Medicaid Generic Drug Payment Cut Would Most Affect Independent Pharmacies

April 18, 2007 – 1:59 pm | posted in Medicare, Pharma Industry

Gannett/Jackson Clarion-Ledger on Wednesday examined the potential impact on independent pharmacies of a CMS plan to cut reimbursement rates for generic prescription drugs provided through Medicaid. According to the Gannett/Clarion-Ledger, independent pharmacies “are having a hard time swallowing” the cuts, which would pay pharmacists on average 36% less than the cost to provide the generic drug, according to a Government Accountability Office report released in December. Independent pharmacies, mostly located in rural or inner city areas, would be hardest hit by the reimbursement cuts because they do not sell the same high volume as chain drug stores and tend to serve more Medicaid beneficiaries, according to Charlie Sewell, a senior vice president for the National Community Pharmacists Association. Medicaid sales account for about 23% of an average independent pharmacy’s business, compared with about 8% of chain pharmacies’ business, Sewell said. Independent pharmacists say the cuts could cause them to go out of business or stop accepting Medicaid, which could make it more difficult for beneficiaries in rural places to fill prescriptions. About 75% of independent pharmacies are in rural areas, according to the Gannett/Clarion-Ledger. CMS officials said that pharmacists in the current formula are overpaid and the cuts will save an estimated $8 billion over the next five years. The cuts would not affect reimbursement rates of brand-name drugs, which account for 41% of Medicaid drugs (Bremner, Gannett/Jackson Clarion-Ledger, 4/11).

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