The Right Prescription for Medicaid

December 17, 2009

By Bruce T. Roberts
Special to Roll Call

"Good health is important to everyone. If you can't afford to pay for medical care right now, Medicaid can make it possible for you to get the care that you need so that you can get healthy -and stay healthy." This official online declaration from the Centers for Medicare and Medicaid Services would be undermined if Medicaid patients lack access to health care providers. Unfortunately, if a decision by Congress from four years ago isn't rectified soon, many Medicaid recipients and other patients might lose access to prescription drug services provided by community pharmacies. 

The Deficit Reduction Act of 2005 ordered the CMS to cut $8.4 billion over a five-year period from the program through an ill-advised average manufacturer price formula, with 90 percent coming from pharmacy reimbursement for Medicaid generic prescription drugs. The Government Accountability Office found pharmacies would lose, on average, 36 percent on every prescription that they filled. The reimbursement formula that the CMS created in 2007 cut even deeper than Congress intended, which is why the National Community Pharmacists Association and National Association of Chain Drug Stores filed a federal lawsuit to prevent the policy from being implemented. Two years ago this month, a stay was granted, but that legal protection could end at any moment. 

We have found a receptive ear in Congress to improve the reimbursement formula. Members understand that if pharmacies lose that much money to participate in Medicaid, they will limit their participation, drop out of the program or even go out of business. Stephen Schondelmeyer, director of the PRIME Institute at the University of Minnesota, testified in the AMP lawsuit as an expert witness and asserted that 10,000 to 12,000 retail pharmacies would close their doors over the next few years as a result of the cuts, with a vast majority being in underserved rural and urban areas. Those losses will be felt most profoundly with community pharmacies, which average 15 percent of their prescription sales coming from Medicaid; that's double the average of large chain pharmacies. 

In a classic example of cutting off your nose to spite your face, Medicaid patients could easily see their health deteriorate because of the lack of access not only to their prescription drugs, but to the consultation pharmacists provide to improve health outcomes and reduce costs. For example, one study from Baoping Shang and Dana Goldman published by the National Bureau of Economic Research found that Medicare saves $2.06 for every dollar that it spends on medication. Thus, we should not be instituting policies that jeopardize access to medications, as would happen in this instance. 

Furthermore, according to the New England Healthcare Institute, $290 billion is wasted annually in inappropriate drug use (including poor medication adherence), which would be exacerbated if pharmacists were less available to patients because of the financial strain of participating in Medicaid. Finally, and most importantly, the inevitable health deterioration that would occur for some Medicaid patients would result in more visits to expensive emergency rooms and doctors' offices. Thus, the up-front costs savings from the Medicaid cuts would be invariably wiped out by the back end additional expenditures. 

The most recent and consequential efforts to create a fair Medicaid generic reimbursement formula occurred when the House and Senate inserted provisions in their health care reform bills. The solutions would restore significant portions of the cuts that the policy calls for, and it certainly is helpful that larger, moving legislation has been used as a vehicle to address the concern. The NCPA has estimated the House-passed bill, which sets reimbursement limits at 130 percent of the weighted average AMP, costs retail pharmacies $18 billion over 10 years. The Senate bill still under consideration sets reimbursement at 175 percent of weighted AMP, costing pharmacies $11.5 billion over 10 years. So while neither level is a panacea for the problem, the Senate alternative is what we prefer, and we hope the number increases as the process moves forward. 

Ultimately, reasonable Medicaid generic reimbursement is not about the financial well-being of pharmacies, but about the well-being of patients. If "Medicaid can make it possible for you to get the care that you need so you can get healthy and stay healthy," then don't make the continued participation of retail pharmacies in the program financially untenable. Congress got us into this mess, now it needs to get us out of it.? 

Bruce T. Roberts is executive vice president and CEO of the National Community Pharmacists Association.

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