State lawmakers have sought to offset the effects of a rule proposed by CMS that would reduce Medicaid reimbursements to pharmacies for generic prescription drugs, but "it isn't clear whether the federal government will go along, since the cost of any fix would be shared" by all states, the Wall Street Journal reports (Merrick, Wall Street Journal, 6/28). The rule, mandated by the Deficit Reduction Act of 2005 and scheduled to take effect on Dec. 30, seeks to ensure that Medicaid can obtain prescription drug discounts similar to those obtained by private entities, such as pharmacy benefit managers.

The rule also would redefine "average manufacturer price" for brand-name and generic prescription drugs. States use average manufacturer prices to calculate Medicaid reimbursement rates for drugs. Under the rule, the federal government would post average manufacturer prices on a Web site that consumers could access. In addition, the rule would limit the federal share of the cost of prescription drugs when at least one generic alternative is available. CMS plans to finalize the rule by July 2 (Kaiser Daily Health Policy Report, 6/26).

Mike James -- a North Carolina pharmacist and government affairs director for the Association of Community Pharmacists Congressional Network, which has asked states to offset the effects of the rule -- said that the effects are "going to be so severe that state Medicaid programs and pharmacists [are] not going to be able to survive the cuts."

State Actions
At least four states -- Texas, Iowa, Kansas and Louisiana -- have passed budget bills that seek to offset the effects of a rule through increased dispensing fees for Medicaid prescriptions. However, such increases require approval from CMS.

According to the Journal, whether CMS will approve such increases "isn't clear" because they "would be more dramatic than in previous years" and "could hinder plans to reduce the federal deficit." Acting CMS Administrator Leslie Norwalk said the agency would require that such increases are "both data-driven and reasonable in terms of being economic and efficient" (Wall Street Journal, 6/28).