New Ad Makes the Case for Medicaid AMP Fix in Health Reform


 By Kevin Schweers

Two years ago this week something significant and positive happened for Medicaid patients and their community pharmacists. This December, we’re working for more of the same. 

Under current law, delayed by court injunction, Medicaid would reimburse pharmacies for generic drugs based on the medicine’s average manufacturer price, or AMP.  Doing so would force pharmacies to accept losses so great that many would likely have to leave the Medicaid program or close their doors altogether. 

The impact on independent community pharmacies would be particularly dire. They’re often in underserved urban and rural areas where they care for many Medicaid recipients. Nearly all independent pharmacy revenue (93% on average) comes from prescription sales and, on average, Medicaid makes up 15% of those sales. For some independents, that figure is much higher.

That’s the point of a new ad NCPA is running in Capitol Hill publications.  You can see the ad here.

Both Democrats and Republicans in Congress understand this. One of the issues buried in the health care reform proposals are revisions of the AMP formula. We prefer the Senate’s AMP fix as a more workable way to ensure pharmacies remain viable Medicaid providers.

But the legislative process takes time, so relief was sought from the courts to prevent these devastating cuts from taking effect.

Two years ago today, on Dec. 14, 2007, a hearing was held on a motion filed jointly by NCPA and the National Association of Chain Drug Stores. On Dec. 19, 2007, U.S. District Court Judge Royce Lamberth granted the injunction to prevent the Centers for Medicare and Medicaid Services from implementing the proposed AMP cuts.

 During these past two years, with the injunction in place, community pharmacies have saved approximately $4 billion due to the efforts of NCPA and NACDS. That amounts to $5.5 million every day nationwide or a savings, on average, of $70,438 for every retail pharmacy outlet in the U.S. Every patient, whether covered by Medicaid or not, has benefitted from having convenient, local access to pharmacies and their highly trained personnel.

Even with the injunction, one does not have to look far to be reminded that pharmacy profit margins can be razor-thin.  Just a few days ago the Tidewater News of Franklin, Va., reported on the closing of Parker Drug, a longtime local fixture.

“Independent pharmacies are really up against it because third-party insurance companies aren’t reimbursing us enough to make ends meet,” co-owner Ed Canada told the paper. “One thing compounds the other, and it’s finally gotten to the point where we just can’t stay there. I’m losing money.”

NCPA officials will continue working with Members of Congress from both parties to ensure an equitable formula is enacted for Medicaid generic drug reimbursement.

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