NACDS, NCPA Urge CMS for Prompt Guidance to States on Medicaid Dispensing Fees

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Groups Stress Importance of Maintaining Community Pharmacy Access
for Patients to Improve Health, Reduce Costs

Alexandria, Va. - Jan. 27, 2012

Following a meeting with the Centers for Medicare & Medicaid Services (CMS), the National Association of Chain Drug Stores (NACDS) and National Community Pharmacists Association (NCPA) re-emphasized the importance of providing guidance to the states on how to adjust Medicaid dispensing fees to determine pharmacy reimbursement. In a letter to the agency, the groups stressed the importance of providing this guidance promptly, before the current draft federal upper limits (FULs)—based on average manufacturer price (AMP)—are finalized.

"Addressing pharmacy reimbursement comprehensively, both the cost of the drug product and the cost of dispensing, is critical to maintaining access to pharmacy services for our Medicaid patients," NACDS and NCPA wrote.

The groups expressed their appreciation for the agency's stance to require accurate dispensing fees in cases where states have adopted average acquisition cost (AAC) as their Medicaid benchmark for pharmacy reimbursement, as well as the acknowledgement by CMS that an accurate fee would be needed if the National Average Drug Acquisition Cost (NADAC) benchmark is developed. But they urged expediency in issuing the guidance for states.

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. Once CMS does calculate accurate federal upper limits on reimbursement that include appropriate incentives to dispense generic drugs, the agency and state Medicaid programs will still need to set fair and accurate dispensing fees to help preserve pharmacy access for patients.

"Since analysis of the four draft FUL lists released by CMS indicates that AMP-based FULs are in many cases below AAC, strong leadership is needed from CMS to help states understand the importance of setting accurate dispensing fees to maintain beneficiary access. In our minds, there should be no distinction between requiring states to adjust fees to use AAC/NADAC compared to requiring states to adjust fees to use FULs based on weighted AMPs," the letter stated.

In the letter, the groups also highlighted that there is consensus among federal policymakers that pharmacies should be reimbursed accurately for both the cost to acquire and dispense prescription medications to Medicaid patients.

"While the Affordable Care Act made revisions to the way in which AMP should be defined, how AMP-based FULs should be calculated, and other matters, Congress has made clear that its position on accurate dispensing fees remains unchanged," the letter stated.

The letter also included a list of factors that make up the cost to dispense prescription medications, including personnel, overhead and other pharmacy-related costs.

Fair and accurate pharmacy reimbursement is essential to help ensure that all patients—including Medicaid patients—have access to pharmacy services. Limiting patient access to these services will only further drive up healthcare costs, as patients will then be forced to find alternative, more costly forms of care. Community pharmacy plays a vital role in the healthcare delivery system, and provides unsurpassed value to patients that helps improve their health and reduce healthcare costs across the board.

To view the full text of the letter, click here.

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 39,000 pharmacies, and employ more than 2.7 million employees, including 118,000 full-time pharmacists. They fill nearly 2.6 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 $830 billion in annual sales. Every $1 spent in these stores creates a ripple effect of $1.96 in other industries, for a total economic impact of $1.57 trillion, equal to 11 percent of GDP. NACDS represents 137 chains that operate these pharmacies in neighborhoods across America, and NACDS members also include more than 900 pharmacy and consumer packaged goods suppliers and service providers, and over 60 international members from 23 countries. 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 a $93 billion health care marketplace, dispense nearly 40% of all retail prescriptions, and employ more than 315,000 people, including 62,400 pharmacists. Independent community pharmacists are readily accessible medication experts who can help lower health care spending. They are committed to maximizing the appropriate use of lower-cost generic drugs and reducing the estimated $290 billion that is wasted annually by improper medication use. To learn more go to or read NCPA's blog, The Dose, at

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