NACDS, FMI Appeal First DataBank/Medi-Span Lawsuit

The National Association of Chain Drug Stores (NACDS) and the Food Marketing Institute (FMI) this week filed their principal legal brief with the U.S. Court of Appeals for the First Circuit, challenging the First DataBank and Medi-Span settlements that lower average wholesale prices (AWPs). Joining the organizations in the brief were pharmacies that stand to be harmed by the AWP reductions.

According to the groups, the implementation of the price reductions would slash reimbursement for many pharmacies. The appeal brief argues that it’s inappropriate to harm pharmacies that weren’t defendants in the original lawsuit, as they did nothing wrong.

The court granted a motion to expedite the schedule for the appeal, meaning that it may be able to issue a decision on case before the cuts take effect Sept. 26.

“Patient access to pharmacy is at risk if the pending settlements are implemented, as they will cut Medicaid reimbursement rates for many pharmacies to devastating levels,” noted NACDS president and CEO Steven C. Anderson. “Patient access should not be compromised. In filing the appeal, we urge that the court not penalize pharmacies but instead rule on the side of patients.”

“The district court’s approval of a judicial settlement that unconstitutionally punishes every pharmacy in the country was an egregious error,” added Deborah White, FMI SVP and chief legal officer. “We … encourage the First Circuit to overturn the district court’s order.”

First DataBank, Medi-Span and the class action attorneys are slated to file opposing briefs on June 29. NACDS and FMI will then file a reply brief July 13. The court is scheduled to hear oral arguments during the week of July 27.

In April, NACDS and FMI filed a motion seeking a stay to halt implementation of the AWP reductions. Earlier, the associations also filed a legal brief, including an economic analysis, to counter the proposed settlements. The brief and analysis detailed the many ways in which the proposed settlement’s cost savings and estimated impact were based on inaccurate economic analysis and would unfairly hurt retail pharmacies.

The AWP reductions will slash Medicaid reimbursement by about $68 million annually. Additionally, pharmacies that are unable to renegotiate their private-sector reimbursement contracts will face a net 4 percent reduction in AWP-based reimbursement.
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