NACDS, NCPA to CMS: Consistency, Coordination Necessary to Remedy Flawed Medicaid Reimbursement Process

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Alexandria, Va. - With the expansion of Medicaid services in the Affordable Care Act on the horizon, NACDS and NCPA urged CMS to take into consideration the true cost of dispensing prescription medications to Medicaid patients. In a letter to the Centers for Medicare & Medicaid Services (CMS), the National Association of Chain Drug Stores (NACDS) and the National Community Pharmacists Association (NCPA) stressed that to maintain patient access to pharmacies, CMS must ensure that states increase dispensing fees for Medicaid drugs in conjunction with the upcoming new Federal Upper Limits (FULs), anticipated in 2014.

CMS is currently in the process of determining new Medicaid FULs that would apply to pharmacy reimbursement for many common generic medications. NACDS and NCPA have repeatedly expressed concern about the reimbursement limits proposed to date by CMS because they would fail to cover even the pharmacy's acquisition costs for hundreds of products.

In the letter, NACDS and NCPA emphasized that the average manufacturer price (AMP) is an inaccurate benchmark for pharmacy reimbursement, and that there is no correlation between the weighted AMP and pharmacy acquisition costs.

"In a number of instances, the AMP-based FUL is lower than the pharmacy's acquisition cost for a given drug," the groups stated in the letter. "In light of the looming problem of under reimbursement, it is important for CMS to advocate to State Medicaid directors the importance of increasing dispensing fees to account for this problem. We urge CMS to make clear to states that in order to maintain patient access to pharmacies, dispensing fees must be increased to reflect no less than the true cost of dispensing prescription medications to Medicaid patients."

NACDS and NCPA also cite that if states do not increase their dispensing fees, Medicaid patient access to pharmacy may be at risk.

"If states fail to increase Medicaid dispensing fees at the same time that AMP-based reimbursement is falling, then pharmacies may be forced to withdraw from the Medicaid program, denying patients access to Medicaid drugs," the groups stated in the letter.

This release can also be found on the NACDS website.

The National Association of Chain Drug Stores (NACDS) represents traditional drug stores, supermarkets, and mass merchants with pharmacies—from regional chains with four stores to national companies. Chains operate more than 41,000 pharmacies and employ more than 3.8 million employees, including 132,000 pharmacists. They fill over 2.7 billion prescriptions annually, which is more than 72 percent of annual prescriptions in the United States. The total economic impact of all retail stores with pharmacies transcends their over $1 trillion in annual sales. Every $1 spent in these stores creates a ripple effect of $1.81 in other industries, for a total economic impact of $1.81 trillion, equal to 12 percent of GDP. For more information about NACDS, visit

The National Community Pharmacists Association (NCPA®) represents the interests of America's community pharmacists, including the owners of more than 23,000 independent community pharmacies. Together they represent an $88.7 billion health care marketplace, dispense nearly 40% of all retail prescriptions, and employ more than 300,000 individuals, including over 62,000 pharmacists. To learn more go to or read NCPA's blog, The Dose, at

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