The National Association of Chain Drug Stores and the National Community Pharmacists Association sued the Centers for Medicare & Medicaid Services (CMS), asking the court to declare the rule illegal and stop the CMS from posting average manufacturer price (AMP) data on its website.
The CMS issued the rule in response to data showing that Medicaid payments to pharmacies for generic drugs were too high. The rule establishes a federal upper limit (FUL) for Medicaid reimbursement for generic drugs based on 250% of AMP and defines how AMP is calculated. The new rule also requires manufacturers to report monthly and quarterly AMP data, which the CMS would then publish online.
Pharmacy groups said the rule would force pharmacies to sell generic drugs at one-third below acquisition cost. The groups also contended that the publicly available and ‘flawed’ AMP data might be used by other payers to set too-low reimbursement rates.
In addition to legal action, the pharmacy groups are supporting legislation that would alter provisions of the CMS’s rule. The Generic Pharmaceutical Association joined the groups in sending a letter to senators last month urging them to pass the Fair Medicaid Drug Payment Act, S. 1951.The bill is said to eliminate the requirement of the CMS to post AMP data online and base FULs on 300% of the weighted average AMP.