaid Would Pay ASP+6% To Pharmacies Under White House Bill

More from Archive

More from Pink Sheet