Lawmakers seek to help pharmacists affected by new Medicaid rules

WASHINGTON -- Missouri and Kansas lawmakers are working to block new Medicaid rules they claim could force many small drug stores out of business.

A new reimbursement formula, released this month by the federal agency that oversees Medicaid, will cut back payments to pharmacies for the cost of prescription drugs when generics are available.

But lawmakers in rural areas say small and independent pharmacists that are not part of major chains will be hurt the most. Many of those stores rely on Medicaid reimbursements for more than half of their business.

Reps. Nancy Boyda, D-Kan., and Jo Ann Emerson, R-Mo., introduced a bill Tuesday that would block implementation of the new rule and propose a different formula. They say their model better reflects the actual costs pharmacists pay for generic drugs.

"We have to realize that our pharmacists out on the front lines are the ones who save lives, and we need to do everything we can to save that industry," Emerson said.

Boyda and Emerson are trying to get their bill passed before Jan. 30, when the proposed rule from the Centers for Medicare and Medicaid Services is set to take effect.

States reimburse pharmacies for the cost of medicine provided to recipients of Medicaid, the health-care program for about 50 million poor and disabled Americans. While Medicaid is administered by state governments, the federal government pays for about 60 percent of the program's costs.

Under the CMS rule, reimbursements for more than 500 generic drugs would be based on the average manufacturer price, replacing the current formula that relies on the average wholesale price. Congress mandated the change after reports showed that Medicaid payments were often higher than prices for the same drugs in the private market.

The new formula is expected to save states and the federal government $8.4 billion over five years. But Boyda argues the savings are coming "straight out of our community pharmacists' pockets."

She and other pharmacy advocates point to a General Accountability Office report in December that found the new rule would reimburse retail pharmacies at an average rate of 36 percent below their cost for the drugs.

"If this rule goes into effect on Jan. 30, hundreds or thousands of communities will lose their local pharmacies forever," Boyda said.

A major problem is that the new formula proposed by CMS includes discounts that manufacturers offer to mail-order pharmacy services, but not traditional drug stores.

More than 30 lawmakers have signed onto the bill, and Boyda and Emerson are hopeful they will have enough momentum to pass the measure later this year. More than 100 lawmakers signed a letter in May urging the CMS to delay its new rule from taking effect until next year. Enforcement of the rule was supposed to begin this month.

Brian Caswell, president of Wolkar Drug in Baxter Springs, Kan., said about half of his customers are Medicare recipients.

"From an economic standpoint, if we can't participate in the program, chances are we're going to be closing our doors," Caswell said.