NACDS reacts to Texas Federal District Court’s ruling to strike down ACA
In response to the announcement last Friday by a federal district court in Texas to strike down the Affordable Care Act, the National Association of Chain Drug Stores issued a statement which said, “The law is expected to remain in effect as the court's decision is appealed to a federal appeals court and perhaps to the U.S. Supreme Court."
"This latest development magnifies the importance of NACDS and the National Community Pharmacists Association's successful litigation on Medicaid pharmacy reimbursement more than a decade ago. This latest development also underscores the potential need for ongoing advocacy on these issues—particularly if the federal district court's ruling on Friday ultimately is upheld." NACDS said.
NACDS went on to say that the federal district court ruled Friday that the "individual mandate" to purchase insurance is unconstitutional. The Supreme Court originally ruled that the individual mandate was constitutional because it imposed a tax on individuals who failed to purchase insurance. However, the federal district court in Texas ruled that the individual mandate is no longer a constitutional tax because Congress zeroed out the tax in 2017.
"Furthermore, the court in Texas held that all the other provisions of the ACA must also be struck down because they are not "severable" from the individual mandate, which the Court found was "essential" to the ACA. This severability issue, which concerns whether all the other provisions of the ACA can survive, will remain a central issue as the case is appealed. Proponents of the ACA argue Congress concluded that the individual mandate is not essential to the ACA in 2017, when Congress eliminated the individual mandate tax but refused to repeal the ACA," said NACDS.
NACDS said that one issue for pharmacies is the implications of the court decision for Federal Upper Limits, or FULs on reimbursement for generics in the Medicaid program. "As a reminder, in 2007 CMS issued a rule that threatened to cut pharmacy reimbursement by billions of dollars by improperly including non-pharmacy sales in Average Manufacturer Price, or AMP, which are used to calculate FULs. NACDS and NCPA successfully litigated against the rule, resulting in a court order that halted implementation of the rule, and CMS eventually withdrew the rule rather than defend it in court."
"The ACA included provisions that prohibited the use of non-pharmacy sales in AMPs. However, the court decision striking down the ACA should not impact the calculation of AMPs, because the court decision in our AMP lawsuit still demonstrates that CMS cannot include non-pharmacy sales in AMPs. However, if the ACA is eliminated then CMS will revert to the pre-ACA method of calculating FULs. Without new legislation, Medicaid FULs for generics would be set at 250% of the lowest reported AMP, whereas today FULs are calculated as no less than 175% of the weighted average AMP. If this were to happen, NACDS would need to work with our members to ascertain the possible impact on pharmacies but our preliminary analysis indicates that a large negative impact on pharmacy reimbursement would be unlikely," said NACDS.
Finally, NACDS said it is prepared for "additional advocacy in the Congress and with the Trump Administration if needed to maintain fair and adequate Medicaid reimbursement."
"This latest development magnifies the importance of NACDS and the National Community Pharmacists Association's successful litigation on Medicaid pharmacy reimbursement more than a decade ago. This latest development also underscores the potential need for ongoing advocacy on these issues—particularly if the federal district court's ruling on Friday ultimately is upheld." NACDS said.
NACDS went on to say that the federal district court ruled Friday that the "individual mandate" to purchase insurance is unconstitutional. The Supreme Court originally ruled that the individual mandate was constitutional because it imposed a tax on individuals who failed to purchase insurance. However, the federal district court in Texas ruled that the individual mandate is no longer a constitutional tax because Congress zeroed out the tax in 2017.
"Furthermore, the court in Texas held that all the other provisions of the ACA must also be struck down because they are not "severable" from the individual mandate, which the Court found was "essential" to the ACA. This severability issue, which concerns whether all the other provisions of the ACA can survive, will remain a central issue as the case is appealed. Proponents of the ACA argue Congress concluded that the individual mandate is not essential to the ACA in 2017, when Congress eliminated the individual mandate tax but refused to repeal the ACA," said NACDS.
NACDS said that one issue for pharmacies is the implications of the court decision for Federal Upper Limits, or FULs on reimbursement for generics in the Medicaid program. "As a reminder, in 2007 CMS issued a rule that threatened to cut pharmacy reimbursement by billions of dollars by improperly including non-pharmacy sales in Average Manufacturer Price, or AMP, which are used to calculate FULs. NACDS and NCPA successfully litigated against the rule, resulting in a court order that halted implementation of the rule, and CMS eventually withdrew the rule rather than defend it in court."
"The ACA included provisions that prohibited the use of non-pharmacy sales in AMPs. However, the court decision striking down the ACA should not impact the calculation of AMPs, because the court decision in our AMP lawsuit still demonstrates that CMS cannot include non-pharmacy sales in AMPs. However, if the ACA is eliminated then CMS will revert to the pre-ACA method of calculating FULs. Without new legislation, Medicaid FULs for generics would be set at 250% of the lowest reported AMP, whereas today FULs are calculated as no less than 175% of the weighted average AMP. If this were to happen, NACDS would need to work with our members to ascertain the possible impact on pharmacies but our preliminary analysis indicates that a large negative impact on pharmacy reimbursement would be unlikely," said NACDS.
Finally, NACDS said it is prepared for "additional advocacy in the Congress and with the Trump Administration if needed to maintain fair and adequate Medicaid reimbursement."