The rule also would redefine "average manufacturer price" for brand-name and generic drugs. The average manufacturer price is used by states to calculate Medicaid reimbursement rates for drugs. Under the proposed rule, the federal government would post average manufacturer prices on a Web site, which could be accessed by consumers (Pear, New York Times, 12/18). In addition, the rule would limit the federal government's share of the cost of a prescription drug when at least three generic alternatives are available. HHS Secretary Mike Leavitt said the rule would affect about 600 medications accounting for about 8.3% of outpatient drug costs under Medicaid. States would retain their current authority to determine Medicaid reimbursement rates to pharmacists (Freking, AP/Long Island Newsday, 12/18). There is a 60-day comment period on the proposed rule. The government's final rule will have the force of law.
Impact
The Bush administration said the rule could lower revenues for small pharmacies, especially "those in low-income areas where there are high concentrations of Medicaid beneficiaries." Administration officials said small pharmacies could "mitigate the effects" of the lower revenue by purchasing lower-cost drugs. According to the Times, that recommendation "assumes that pharmacies can find another source of supply: generic drug companies willing to lower their prices below the new federal limits" (New York Times, 12/18). Acting CMS Administrator Leslie Norwalk said pharmacists are concerned the rule would lower reimbursements for generic drugs. "We want to make sure pharmacists still have a reason to provide generics," she said, adding that the agency likely would issue a final rule in summer 2007 after obtaining suggestions (AP/Long Island Newsday, 12/18). Bruce Roberts, executive vice president of the National Community Pharmacists Association, said, "The proposed rule would have the perverse effect of discouraging the use of generic drugs," adding, "The new limits on Medicaid reimbursement will be way below what drugstores typically pay for those drugs" (New York Times, 12/18).
"Reprinted with permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation . © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.
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