FMI Gives Thumbs Up to Script Payment Legislation

ARLINGTON, Va. -- The Food Marketing Institute here has come out in support of the Fair Medicaid Drug Payment Act (S. 1951), which was introduced by Senate Finance Committee Chairman Max Baucus (D-MT), together with co-sponsors Senators Thad Cochran (R-MS), Joe Lieberman (I-CT), Blanche Lincoln (D-AR), Trent Lott (R-MS), Pat Roberts (R-KS), Ken Salazar (D-CO), and Gordon Smith (R-OR).

"This legislation will help ensure that Medicaid recipients can continue to obtain low-cost generic prescriptions at thousands of pharmacies across America," noted FMI s.v.p. of government and public affairs John J. Motley III in a statement. "It will solve the problems created by a misguided regulation that undermines the ability of retailers to serve Medicaid patients. Retail pharmacies now face the deplorable choice of dispensing only high-cost brand name drugs, no longer serving Medicaid patients at all, or, in some cases, shuttering their stores."

The bill would counteract a new generic prescription drug reimbursement rule from the Centers of Medicare and Medicaid Services (CMS), which bases reimbursement for generic prescriptions on its new "average manufacturer price" (AMP) formula. Since the CMS formula bases reimbursement on many discounts, rebates, and other price reductions that most retailers don't receive, pharmacies are reimbursed less than they pay to buy these medications, according to FMI.

FMI said the Fair Medicaid Drug Act would:
--Base payments on the weighted average AMP calculated only based on prices paid by pharmacies rather then the lowest AMP based on cost reductions available just to some pharmacists and mail-order houses.
--Boost the payment rate to 300 percent of the AMP, up from 250 percent under the current regulation.
--Increase the use of generic drugs in the Medicaid program by requiring prior authorization of brand-name drugs with generic alternatives, thus saving Medicaid and its beneficiaries money.

FMI members operate over 19,000 pharmacies in their stores across the United States. Many of these locations offer pharmacy services to significant numbers of Medicaid recipients.
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