CMS caves to drugmakers’ plea, partially delays enforcement of Medicaid drug rule

Drug manufacturers are breathing a sigh of relief after the CMS announced it will delay enforcement of a rule that changes the way state Medicaid agencies reimburse pharmacies for prescription drugs.

The CMS pushed back the enforcement date for inhalation, infusion, instilled, implanted or injectable drugs to July. Pharmaceutical companies wanted a delay until October.

On April 1, state Medicaid agencies were to start reimbursing pharmacies for prescription drugs based on acquisition costs, according to a final rule released in January.

Previously, Medicaid programs had been reimbursing pharmacies based on the cost of the ingredients to make the drug plus a dispensing fee for filling the prescription.

Drugmakers said they needed more time to determine the average manufacturer price (PDF) for that subset of drugs that are not generally dispensed through retail community pharmacies.

“Rushing this process could increase the risk of errors, which could create legal risk for manufacturers … and impose increased burden on downstream entities that rely on these AMP calculations,” according to a joint letter to the CMS (PDF)from various trade groups, including the Pharmaceutical Research and Manufacturers of America and the Biotechnology Innovation Organization.

The CMS responded by giving manufacturers “a transition period” to make modifications and test their systems to calculate and report the AMP for drugs.

The final rule was released nearly four years after its draft came out in February 2012. The regulations carry out provisions of the Affordable Care Act that revise the reimbursement criteria for outpatient drugs prescribed to Medicaid beneficiaries.

The CMS believes the rule will save $2.7 billion over five years in state and federal costs, primarily because of alterations it made to the federal upper limit of drug reimbursements.