A bill that would make Medicaid reimbursements for generic drugs more favorable for community pharmacies and protect Medicaid recipients was introduced Tuesday by congresswomen from Kansas and Missouri.
"I think this will be a good thing for the taxpayers," U.S. Rep. Nancy Boyda, D-Kan., said during a teleconference.
Boyda and U.S. Rep. Jo Ann Emerson, R-Mo., put together the bill they say would fix flaws in the so-called "final rule" issued by the Centers for Medicare and Medicaid Services.
The bill would make retail costs the benchmark for determining Medicaid pharmacy reimbursements for generic drugs. Boyda and Emerson say their benchmark more accurately reflects pharmacy costs and would encourage use of generic drugs, which are cheaper than brand-name drugs.
Under the Boyda-Emerson bill, the reimbursement rate would be 150 percent of the median retail acquisition cost for the drugs.
The CMS rule uses a formula based on the average manufacturer price. The federal General Accountability Office found that under this rule pharmacies would be reimbursed for generic drug prescriptions at 36 percent below cost.
That finding was supported by the Office of Inspector General in the Department of Health and Human Services, said Charles Sewell, senior vice president for government affairs with the National Community Pharmacists Association. The CMS rule discourages the use of generic drugs, he said.
"About 75 percent of all the drugs out there have a generic equivalent, but Medicaid has one of the worst generic utilization rates - only about 65 percent," Sewell said.
Critics of CMS say the rule will force many independent pharmacies in rural areas to stop taking Medicaid clients or go out of business. In rural areas, that would force those clients to travel long distances to other pharmacies or rely on mail-order prescriptions.
"It penalizes the pharmacies," said Brian Caswell, owner of a pharmacy in the small southeastern Kansas town of Baxter Springs. About 50 percent of his customers are on Medicaid, he said.
Boyda said she thinks the CMS rule might be part of an effort to de-emphasize generic drugs and push people toward mail-order drug companies. Mail-order firms get their drugs at a reduced cost, she said.
"I'm not suggesting that mail-order be taken away, but what on earth is going on and why the rush and push to mail-order?" Boyda said.
The new Medicaid rule was mandated by the Federal Deficit Reduction Act of 2005. It is to be fully implemented by January.
It is not yet known how much the Boyda-Emerson proposal would save the federal government, but Sewell said he thinks it would be hundreds of millions of dollars.
Under Boyda-Emerson there could be a 6 percent to 7 percent increase in generic drug use, Sewell said. Every 1 percent move from brand-name to generic drugs would save about $300 million, he said.
The Boyda-Emerson bill so far has 30 co-sponsors, including lawmakers from both political parties, Boyda said.