Medicaid Generic Drug Refund Cut Could Hurt Rural Pharmacies

Cut in Medicaid generic drug refund could hurt small, rural pharmacies

...editor's note, this post is credited to our friends at the Rural Blog at the University of Kentucky.

Independent pharmacies could be hurt by a federal proposal to cut the reimbursements they receive for providing generic prescription drugs to people on Medicaid. The Centers for Medicare and Medicaid Services’ new rule would pay pharmacists an average of 36 percent less than what it would cost them to provide the drug, according to a Government Accountability Office study.

The new rule would go into effect July 1 and would apply to all pharmacies, but small pharmacies would be hurt most because they don’t have the same sales volume as chain stores and serve more Medicaid patients. Small pharmacies might be forced to stop serving Medicaid patients. About 75 percent of the independent pharmacies in the United States are located in rural areas.

The proposal could leave many rural Medicaid patients with fewer places to get prescriptions filled, says a staff-and-wire report in the Journal News of White Plains, N.Y.

Pharmacies now make only 1 to 5 percent profit on drugs under Medicaid, according to the National Community Pharmacists Association. Steve Feinstein, co-owner of the Prescription Center of Ossining, said that as an independent pharmacist he feels “there's a concerted effort by our government to really put us out of business… We're seeing reimbursement rates, for example, from (Health Insurance Plan of New York), of 87 cents for a co-pay.” Most pharmacists don't determine the drug prices, which are set by third parties such as pharmacy-benefits managers, said Bob Giaquinto, owner of Rye Beach Pharmacy.

“CMS disputes the GAO's findings that pharmacists would be underpaid,” the story says. “In its response to the report, CMS said its results are unreliable because they are based on confidential data the GAO received from IMS Health, a private company that tracks drug prices, and cannot be verified. Congress mandated the change in reimbursement rates in the 2005 Deficit Reduction Act because under the current formula pharmacists are overpaid, the agency said. The change is supposed to save taxpayers $8 billion over the next five years.” (Read more)

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