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Executive Summary

The Health Care Financing Administration (HCFA) should let states determine the best way to reform Rx drug reimbursement under Medicaid, California Pharmacists Association (CPhA) President Robert Johnson maintained in Sept. 9 comments to HCFA. Instead of choosing one plan for all states, Johnson suggested that "it might be well to consider whether all of the options [CIP, PhIP or a revised MAC] might be made available, with each state selecting that option which best meets the needs of the providers within that state, as well as the needs of both state and federal government." The Michigan Pharmacists Assn. similarly asked for more latitude for state choice in comments to HCFA in late August ("The Pink Sheet" Sept. 8, p. 7). CPhA asked that state hearings be held before either CIP or PhIP is initiated in any given state. "Should a state wish to choose either [PhIP or CIP], we request that public hearings be made mandatory in that state so that public comment from the pharmacy providers may be obtained," Johnson wrote. "It is the pharmacies that are directly affected, and no state can foretell accurately what the effects of either of these two approaches might be." The EAC method should be abolished from the PhIP and MAC revision proposals, Johnson contended, because its "inflexibility" has "served to alienate the pharmacy profession." The PhIP and MAC revision options would reimburse single-source drugs at usual and customary prices, under CPhA's suggestion. State EAC rules "have been diverse and sporadic at best" and have been unable "to approach even a close and fair approximation of acquisition cost," Johnson maintained. Consequently, EAC has "unjustly penalized many pharmacies while rewarding others," he said. For example, California pays direct prices offered only by manufacturers identified on a state list, even though the state has provided "no evidence" to justify its selection of the particular companies and has refused "repeated requests . . . to confirm the use of these companies by pharmacies on a direct account basis," Johnson contended. PhIP's maximum incentive payment to pharmacists for substituting a generic for a brandname prescription should be a greater than $4, CPhA continued. "In terms of today's medications, some of which may approach $300.00 per 100 tablets or capsules or more in cost, the proposed $4 markup per 100 would not even cover the inventory costs, particularly if less than an original package were prescribed and an unused portion remained," Johnson said. CIP should allow multiple price screens within larger states and update those screens more frequently than once per year, CPhA urged. Noting that the CIP proposal would employ a statewide screen to determine the upper limit of payment for multiple-source Rx drugs, Johnson said "it may be more appropriate" in larger states like California "to establish multiple screens within the state in order to more accurately reflect charges within the state's different pricing regions." Furthermore, Johnson wrote, because "statewide charges are dependent upon the costs of the drug product, an item independent of HCFA's control, we request that updating of the screen be performed no less often than semi-annually. To do otherwise in a period of inflationary drug costs only serves to penalize" pharmacists. Screens of statewide charges would be updated annually under HCFA's proposal.

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