WASHINGTON – Medicaid, the national health care plan for the poor, will reduce its payments for generic medicines, the U.S. Centers for Medicare and Medicaid Services announced today.
The agency said it will pay pharmacies 250 percent of the average manufacturers’ wholesale price, Bloomberg News said. Payments previously were calculated based on the “average wholesale price,” or AWP – a manufacturers’ list price that Medicaid said was “artificially inflated.”
Medicaid projected that the pricing and related changes, effective Oct. 1, will yield savings of $4.9 billion over the next five years for the U.S. government and $3.5 billion for the states. But an analysis by the U.S. Government Accounting Office found the change may cut average Medicaid payments for generic drugs to 36 percent below what pharmacies pay for them.
The change “could create severe financial hardships for many Medicaid pharmacy providers,” National Association of Chain Drug Stores said in a statement on its Web site. “Pharmacies in low-income communities could be forced to reduce staff or operating hours, eliminate delivery services to remote rural areas, or even close their doors.”
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Although the new formula would affect the largest U.S. drugstore chains – including Walgreen Co. and Woonsocket-based CVS Caremark Corp. – industry groups said the impact would be greatest at small pharmacies that depend more on Medicaid payments. “They are doing a hatchet job on independent pharmacies,” Crystal Wright, spokeswoman for the Association of Community Pharmacists Congressional Network, told Bloomberg News.
