AMP injunction an 11th-hour victory for Rx

ALEXANDRIA, VA. —On the critical issue of Medicaid prescription reimbursements, the drug store industry faces the New Year with a little breathing room.

In a dramatic, 11th-hour turn of events, U.S. District Court Judge Royce Lamberth handed at least a partial victory Dec. 14 to the National Association of Chain Drug Stores and the National Community Pharmacists Association. Acting on a lawsuit filed in November by the two groups, Lamberth agreed to halt temporarily the government’s plan to impose steep Medicaid reimbursement reductions on community pharmacies.

Besides issuing an injunction just seven weeks before the new reimbursement plan was to take effect, Lamberth also ruled that the Centers for Medicare and Medicaid Services would not be permitted to post data on the Internet related to the average manufacturer price of generic pharmaceuticals.

With CMS’ new AMP-based payment plan for generics dispensed under Medicaid set to take effect Jan. 30, Lamberth’s decision was a welcome Christmas present for a beleaguered industry. Retail pharmacy operators have long asserted that the new generic reimbursement schedule would devastate many community pharmacies serving large Medicaid populations, by tying claims payments to a faulty and inaccurate formula for deriving the true acquisition cost of a generic drug.

Independents would be particularly hard-hit, NCPAnoted, with many forced many to either stop serving Medicaid patients or go out of business.

In response, NACDS and NCPA—along with many of their individual chain or independent pharmacy members—have waged a protracted battle in Congress, at the grassroots local level and within the Bush administration to scrap the plan and come up with a more equitable method of payment. In a final desperate bid to halt the new rule, the two groups filed suit Nov. 7 in the U.S. District Court for the District of Columbia against the Department of Health and Human Services and CMS. Also named in their official capacities were HHS Secretary Michael Leavitt and CMS acting administrator Kerry Weems.

Lamberth’s injunction that will prevent CMS from adopting the reduced AMP-based reimbursement formula for generics until he’s had an opportunity to fully review the new payment plan, and the merits of the suit.