Blog for Rural America

The Center for Rural Affairs, a private, non-profit organization, is working to strengthen small businesses, family farms and ranches, and rural communities. Permission to reprint items from this web log is hereby granted, on the condition that clear credit is given to the original source of the material. If the blog provides information for a story, please let us know by sending an email to johnc@cfra.org.

Thursday, April 05, 2007

Medicaid Generic Drug Refund Cut Could Hurt Rural Pharmacies

Cut in Medicaid generic drug refund could hurt small, rural pharmacies

...editor's note, this post is credited to our friends at the Rural Blog at the University of Kentucky, see the link under the title of this blog post

Independent pharmacies could be hurt by a federal proposal to cut the reimbursements they receive for providing generic prescription drugs to people on Medicaid. The Centers for Medicare and Medicaid Services’ new rule would pay pharmacists an average of 36 percent less than what it would cost them to provide the drug, according to a Government Accountability Office study.

The new rule would go into effect July 1 and would apply to all pharmacies, but small pharmacies would be hurt most because they don’t have the same sales volume as chain stores and serve more Medicaid patients. Small pharmacies might be forced to stop serving Medicaid patients. About 75 percent of the independent pharmacies in the United States are located in rural areas.

The proposal could leave many rural Medicaid patients with fewer places to get prescriptions filled, says a staff-and-wire report in the Journal News of White Plains, N.Y.

Pharmacies now make only 1 to 5 percent profit on drugs under Medicaid, according to the National Community Pharmacists Association. Steve Feinstein, co-owner of the Prescription Center of Ossining, said that as an independent pharmacist he feels “there's a concerted effort by our government to really put us out of business… We're seeing reimbursement rates, for example, from (Health Insurance Plan of New York), of 87 cents for a co-pay.” Most pharmacists don't determine the drug prices, which are set by third parties such as pharmacy-benefits managers, said Bob Giaquinto, owner of Rye Beach Pharmacy.

“CMS disputes the GAO's findings that pharmacists would be underpaid,” the story says. “In its response to the report, CMS said its results are unreliable because they are based on confidential data the GAO received from IMS Health, a private company that tracks drug prices, and cannot be verified. Congress mandated the change in reimbursement rates in the 2005 Deficit Reduction Act because under the current formula pharmacists are overpaid, the agency said. The change is supposed to save taxpayers $8 billion over the next five years.” (Read more)

Agree? Disagree? Post a comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action

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    Thank you for posting this John.

    I must say that after I read this, I was so angry that I had to go smoke a cigarette to calm down before commenting :)

    I really hope that this infuriates people half as much as it does me.
    My father owns an independent pharmacy in small town North Dakota and a big part of his customer's receive Medicaid. Medicare Part D is already a huge mess, so lets make it even more difficult for pharmacies to get by.

    Small pharmacies have higher costs with the increasing costs of drugs that they need to provide for their customers because they cannot purchase them in the same volume as the chain pharmaices.

    Small business owners go out of their way to provide the best service and quality they can to their customers. My father will go to the store 24 hours a day, 7 days a week to fill a prescription for someone. Why does he do that? Because he cares and because he is trying to provide a service to his customers. He does it because of competition from corporations. Do you think the CVS or Medicine Shoppes or any of the other chain pharmacies do that? Of course not.

    Instead of the federal government going after the drug companies to lower their prices where the real problem lies, their answer? Go after the little guy and make it even MORE difficult for people to get the drugs that they need and to continue to run their businesses.

    When is the government going to stop penalizing low incomed people?? These people are busting their tails to make ends meet, they are people with disabilities, they are elderly people!

    North Dakota already struggles with competition from Canada but at least ND has a law that prohibts pharmacies that are not owned at least 51% by a registered Pharmacist.

     
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