ARLINGTON, VA

August 7, 2007



The Food Marketing Institute (FMI) strongly supports the Fair Medicaid Drug Payment Act (S. 1951) and praises Senate Finance Committee Chairman Max Baucus (D-MT) for introducing this measure, along with co-sponsors Senators Thad Cochran (R-MS), Joe Lieberman (I-CT), Blanche Lincoln (D-AR), Trent Lott (R-MS), Pat Roberts (R-KS), Ken Salazar (D-CO) and Gordon Smith (R-OR).




"This legislation will help ensure that Medicaid recipients can continue to obtain low-cost generic prescriptions at thousands of pharmacies across America," said John J. Motley III, FMI senior vice president of government and public affairs. "It will solve the problems created by a misguided regulation that undermines the ability of retailers to serve Medicaid patients. Retail pharmacies now face the deplorable choice of dispensing only high-cost brand name drugs, no longer serving Medicaid patients at all or, in some cases, shuttering their stores."




This legislation would correct a new generic prescription drug reimbursement rule from the Centers of Medicare and Medicaid Services (CMS) that bases reimbursement for generic prescriptions on its new "average manufacturer price" (AMP) formula. Because the CMS formula bases reimbursement on many discounts, rebates and other price reductions that most retailers do not receive, pharmacies are reimbursed less than they pay to purchase these medications.




The Baucus bill would replace the Medicaid AMP payment reductions for generic drugs with a more rational approach to setting reimbursement rates. Specifically, the measure would:




• Base payments on the weighted average AMP calculated only based on prices paid by pharmacies rather then the lowest AMP based on cost reductions available only to some pharmacists and mail order houses.




• Increase the payment rate to 300 percent of the AMP, up from 250 percent under the current regulation.




• Increase the use of generic drugs in the Medicaid program by requiring prior authorization of brand name drugs that have generic alternatives — saving Medicaid and its beneficiaries money.




FMI members operate more than 19,000 pharmacies in their stores nationwide. Many of these locations provide pharmacy services to significant numbers of Medicaid recipients.




Contact:

Bill Greer

(202) 220-0667

wgreer@fmi.org