In a clear victory for retail pharmacy, the National Association of Chain Drug Stores and the National Community Pharmacists Association have agreed with the Centers for Medicare and Medicaid Services on a motion to dismiss the Medicaid average manufacturer price lawsuit. The landmark agreement came after CMS withdrew the last remaining provisions of the AMP rule that had been blocked by a preliminary injunction following litigation by NACDS and NCPA.

 

This agreement is beneficial to all pharmacy, but it is particularly important for independent pharmacy.

NACDS and NCPA leaders were jubilant. By agreeing to end the lawsuit, the chain and independent retail pharmacy industries have resolved a long-running and bitter dispute with the federal government over the way pharmacies will be reimbursed for dispensing generic drugs to low-income Americans covered by Medicaid. A dismissal of the lawsuit by a U.S. district court would end a simmering, three-year legal battle - and a three-year court injunction that has blocked CMS from implementing the new AMP guidelines, saving pharmacies billions of dollars, according to pharmacy groups.

NACDS president and CEO Steve Anderson and NCPA EVP and CEO Kathleen Jaeger hailed the agreement. "Today marks a vital triumph for pharmacy and patients," they said in a jointly worded statement Tuesday afternoon. "The agreement of CMS to stop applying federal upper limits to all B-rated [generic] drugs after Dec. 15 and to refrain from publishing AMPs calculated under the old AMP rule are the final steps that will allow the AMP lawsuit to be dismissed."

CMS agreed to formally withdraw provisions of the AMP rule related to the definitions of both AMP and what constitutes a "multiple-source drug" as specified in the original regulations the agency proposed for Medicaid prescription reimbursements going forward. CMS also dropped its controversial method of calculating the FUL for generic drug reimbursements.

The deal lays to rest a long and bitter disagreement between retail pharmacy and federal health officials over Medicaid pharmacy payments, and eliminates one of the industry's biggest potential threats to profitability. In the three years that the injunction blocking AMP has been in effect, NACDS and NCPA said, it has "prevented devastating reimbursement cuts from being implemented" and bought the industry time to craft an agreement with CMS.

Each day that the injunction remained in place avoided $5.5 million per day, for a total of approximately $5.75 billion from Jan. 1, 2008, through yesterday.

Stay tuned!

Richard E. Beck, RPh
Executive Director