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LOUISIANA MEDICAID's USE OF "UNMODIFIED AWP" WILL BE SUBJECT

Executive Summary

LOUISIANA MEDICAID's USE OF "UNMODIFIED AWP" WILL BE SUBJECT of a Health Care Financing Administration hearing in Dallas (tentatively scheduled Sept. 21). The hearing was requested by Louisiana after HCFA decided that it would disapprove the state agency's plan to use average wholesale prices published in the Blue Book to determine estimated pharmacy acquisition costs for prescription drugs. In a letter scheduling the hearing, HCFA Administrator William Roper, MD, wrote to Louisiana Department of Health and Human Resources Deputy Assistant Secretary Howard Prejean: "The issues in this matter are (1) whether use of an unmodified AWP constitutes the agency's 'best estimate' of current prices as required [by federal regulations], and whether payments resulting from the use of the unmodified AWP are consistent with efficiency, economy, and quality of care as required by . . . the Social Security Act." Roper added that the hearing will also examine whether HCFA can be barred "from applying its determination of drug availability to the state." The hearing will occur exactly three years after seven national pharmaceutical associations sued HCFA to block efforts to force states in Region VI and other HCFA regions to discount AWP for setting Medicaid reimbursements. Louisiana is in HCFA Region VI. On Aug. 18, the Louisiana Pharmacists Association asked to participate in the hearing. In its petition, the state association asserted that Louisiana's plan to rely on published AWPs for estimated acquisition cost "satisfies all legal requirements and should be approved." The association also maintained that "in recent years reimbursement for the services of pharmacists under the Louisiana Medicaid Program has been substantially reduced." NARD petitioned on Aug. 18 to participate in the hearing as an amicus curiae. The National Association of Chain Drug Stores is reviewing the situation and said it will submit comments and may ask to testify. The American Pharmaceutical Association also plans to submit comments on the case.

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