NACDS expresses concerns with new FUL list for pharmacy Medicaid reimbursement

ALEXANDRIA, Va. — The National Association of Chain Drug Stores submitted on Friday comments to the Centers for Medicare and Medicaid Services regarding the draft federal upper limit list published by CMS.

"We offer these comments in the spirit of implementing a Medicaid pharmacy reimbursement policy that maintains the strong link between chain pharmacies and Medicaid patients," NACDS wrote. "In our comments, we focus on the following issues: [average manufacturer price] is an inaccurate benchmark for pharmacy reimbursement; lack of consistent AMP reporting by manufacturers; whether to calculate a federal upper limit; amount of federal upper limit; and accurate dispensing fees are critical."

NACDS has consistently emphasized that — in addition to providing access to medications and to pharmacists who enhance the effectiveness of medications by helping patients take them as prescribed — community pharmacy access is vital because such additional services as vaccinations, screenings, health education and innovative programs help to improve patient health and prevent more costly forms of care.

Dating back to the enactment of the Deficit Reduction Act of 2005 and the issuance of rules by CMS in 2007 to implement this law, NACDS has fought for patients' medication access and to prevent unreasonable — and even below-cost — reimbursement to pharmacies for generic prescriptions filled through the Medicaid program.

NACDS and the National Community Pharmacists Association won a preliminary injunction in federal court in 2007 to block CMS' approach to pharmacy reimbursement with the average manufacturer price model, and CMS eventually withdrew all of the contested rules.

The AMP-based reimbursement model created by the DRA was modified by provisions in the Patient Protection and Affordable Care Act, and other legislation. In addition to the FUL list, CMS shortly is expected to issue a proposed rule to implement pharmacy Medicaid reimbursement according to AMP.

Regarding the published FULs, NACDS wrote in its comments, "NACDS continues to have significant concerns with [AMP] as a basis for pharmacy reimbursement. AMP is not a price paid in the marketplace. Instead, it is a benchmark to determine manufacturer rebates in the Medicaid program."

Substantiating this concern, NACDS wrote, "After a comprehensive analysis, one NACDS member company found that more than half of the draft federal upper limits were below the pharmacy's cost to acquire these products from a wholesaler. Other NACDS member companies have reported similar findings."

NACDS said that further undermining this approach to pharmacy reimbursement is the fact that "The absence of any specific agency guidance or regulation means there is no clear regulatory standard for manufacturers, which leads to great variability in how AMPs are calculated and reported to CMS."

NACDS also raised the issue of the applicability of the published FULs given the current absence of a new AMP rule. "Because CMS has withdrawn the 2007 AMP rule, including the sections pertaining to the calculation of FULs, there is no regulatory process in place to govern calculation of Federal Upper Limits," NACDS wrote. "As a result, NACDS believes that the draft FULs, calculated without regulatory guidance and seemingly inaccurate, should neither be made available for nor used as a basis for pharmacy reimbursement. Furthermore, no further draft FUL lists should be published before a final AMP rule is effective. At the completion of rulemaking, CMS should again issue a draft FUL list for public review and comment."

NACDS described instances in which CMS will need to make adjustments to FULs, in accordance with the new healthcare-reform law, to foster workable reimbursement. "The Affordable Care Act provides CMS with the authority to calculate Federal Upper Limits at 'no less than' 175%," NACDS explained. "The 'no less than' language in the ACA is critical. While Congress created a floor of 175% for calculating FULs, it clearly recognized that CMS would require flexibility in the level of multiplier in order to maintain patient access to prescription medications. Congress did not limit the ability of CMS to increase the multiplier to calculate FULs, but rather provided broad authority. Based on analysis of the draft FUL list, it appears that at least initially, CMS may need to increase the multiplier for calculating all FULs."

NACDS also emphasized the importance of appropriate dispensing fees: "We urge CMS to make clear to states that in order to maintain patient access to pharmacies, dispensing fees must be reviewed and adjusted to reflect no less than the true cost of dispensing prescription medications to Medicaid patients."

NACDS concluded its comments, "We are committed to working with you to implement these provisions in a manner that complies with current law and maintains access to prescription drugs and services for Medicaid beneficiaries."


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