NACDS, NCPA Oppose Medicaid Reimbursement Cuts in Obama Administration Budget Proposal

Complete the Rulemaking Process That’s Underway, They Urge

Arlington, Va. – Instead of pursuing new Medicaid cuts that threaten patient access to prescription drugs and pharmacy services, federal Medicaid officials should modify and complete already proposed regulations to set future federal upper limits (FULs) for reimbursement of most generic drugs, the National Association of Chain Drug Stores (NACDS) and the National Community Pharmacists Association (NCPA) argued today.

The trade groups sent a letter to the U.S. Centers for Medicare and Medicaid Services (CMS), which runs Medicaid at the federal level. In it, they outlined concerns with a proposal to further reduce Medicaid drug reimbursement that was included in President Obama’s fiscal year (FY) 2014 budget plan.

“While the goal of this provision may be to decrease Medicaid costs, we believe it may in fact reduce access to prescription drugs and pharmacy services for Medicaid patients, resulting in increased overall healthcare expenditures,” said NACDS President and Chief Executive Officer Steven C. Anderson, IOM, CAE and NCPA CEO B. Douglas Hoey, RPh, MBA in their letter.

The groups called the new proposal “premature” because CMS has not yet completed its ongoing rulemaking process by which it intends to establish new FULs that are based on Average Manufacturer Price (AMP). The FULs would apply to the vast majority of generic drugs (or “multi-sourced” generics).

CMS has published a series of draft FULs for hundreds of drugs. However, the proposed payment rates require significant adjustment. NACDS and NCPA have objected to the draft FULs, noting that they would pay pharmacies well below their costs of serving Medicaid patients and such cuts could force some pharmacies out of the Medicaid program as well as undermine the incentive to dispense cost-saving generic drugs. Fourteen U.S. Senators and 40 U.S. Representatives have written to CMS in objection to its draft FULs. CMS’ obligation to calculate new FULs was set forth in the Affordable Care Act.

“[A]dditional efforts by CMS are necessary to ensure that pharmacies are not reimbursed below their costs using the reimbursement formula created by the Affordable Care Act,” Anderson and Hoey added in their letter. “We urge the agency to utilize the rulemaking process to implement the Medicaid pharmacy provisions in a manner consistent with congressional intent, rather than pursuing policies that would further cut pharmacy reimbursement.”

NACDS and NCPA also noted in the letter that research has shown how prescription drug use and pharmacy services can help reduce health care costs; that Medicaid expansion and new health care exchanges will drive more demand for health care services; and that pharmacists are playing a larger role in health care delivery.

“We welcome the opportunity to continue our partnership with CMS on the development of comprehensive Medicaid pharmacy reimbursement policy that maintains the strong link between community pharmacies and Medicaid patients,” Anderson and Hoey noted in conclusion.


The National Association of Chain Drug Stores (NACDS) represents traditional drug stores, supermarkets, and mass merchants with pharmacies – from regional chains with four stores to national companies. Chains operate more than 41,000 pharmacies and employ more than 3.8 million employees, including 132,000 pharmacists. They fill over 2.7 billion prescriptions annually, which is more than 72 percent of annual prescriptions in the United States. The total economic impact of all retail stores with pharmacies transcends their over $1 trillion in annual sales. Every $1 spent in these stores creates a ripple effect of $1.81 in other industries, for a total economic impact of $1.81 trillion, equal to 12 percent of GDP. For more information about NACDS, visit

The National Community Pharmacists Association (NCPA®) represents the interests of America’s community pharmacists, including the owners of more than 23,000 independent community pharmacies. Together they represent a $93 billion health care marketplace, dispense nearly 40% of all retail prescriptions, and employ more than 315,000 people, including 62,400 pharmacists.  Independent community pharmacists are readily accessible medication experts who can help lower health care spending. They are committed to maximizing the appropriate use of lower-cost generic drugs and reducing the estimated $290 billion that is wasted annually by improper medication use. To learn more go to or read NCPA’s blog, The Dose, at

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