NACDS, NCPA join state pharmacy association in suit contesting ‘flawed’ Medicaid rule

OLYMPIA, Wash. — The retail pharmacy industry is pursuing legal action against Washington state over a “substantively and procedurally flawed” rule  that would pay pharmacies below the actual cost to dispense Medicaid prescriptions.

The National Association of Chain Drug Stores joined the Washington State Pharmacy Association and the National Community Pharmacists Association in preventing a rule that would jeopardize patient access to their medications, the associations said.

“This Motion seeks to halt further reimbursement cuts until such time as [Washington state] properly implements Medicaid reimbursement rates that cover the actual costs that pharmacies incur when they serve Medicaid patients, as required by law,” the associations stated in a motion filed Thursday in the Superior Court of Washington, Thurston County.

At issue is a rule (WSR 17-07-001) by the Washington State Health Care Authority that changes the basis by which the agency determines pharmacies’ cost of acquiring pharmaceuticals, thus reducing reimbursement to pharmacies for medications dispensed to Medicaid patients.

Contrary to a federal rule by the U.S. Department of Health and Human Services’ Centers for Medicare & Medicaid Services, the Washington State rule does not make required adjustments to account for another aspect of pharmacies’ costs –  the “professional dispensing fee.”

The professional dispensing fee must cover actual costs to safely fill the prescription such as the pharmacist’s professional services. The current dispensing fee in Washington State is significantly lower than the cost of dispensing identified in studies conducted by other states and experts. For example, an independent study commissioned by NACDS and NCPA found that the cost of dispensing in Washington state is more than double the proposed professional dispensing fee for Medicaid prescriptions in Washington State’s new rule.

In addition to failing to adjust professional dispensing fees, as required by federal law, Washington state also violates rulemaking procedures, the assocations stated. The state informed pharmacies after the formal comment period, and after it issued the final rule, that dispensing fees would not be adjusted. As a result, the pharmacy industry did not have an adequate opportunity to comment on this matter, as required by the State’s Administrative Procedure Act.

“The State’s new rule is both substantively and procedurally flawed,” the groups summarized in their motion. “First, it should be stayed because it constitutes arbitrary and capricious agency action that violates federal law. Second, it should be stayed because the state failed to follow the clear procedural directives that apply when amending a rule.”

It is notable that the Medicaid pharmacy benefit is valued highly among Washington state residents. In a survey conducted by Morning Consult and commissioned by NACDS in March 2017, 80% of registered voters in Washington state indicated their belief that pharmacy benefits should be covered under Medicaid.



Residents of Washington state also appreciate the accessibility of pharmacies. In the survey, 88% of respondents indicated they consider it easy to access pharmacies – the highest accessibility among providers tested (pharmacies, doctors, emergency room, nurses, primary care physicians, and specialist physicians).